Comfortable Retirement Eludes Latinos
Elderly Latinos struggle due to lack of information, opportunities and planning during their working years
By Rosalba Ruíz
Senior Orbelina Reyes spends much of her time watching television at home. The 67-year-old doesn’t miss any episodes of her favorite novelas, or soap operas, now that she works only once a week.
But it’s not because she wants it that way.
“I want to work. I can work,” says Reyes, who lives in the Columbia Heights neighborhood in the nation’s capital. “The problem is, I can’t find work.”
Because she doesn’t have any savings, Reyes cannot afford to retire quite yet.
NOT ENOUGH PLANNING
Ever since she was about nine, Reyes toiled. First, working 13-hour days selling tortillas, chicken tamales and sweet breads made of yucca, corn and honey at her mother’s side in an open-air market in San Francisco Gotera, a rural northeastern town in El Salvador. Then she ran a small business buying clothing in bulk and reselling it in San Pedro Sula and other coastal cities in Honduras as a single mother in her 20s. Migrating to the Washington, D.C. suburb of Kensington, Maryland, she found employment as a house keeper. During the ’80s, Reyes worked three jobs: cleaning houses in the morning, offices in the afternoon and at night, stuffing advertising inserts into The Washington Post.
Now, in addition to a house-cleaning job that pays $90 a week, Reyes depends on her monthly Social Security pension of $728 to survive.
Although retirement did cross her mind at various points in her life, saving for it was never a priority.
That is the case for a majority of Latinos in this country, say experts. The reasons are many.
“It has a lot to do with family,” says Roger E. A. Framer, chair of the Department of Economics at the University of California at Los Angeles. “Immigrant communities are coming here from societies where the elderly receive support from family.”
Traditionally, children and grandchildren assume the responsibility to care for their elders.
In addition, Hispanics now have a longer life expectancy. It is greater that for blacks or whites, but this hasn’t connected to the assumption by Latinos that “we will not live long,” says Fernando Torres-Gil, director of the UCLA Center for Policy Research on Aging.
The professor highlighted several additional points:
•Latino families are beginning to realize they are going to live to a ripe old age as they are taking care of their parents.
•Latinos now realize aging issues are important, but at same time are overwhelmed with care giving and long-term care, so they have pushed aside planning for retirement.
•They are a young population with a large proportion of immigrants, so they have few, if any, resources for savings and they focus on surviving instead.
•While not saving enough for retirement is a problem for all groups, Latinos are more vulnerable to retirement insecurity.
•The importance of saving and investing for the long term – 30, 40, 50 years – has not taken hold in this community.
NOT ENOUGH ACCESS
Another obstacle this population faces is the lack of access to information and retirement programs.
“The rest of the population tends to have better access to savings products,” says Leticia Miranda, associate director of the Economic and Employment Policy Project at the National Council of La Raza. “We don’t have the opportunity to save pretax dollars.”
A 2009 study conducted by Miranda shows that two out of three, or 65 percent, of Latinos work for employers who don’t offer a retirement plan to their workers.
Many Latinos work in low-wage jobs and for small, private companies, or in industries where retirement plans are not usually offered, such as construction, hospitality and maintenance, the study says.
In some cases, immigrants have even less access to information and products than do U.S.-born Latinos due to language and educational barriers. This is detrimental not only during their working years, but once they reach retirement age.
“Even when people are entitled to Social Security benefits, they don’t know they have a right to claim them or they don’t know how to go about it,” says Raúl Rodríguez, a counselor at the Central American Resource Center in Washington, D.C., where he organizes financial literacy workshops.
NOT ENOUGH SECURITY
A 2005 study by the Pew Hispanic Center confirms that Hispanics age 65 or older are in worse economic condition than other racial and ethnic groups.
It found that more Latinos live in poverty. They lack income from private pension plans and personal wealth. As a result, elderly Latinos depend more on the Social Security system than other groups of retirees.
Social Security comprises more than half of total income for 76 percent of Hispanic beneficiaries, while 63 percent of white beneficiaries are in the same situation. Almost half of older Latinos rely on Social Security for 90 percent or more of their income. For 38 percent of older Latinos, Social Security is the sole source of income.
Although this group depends heavily on Social Security to survive, Hispanics 65 and over are less likely to receive benefits and the average amount they do receive is lower.
About 75 percent receive benefits, compared with 91 percent of whites and 85 percent of blacks. This is due to eligibility issues pertaining to immigration and work histories.
LEARNING AND ADAPTING
Mario Cuéllar, a histology technician, is 47 years old. He migrated from El Salvador in 1984 after his university studies. He says he hadn’t heard about retirement planning up to that point.
“Usually that doesn’t exist in our country,” says Cuéllar, a Centreville, Virginia, resident. “I didn’t have the mentality, the concept of what retirement was until I arrived to this country. I started learning that people here saved for retirement.”
At age 28, he entered the medical industry and his employer offered a 401(k) plan. He attended informational sessions and asked for investment advice. He started saving for retirement then and taught his wife, Sonia, about it, so she started saving, too.
The couple had three children, now ages 26, 28 and 36. Each one of them is saving for retirement.
“We knew that our children would also have their own responsibilities, their own goals. I don’t think it’d be fair to depend on them later on in life,” says Cuéllar. “By having retirement accounts, I think we have taught them the same habit, the discipline that you have to save for the future.”
NOT MANY OPTIONS
After decades of non-stop work, Orbelina Reyes at one point had saved $16,000, but she had to use the funds for a family emergency, something that Latinos are more likely to do than whites, according to Miranda’s study.
Later, during the 90’s, she didn’t have three jobs anymore, so she had to stop saving. She did manage to send enough money to her home country to build two small houses. Moving back and living off her Social Security pension would be a last resort, she says.
But life in El Salvador is uncertain, she adds, so she wants to keep working here to be near her only son, who lives in Silver Spring, Maryland, a $1.70 bus ride away.
“I’m broke… sometimes I don’t even have enough to take a bus to visit my son,” laments Reyes, who helps him with groceries when she can. He lost his electrician job almost two years ago. “But as long as I can walk, I tell my son I don’t need his help. I’ve worked hard. I can still work.”
RESOURCES
Retirement tips for individuals by the IRS
http://www.irs.gov/retirement/participant/article/0,,id=133069,00.html
Retirement planner by the Social Security Administration
This article was published with the support of the International Center for Journalists
