Saving enough money to retire comfortably is a challenge for almost every American, but it’s even more difficult for the millions of Hispanics who are employed by small companies that do not offer retirement plans.
According to NBC News, a new program being offered by the federal government could make it much easier for Hispanics to save for retirement, regardless of what they do for a living.
Currently, almost 70% of Latinos have no retirement accounts whatsoever, compared to less than half of non-Hispanic households in the U.S.
Experts believe that this problem is largely due to the abundance of Latinos who work for companies with fewer than 50 employees, which typically cannot afford to offer retirement plans. Approximately 40% of all Hispanic workers in the U.S. are employed by such companies.
My Retirement Account, or myRA, is an affordable retirement savings plan that was first proposed by President Obama in his 2014 State of the Union address. Treasury Secretary Jacob Lew claims that the program was designed to remove common barriers to saving for retirement, which disproportionately impact the Latino community.
“[My Retirement Account] can give people confidence that they’re taking steps in the right direction – myRA has no fees, no risk of losing money and no minimum balance or contribution requirement,” said Lew.
There are just over 40 million Americans age 65 and older, making up 13% of the total population. Unfortunately, many of these retirees finish their careers without any savings, and the goal of myRA is to help low-income workers build towards a better future before it’s too late.
Louis Barajas, a Hispanic financial planner and author, believes that automatically depositing money into a retirement account is the key to saving. Generally speaking, workers are less prone to make deposits if they are forced to do it manually.
“What has worked most successfully is to set up an account where the payments are automatic so you don’t even see the money. It’s really the only way to do it,” said Rojas.
According to MySuncoast.com, My Retirement Account is expected to provide more than 30 million new people with access to retirement savings. Employers also stand to benefit from implementing the program, receiving a $3,000 tax credit to offset administrative expenses.
Several other programs similar to myRA have been introduced in the past several years, and it seems to be easier than ever for low-income households to start planning for retirement.
While myRA won’t completely solve the retirement woes of Hispanic Americans, it is certainly a step in the right direction.