A new study from Finhabits finds that less than 10 percent of employees in small businesses located in the top five Hispanic metro areas of the U.S. have access to employer-sponsored retirement savings accounts.
Hispanic Retirement Savings Trends
The ‘2017 Latino Small Business Workers Lack Retirement Savings study found there is a significant ethnic gap in retirement savings. The states with the largest concentration of Hispanic residents — namely Arizona, Florida, New Mexico and Texas — are the worse for small business employee retirement savings. Small business employees within these states have less access to a retirement plan through their employer, the study found.
The research draws attention to the importance of small businesses offering a retirement plan to employees. Providing employees with the security of an employer-sponsored retirement plan can help small businesses attract and retain workers. By showing a vested interest in workers via the incentive, small businesses stand apart from competitors who do not offer such benefits.
Carlos Garcia, founder and CEO of Finhabits, spoke of the issues the lack of retirement savings with Hispanics working at small businesses can create.
“We have a retirement savings problem in the U.S. and the data clearly shows a wealth savings gap with Hispanics working at small businesses. Our analysis found a moderate and troubling correlation between retirement savings and the Hispanic population of a city. This will have a long-term impact on the quality of life and the economy,” Garcia said in a press statement announcing the study results.
The report found that in the leading five Hispanic metro areas, an average 4 percent of small businesses with fewer than 100 employees offered a 401(k), a retirement savings plan sponsored by the employer.
With 41.9 percent of small business employees having a retirement plan in place, Connecticut is the best state for small business employee retirement savings, Finhabits found.
The report should be a wake up call for small businesses to offer the right incentives and benefits to employees, if they can afford to do so.