Older Latinos are tapping into their retirement funds

CHICAGO — Suddenly jobless and with small children to support, Jose Victor Camargo without hesitation cashed out a retirement account he had with his former employer.

That was more than a decade ago, and the father of three used the money to pay for rent and stay afloat until he found another job.

An Associated PressNORC Center for Public Affairs Research poll found that older Latinos are more likely than older whites or older blacks to say they’ve had to withdraw or borrow money from a retirement account — 34 percent for Latinos compared with 24 percent for whites and 25 percent for blacks.

A third of all respondents who said they withdrew money from a retirement account indicated they used the money to pay monthly bills including rent and utilities, the poll found.

Ernest Gonzales, sociology professor at Boston University, said many Latinos don't have any savings, which means an unforeseen event, such as job loss or medical emergency, can be devastating.

Gonzales said the problem goes beyond poor financial literacy and planning. Pay disparity plays a big role in Latinos’ ability to save, because their paychecks often barely cover living expenses. Hispanic men earned 69 percent of white men’s earnings in 2015, according to the Pew Research Center.

Only 1 in 3 native-born and immigrant Latinos has a retirement plan through their employers, in large part because these workers are often employed in jobs that don’t provide retirement plans.

But even if an employer offers a savings plan, the participation rate is still lower, 44 percent, compared to 60 percent for white or black workers, according to a 2008 report by the Employee Benefit Research Institute.

Gonzales said making contributions to retirement accounts automatically rather than as an option would increase participation rates. He said economically vulnerable workers would benefit from financial literacy classes. In his research, he finds that the best way to teach those skills is by having group classes or informal seminars.

The survey was conducted Feb. 14 through March 13 by The Associated Press-NORC Center for Public Affairs Research with funding from the Alfred P. Sloan Foundation.

It involved interviews in English and Spanish with 1,683 people age 50 and older nationwide who are members of NORC’s probability-based AmeriSpeak panel, which is designed to be representative of the U.S. population. It includes samples of 332 African Americans and 308 Hispanics. Results from the full survey have a margin of error of plus or minus 3.0 percentage points.