Fall 2008

Spanish-Speakers: Addressing Their Fear of Retirement Planning and Investing

By: Margarita Hughes, CRC | Education Counselor, Innovest

There is a dual benefit in employees participating in their employer sponsored retirement plan ("retirement plan"). Employers obtain the immediate benefits of increased participation, and employees get an immediate tax benefit but also get a long term benefit of building a retirement nest egg. However, with the increasing numbers of Spanish speaking employees in the United States (US), employers are challenged to construct an effective education plan that communicate the benefits of retirement plan participation and increase the level of understanding of Spanish speaking employees.

Typical education plans address common reasons for low participation retirement plans which include:

  • Many employees don’t start thinking about retirement savings until much later in life
  • Interruptions in saving due to frequent job changes
  • Lack of confidence in the economy
  • Poor/no understanding of the plan

For Spanish speaking employees, these reasons along with language barriers and cultural beliefs compound the problem. After all, the culture of which or that which most Spanish speaking employees were raised did not emphasize the importance of retirement plans and may not have acknowledged the existence of these plans. In addition, it is important to understand that within this culture a primary means of education is word of mouth. Personally, I was raised in this culture and experienced my parent’s financial and retirement planning perspective. Commonly, the decision to participate within a plan will be based on whether their supervisor participates - essentially this person is trusted and his opinion is valued. The opposite is also true - if their supervisor doesn’t participate, that is an indication to many not to participate. Understanding and having insight into these cultural differences helps employers create an education program that will be positively received. Again, the employer benefits with increased participation and the employee gets the benefit of creating a nest egg for retirement.

Addressing language barriers goes beyond translating existing presentations to Spanish. The Spanish speaking community has many misconceptions related to participating in retirement plans. Education programs and presentations that do not address these, could reinforce the misconceptions and fail to increase participation in the plan.

Common misconceptions among Spanish speaking employees:

  • Need to be formally educated to understand retirement plan and investments
  • Only wealthy individuals or Americans save
  • Financial system of the US designed to benefit others more than me
  • Money saved will not be received if return to home country
  • Mistrust of banks that hold their money and would rather have the cash in hand

Some of the misconceptions listed above are tied to their cultural beliefs originating from living or being raised by parents that lived outside the US. One of these beliefs, results from living in a system where only the wealthy had the resources to invest and save for the future. We are talking about people whose livelihood depends on every penny of their paycheck and financial planning (looking beyond the next paycheck) is a concept that is foreign to them. With this in mind, retirement education needs to be designed in a way that helps them get past their mindset and become comfortable with the concept.

In addition, the education program should be presented as SIMPLE as possible. In other words, investment terms can be intimidating and we want participants to understand and apply the concepts. So it is important to explain complex concepts in SIMPLE terms so participants benefit from the education workshops. Misconceptions limit, not just Spanish speaking participant, but most participant’s ability to capitalize on the benefits of participating in a retirement plan.

An effective retirement plan education program for Spanish speaking employees requires the employer to invest time to design a program that meets the unique needs of Spanish speaking employees. Employers must understand and appreciate the language barriers but perhaps more importantly, the cultural beliefs Spanish speaking employees face and incorporate these into their education program. This approach to retirement education for Spanish speaking employees develops trust and will help Spanish speaking employees embrace the benefits of a retirement plan (and most importantly increase participation). Certainly by creating education workshops that takes these misconceptions into consideration will prove to be an effective way to reach out to Spanish speaking participants and begin to make a difference in participation rates. o

Margarita Hughes, CRC is an Education Counselor at InSight Employee Benefit Communications, a division of Innovest Portfolio Solutions. InSight provides participant education services to employees of public and private sector organizations. InSight is based in Denver, Colorado. Margarita can be reached at 303-694-1900 or margaritah@innovestinc.com