A recent study finds the financial capability of Latinos improved over the last decade, but obstacles to Latino wealth remain. In February 2023, the U.S. Financial Industry Regulatory Authority (FINRA) Foundation published new findings in a study titled \u201cA Closer Look at Financial Capability of Hispanic Adults in the United States.\u201d<\/p>\n
Several FINRA surveys contributed to the 2023 FINRA study, and the most recent of those surveys was fielded in 2021 to a nationally represented sample of the diverse U.S. Latino population. It showed more Latinos are saving and investing, but experiences vary greatly by race, gender, income and education.<\/p>\n
Between 2009 and 2021, the number of Latinos reporting that they had set aside some amount of emergency savings nearly doubled, from 29% in 2009 to 48% in 2021. On the whole, Latino adults reported they were \u201cbetter able to manage everyday money matters\u201d and experienced less \u201cfinancial fragility\u201d in 2021 compared to 2009. The study also identified an increase in Latino\u00a0investment account\u00a0ownership from 24% in 2012 to 30% in 2021.<\/p>\n
See<\/strong>: Telling low-income families to budget better won\u2019t close the racial wealth gap, Boston Fed researcher says<\/p>\n While the progress sounds encouraging, a closer look shows a complex and not-so-rosy situation.<\/p>\n First, the study attributes some of the financial gains by Latinos to broader trends in the financial sector, and not necessarily gains specific to the Latino community. Since 2009, it\u2019s become easier for people with varying budgets to open an investment account and trade, especially with the creation of fractional shares and zero-commission trading.<\/p>\n FINRA Foundation senior researcher and study author Olivia Valdes suggests the Latino progress between 2009 and 2021 is consistent with that of the general U.S. population. Valdes attributes some of this trend to the year the study started.<\/p>\n \u201cWhen we first started collecting this data, it was in 2009 right after the Great Recession. It was a low point in financial capability in general,\u201d says Valdes. \u201cAs the economy has improved, it makes sense that things have looked better.\u201d She says that\u2019s been the case in general, including for other racial and ethnic groups.<\/p>\n The reality is the\u00a0wealth gap\u00a0between Latino and non-Latino households remains stark. According to the U.S. Census Bureau, the median net worth of Latino households in 2020 was $52,190, compared with $195,600 for non-Latino households.<\/p>\n Latinos are more likely to face barriers to retirement benefits, too. The FINRA study found that in 2012, only 48% of Latinos owned a retirement plan, and that percentage grew only a small amount \u2014 to 51% \u2014 by 2021. The gap is even greater for Latinos without a college degree. The study found that 75% of Latino college graduates owned a retirement account compared to 42% of those with lower levels of education.<\/p>\n The study\u2019s authors partly attribute low rates to a lack of access, since \u201csome estimates find that only half of Hispanic workers have access to employer-sponsored retirement plans.\u201d FINRA referenced a 2018 study by UnidosUS titled \u201cLatinos\u2019 Retirement Insecurity in the United States,\u201d which also drew its information from the U.S. Census. It found Latinos face \u201caccess and eligibility hurdles\u201d to employer-sponsored retirement and showed nearly 75% of white workers have a job that sponsors a retirement plan, compared with only 53% of Latinos.<\/p>\n See<\/strong>: 3 ways to close the retirement gap for Black, Latino savers<\/p>\n The FINRA survey revealed important differences in financial experiences by race, gender, income, education and age:<\/p>\n The experiences Latinos face likely influence their financial lives and choices. Even if Black and brown investors have similar goals as white investors, they likely face a different path to getting there, says Omari Hall, a financial counselor and diversity leader at Greenpath Financial Wellness in Detroit.<\/p>\n Hall points to how discriminatory experiences and barriers to access have led to a lack of trust in the financial system.<\/p>\n \u201cMost financial services systems do not account for the entry point that many Black and brown folks are starting from in order to get to those goals,\u201d says Hall.<\/p>\n Research by the U.S. Census Bureau also suggests discrimination could be a factor in these gaps. Its study on wealth disparity within the Latino community identified \u201cdisparities in well-being and wealth among Hispanic origin groups.\u201d It found that barriers to refugee and asylum laws, knowledge of English, and racial discrimination contribute to well-being and wealth variation between Latino groups.<\/p>\n These findings are consistent with previous research on experiences of discrimination. In 2021, a study by the Pew Research Center found: \u201cNo matter their skin color and despite the notable gap, Latinos are experiencing discrimination.\u201d<\/p>\n Around half of Latino adults reported experiences of discrimination in the year prior to the Pew study, such as: being told to go back to their country, being criticized for speaking Spanish, or being regarded as stupid. Latinos with darker skin color reported experiencing more discrimination (64%) than Latinos with lighter skin color (54%).<\/p>\nWhat\u2019s behind Latino financial gains<\/strong><\/h2>\n
Latinos lack access to retirement accounts<\/strong><\/h2>\n
Race, gender and discrimination<\/strong><\/h2>\n
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