This article is part of our Retirement Plan Trends series, which explores issues affecting the retirement space.

The Hispanic community’s tremendous cultural and economic impact in America has only grown in the past few decades. By 2030, this group will represent 22% of the workforce, and that number is expected to grow to 30% by 2060.¹ Although Hispanic workers make up a growing share of U.S. labor, their overall savings and contribution rates trail behind other groups. As of 2019, only around 30% of Hispanic workers ages 55 and over participated in any retirement plans compared to 54% of non-Hispanic white and 50% of non-Hispanic Black workers.²

To better support Hispanic participants in preparing for retirement, Capital Group set out to understand the reasons for the disparity and address participants’ most urgent needs. A custom educational experience was created aiming to engage Hispanic workers in their employer-sponsored retirement plans and set them on a path to a successful retirement. The initiative included extensive proprietary research along with an in-depth academic study in collaboration with the School of Public Policy at Pepperdine University to test the effectiveness of the new experience.  

The research revealed that cultural differences and language barriers often prevent Hispanic participants from optimally participating in employer-based retirement plans. Providing these participants with informative content that addresses their language preferences and supports their cultural priorities and motivations more directly can make a meaningful difference in helping them achieve a successful retirement. 

These findings were used to enhance Capital Group’s online participant engagement platform – ICanRetire® – with a tailored experience to help engage Hispanic participants in a way that is more relatable for them. Following its creation, the Hispanic Experience was tested with actual participants to gauge its real-world impact, with favorable results.

What are the key concerns among Hispanic participants? 

ICanRetire’s online Hispanic Experience was built in response to initial research, that revealed four main questions and concerns among this group.

While generational and family roles among Hispanic participants exist, there are four primary needs that are common across all age groups and family dynamics. The foundational Hispanic experience is rooted in addressing these concerns:

1. “I feel unsure about starting to save for retirement because I don’t know how to begin.” 

Lack of familiarity can lead to inaction. Many Hispanic participants question the value of saving in an employer-sponsored retirement plan. Lack of experience and familiarity cause inertia, preventing Hispanic participants from knowing where to begin or what questions to ask to deepen their understanding.  Further, not having role models who have participated or benefited from the plan leads to a lack of trust in the system and financial institutions overall. 

2. “What happens to my money if I get a new job, my company goes under, or I pass away?” 

Visibility and accessibility are critical. Visibility and access to funds are critical to build trust and participation. There is an inherent misunderstanding that the money they personally contributed to their retirement account is not fully theirs. The ability to view and draw on 401(k)/403(b) balances for emergencies or simply to see their investments working is an important and easily addressable need.  

3. “My culture affects my decision to invest because we know how hard it is to earn money. We’re not that quick to want to take a risk and possibly lose it. Why would we put it on the line?”

High perceived risk makes Hispanic employees more reluctant to invest in retirement plans. Many Hispanic participants were taught to keep their money close and to invest in “safer,” more tangible vehicles such as real estate or small businesses. Transforming this mindset by helping participants see how long-term investments take risk into account can encourage diversification and promote positive action in the plan. 

4. “In my culture, we don’t talk about money. We are brought up to work hard and we will be rewarded, but ‘don’t get greedy.” 

Talking about money can be taboo. Hispanic participants are open to learning about retirement investing but want guidance on how to do it. Importantly, there is a need for help in navigating delicate financial conversations with family and friends. Younger generations want to understand their parents’ retirement plan, if they have a role in it, and how they can share valuable, easy-to-understand information with family and friends.

The key elements of the Hispanic Experience

The Hispanic Experience is an additional section of the ICanRetire website designed to address the above concerns of Hispanic participants. The new custom experience contains information, tools and resources that directly address cultural influences related to saving in retirement plans. The platform includes the following resources. 

Bilingual capabilities.The research showed that nuanced, thoughtful Spanish-language translations of educational content are key to engaging participants and can help build trust. Simply by clicking on a toggle switch, the user can choose to view content in either English or Spanish. The carefully translated materials were reviewed by a panel of Spanish speakers to ensure fluency and accuracy.

 

Educational videos. Three videos were created to address common questions about retirement plans. They feature Hispanic participants sharing personal stories about their retirement planning journey and their initial concerns using a friendly, relatable tone. Participants can learn how to start contributing, the accessibility of accounts/investments and the benefits of long-term investing in retirement plans. 

 

A helpful discussion guide. Similar to other groups, family is central to Hispanic culture. The potential responsibility of caring for aging parents or extended family can be daunting, especially if they are not financially prepared. The discussion guide includes helpful talking points to support difficult, but necessary, conversations about the future and money with family and friends.

 

Target date funds made simple. Investment products can often be confusing and complex to understand. The experience contains interactive flashcards used to explain how target date funds work and the potential benefits. 

 

Illustrate the benefits of saving. Tools such as a simplified retirement investment simulator can help participants visualize the concept of compounding. Additionally, participants have access to interactive content and articles related to broader financial wellness concepts like debt, inflation and prioritization. 

 

Customization drives more plan engagement 

To gauge the impact of the custom Hispanic experience, two tests were conducted: a market research study and an academic research study. 

In the market research study, the online experience was tested with Hispanic participants across the country with diverse ages, income levels and occupations. Overall, this study found the content was helpful and easy to understand, the experience was effective in engaging Hispanic participants, and the addition of properly translated Spanish-language content was valuable. (For details on the study’s methodology, refer to the explanation at the end of this article.)

Other key findings included:

 

• A simple, practical understanding of their retirement plan is key. Providing Hispanic participants with a basic understanding of an employer’s retirement plan can remove a major barrier to greater participation.
• Hispanic adults whose preferred language is Spanish feel a greater sense of confidence and optimism about retirement overall than the general population, despite being less certain about where to begin. This is where translated materials are imperative. Hispanic participants are open to learning and receiving educational materials on the web, social media and television.
• Thoughtful Spanish translations can build credibility and trust. Hispanic participants responded positively to receiving content free of grammatical errors and/or misappropriated terminology.

A separate academic study — conducted in collaboration with Pepperdine University’s School of Public Policy — analyzed whether the experience motivated Hispanic participants to change their retirement saving behavior. Over an eight-week period, a test group of participants, including Hispanic participants, was contacted twice a week via email and SMS and invited to review a specific section of the Hispanic Experience. Results were compared with a control group of participants who were simply directed to the broader ICanRetire experience instead of the custom Hispanic Experience.

Overall, the study showed that a custom experience that addresses cultural influences and language barriers helped drive stronger engagement and inspired Hispanic participants to take steps to prepare for retirement.

A custom experience encourages participants to take action

 

• After completing the program, 65% of participants in the test group were more likely to say they intended to check their current or future retirement plan accounts — compared to the control group.
   

• Hispanic participants exposed to the experience had the most favorable responses, although both test and control groups reacted well to the content. Compared to the control group, Hispanic participants in the program were more likely to say they intended to:
  
  
  • Check their own retirement savings plan online.
  • Think realistically about their retirement age and how much money they need for retirement.
  • Read additional retirement information, both printed and online.
  • Speak with a financial professional.
  • Take other actions to prepare for retirement.

Conclusion

To improve Hispanic workers’ retirement readiness, it’s crucial that plan sponsors use culturally relevant educational content that addresses this group’s needs and concerns. Providing access to well-translated content and presenting the basic elements of retirement investing in a simple and relatable way can help Hispanic participants engage more productively in their plans at work.

From both studies, we can see the early positive impact a platform like the Hispanic Experience can have on Hispanic participants. This includes a potential change in saving behavior and a willingness to obtain more information or talk to a financial advisor. There is also a strong preference for having content available in Spanish. Regardless of their preferred language, most Hispanic participants in the study enjoyed the experience and believed that it could help them bridge the knowledge gap between retirement planning and saving. In the coming months, we will present more of the academic research with Pepperdine University.