Preparing for the Future: Latinos' Financial Literacy and Retirement Planning

Over the past three decades, the burden of responsibility for retirement savings has shifted from employer to employee. Saving for retirement has changed from an insured, employer-provided benefit to an uninsured employee-provided deduction from a paycheck. When retirement planning and investment decision-making is largely relegated to individuals, financial literacy is essential. Financial illiteracy, however, is widespread throughout the population and is of particular concern for Latinos. Closing the gap between what American workers generally and Latino workers, in particular, need to know to prepare for retirement and their current level ofp reparation is an urgent need. This paper disaggregates ethnic differences between Latinos, both foreign and US born, and non-Latino Blacks and Whites in the analysis of core and supplemental data from the 2004 Health and Retirement Study (HRS). While other analyses of data from the survey deal with aggregates, this study explains how individual characteristics among ethnic groups affect financial literacy.