Latino Collectivism, Retirement Savings, and Holistic Financial Literacy

Half of American workers have no retirement savings. One-fifth of Americans are Latinos. Latinos, who have the highest labor-force participation of US demographic groups, have the lowest income, wealth, and retirement savings. Latinos have developed strategies to counteract economic discrimination and financial precarity by engaging in cooperative cultural practices, maintaining networks of mutual support, and building social credits that they expect to depend on in times of need. Our study weaves together theories and methods from anthropology and economics to understand the value of collectivism as a form of wealth for Latino workers and retirees. Drawing upon findings from our long-term qualitative research in Chicago, as well as economic analysis of national survey data from the Survey of Income and Program Participation, we demonstrate the mismatch between Latino workers’ financial interdependence and their engagement with a retirement savings system that is supposed to help them build wealth for a secure retirement. We also introduce a methodology for measuring and treating informal transfers of support as forms of wealth comparable to other assets and formal savings, to demonstrate how much this support contributes to Latinos’ net worth and substitutes for formal retirement savings (compared to non-Latino Whites). These informal assets function as a long-term safety net that temporarily attenuates ethnoracial wealth disparities that can and must be corrected by eliminating the multiple structural barriers Latinos confront to accumulating wealth and by reforming the retirement savings system so that it can guarantee a secure retirement for all US workers, including Latinos.