How to Save for the Future Even If You’re Behind
Many people put off retirement planning, thinking, “I’ll save when I make more money, or I still have time.”
But for many Latinos, time is running out faster than expected, and saving for retirement is more challenging than ever.
Studies show that Latino families have far less saved for retirement compared to other groups. We’ve seen this in our own lives and with our own family and friends.
While the average white household has around $181,000 in retirement savings, the median savings for Latino families is just $20,000—barely enough to sustain a year’s worth of living expenses. (Economic Policy Institute) Even worse, many Latinos have no retirement savings at all, relying solely on Social Security, which often isn’t enough to cover basic expenses.
So, what does this mean for you? If you’re behind on retirement savings, don’t panic—there’s still time to catch up.
Whether you’re in your 30s, 40s, or even 50s, taking the right steps now can help you secure a comfortable retirement. This article will show you how to assess where you stand and what you can do today to get back on track.
How to Know If You’re Behind on Retirement Savings
Many people assume they have enough time to save, but how can you tell if you’re falling behind? Here are a few key indicators:
You have little to no retirement savings.
- If you’re in your 30s and haven’t started saving, you’re already at a disadvantage.
- By your 40s, you should have saved at least two to three times your annual salary.
- If you’re 50+ with less than $50,000 saved, it’s time to take immediate action.
Delaying savings any further could mean working well into your 70s or relying solely on Social Security, which may not be enough to cover basic living expenses.
The good news is that it’s never too late to start—small, consistent contributions and smart investing can still make a difference. Focus on increasing your income, cutting unnecessary expenses, and maximizing retirement contributions while you still have the ability to earn. The sooner you take action, the better your chances are of securing a more stable and comfortable retirement.
You’re depending entirely on Social Security.
- Social Security only replaces about 40% of your pre-retirement income, which is not enough to live comfortably.
- If you’re counting on it as your main source of income, you’ll likely need to work longer or find alternative income streams.
Don’t even consider this option. It may not exist, or it may not be enough to cover your basic needs.
Social Security wasn’t created to replace your entire income source. Relying entirely on it could leave you struggling financially, forcing you to work longer or drastically cut your living standard.
You don’t have a financial retirement plan.
- If you haven’t calculated how much you’ll need per month in retirement, it’s easy to underestimate how much you should be saving.
- Without a plan, you risk running out of money too soon.
You still have major debt or a mortgage.
- If you still owe large amounts on your home, credit cards, or loans, these expenses can drain your retirement income quickly.
- A good goal is to be debt-free (or nearly so) before retirement.
If any of these sound familiar, don’t worry—there’s still hope.
Let’s discuss some practical steps to catch up and better secure your financial outlook.
It’s Real. The Latino Retirement Gap
The truth is, you are likely not alone in feeling unprepared for retirement. Many white, black, and Asian families are in the same situation. It’s just that Latinos are particularly vulnerable.
Many Latino Americans face significant challenges in saving for retirement. This can be attributed to several reasons. If you or your parents moved to the United States with nothing when you were young or middle-aged, you’re likely starting late. Considering retirement accounts when you immigrate to the United States may not be realistic, as the priority is establishing yourself, getting on your feet, taking care of your children, and creating a home, all of which require financial resources. Additionally, there is lower access to employer-sponsored plans, wage gaps, and financial obligations to family.
Studies show that Latinos retire with far less savings than other groups, making it even more critical to take action now. Understanding these challenges is the first step toward breaking the cycle and securing a more stable financial future.
Why Are Latinos Behind?
- Fewer employer-sponsored retirement plans.
- Many work in self-employed, gig, or cash-based jobs without benefits.
- Cultural expectations—many Latinos financially support their parents & extended family instead of saving.
Did You Know:
- Only 31% of Latinos have retirement accounts, compared to 57% of white households.
- Median Latino retirement savings: ~$20,000, compared to $181,000 for white households.
- Many Latinos rely on Social Security, which isn’t enough to live comfortably.
Poco a Poco: How to Catch Up on Retirement Savings
If you’re behind on retirement savings, don’t panic—there’s still time to turn things around. Pero, apurate!
The key is to take deliberate action now by increasing your savings, reducing unnecessary expenses, and making informed investment choices.
Look, whether you’re in your 30s, 40s, or even 50s, making small changes today can have a significant impact on your future. Follow these steps to get back on track and build the retirement security you deserve.
Step 1: Take Advantage of Free Money (Employer 401(k) Match)
Would you turn down free money? Many people do this by skipping out on their employer’s matches.
Contributing to your employer’s 401(k) match is one of the easiest ways to boost your retirement savings. It’s essentially free money that doubles your contributions up to the match limit, helping your savings grow much faster. If you’re not taking full advantage of this benefit, you’re leaving thousands of dollars on the table every year.
- If your job provides employees a 401(k) match, get on it! Try to contribute the full amount to receive the match. Over time, it will add up!
- Example: If your company matches 3% of your salary, that’s free money—don’t leave it behind!
Step 2: Open a Roth IRA or Traditional IRA
- If you don’t have a 401(k), open a Roth IRA or Traditional IRA (can contribute up to $7,000 per year in 2025).
- Roth IRA advantage: Tax-free withdrawals in retirement.
- If you are over 50 years old, you can contribute an additional $1,000 per year to catch up.
Opening a Roth IRA or Traditional IRA gives you more control over your retirement savings and tax benefits. This can work on your savings, boosting your money growth over time.
A Roth IRA lets you withdraw money tax-free in retirement, while a Traditional IRA allows you to defer taxes until you start making withdrawals. (Read our post on Roth IRAs here)
If your employer doesn’t offer a retirement plan, you have to take matters into your own financial hands. Setting up a Roth is a crucial way to start saving on your own. Even small, consistent money contributions can add up over time and significantly affect your financial future.
Step 3: Cut Expenses & Reallocate Savings
- Look at your spending: Where can you cut costs and redirect that money to retirement?
- If you save $100 a month starting at 45, it could grow to over $60,000 by age 65 with the help of investments.
Cutting unnecessary expenses frees up extra cash that can be used elsewhere, such as toward retirement savings. This will help you catch up faster. Small changes made over the week and month, such as reducing subscriptions you don’t use, eating out less, or refinancing any debt you may have, can add up over time.
The money you save today, this week, or this month can be invested and grow significantly, giving you a more secure and comfortable retirement. But you have to have a plan! Remember smart banking! Saving with local banks or credit unions is often a good choice if you’re interested in earning higher savings rates.
Step 4: You Can Invest Smartly—Even with a Late Start
- If you’re 40+, focus on investments with higher growth potential (stocks, index funds). You’ll always want to start studying your options, as they are subject to change.
- Please avoid high-risk investments, such as day trading or cryptocurrency, if you’re nearing retirement.
Even starting late, smart investing can help your money grow exponentially through the power of compound interest. You can maximize growth while managing risk by selecting a diversified portfolio that includes stocks, bonds, and index funds. The key is to stay consistent, avoid emotional decisions, and let time in the market work in your favor.
Step 5: Consider Working Longer or a Side Hustle
- Putting off retirement by just a few years can increase your Social Security benefits. (I’ll have a new post about retirement age soon!)
- Side hustles (freelancing, real estate, consulting) can boost savings without relying on your primary job.
Working a few extra years or starting a side hustle can significantly boost your retirement savings and reduce the time you’ll need to rely on them. Even a tiny additional income stream can help you save more, pay down debt, or delay Social Security for a larger benefit. This extra financial cushion can make the difference between just getting by and truly enjoying your retirement.
