Many Hispanic and Latino clients aren’t just saving for themselves—they’re saving for their immediate and extended families. During Hispanic Heritage Month, consider who may be relying on your clients as you plan to address their most common concerns.
When helping clients plan for retirement, it can be easy to only consider a client’s needs—or, at most, the client plus a spouse and/or children. However, some clients support extended family members. Research shows that Hispanic clients are more likely to focus on the “us” than the “I,” shouldering additional responsibility for extended family and other loved ones.1 As you work to address the challenges your Hispanic clients are likely to face in retirement, it may be helpful to ask who needs to be considered in their preparations and how annuities can help.
According to a 2022 research study conducted by AARP, 64% of surveyed Hispanic workers don’t have access to workplace retirement plans.2 This means that they are at a distinct disadvantage when it comes to accumulating enough money to sustain themselves in retirement, which is even harder to overcome when they must account for their extended families. Without the benefits of tax deferral and employer matching, the gap may become wider.
Even if clients feel their savings are behind, it’s important for them to know there are options to help reach their financial goals. For example, adding a Roth IRA can help them accumulate savings for which they won’t need to pay income tax when they take distributions in retirement. You also can remind clients that lifetime income products, such as annuities, can provide regular payments that cover RETIREMENT PLANNING immediate expenses and may allow them to delay claiming Social Security retirement benefits. Extra income from delayed social security retirement credits can go a long way to help clients create the retirements they want, while taking care of relatives and loved ones.
The average Hispanic client will live longer than clients of most other ethnicities.3 When working to build their retirement plans, it can be helpful to remember that this means these clients must account for both their own extended lifespans and those of their loved ones. For those in the sandwich generation—those responsible for caring for both young children and aging parents—this concern may feel even more pressing.
To address longevity risk, it can be helpful to suggest a strategy that accounts for everyone your Hispanic clients may need to care for. Prepare them for the possibility that their loved ones may live longer than the national average—and what that could mean for their savings needs. For example, providing additional lifetime income, with the help of annuities, both generations may be able to reduce portfolio stress and increase a potential financial legacy for their children. The ability to leave behind generational wealth may give Hispanic clients the confidence that their children (or other younger beneficiaries) will be set up for success to take care of themselves and their own families.
By asking clients questions like, “Beyond your spouse and children, who might need support from you?”, you can offer strategies that account for their top priorities. Consider discussing adding annuities with lifetime-income strategies to IRAs to help maximize growth potential and flexibility to address the challenges they may face in caring for multiple generations. Your advice has the potential to address long-term income needs for more than a single generation.
For more information about retirement-planning, please contact our Retirement Strategies Group at RSG@PacificLife.com or (800) 722-2333, ext. 3939.
1TruStage. “What Matters Now: A multicultural and multigenerational consumer lens.” 2022 Research Report.
2David John, Gary Koenig, and Marissa Malta. “Payroll Deduction Retirement Programs Build Economic Security.” AARP. July 2022.
3National Institutes of Health. “Life expectancy in the U.S. increased between 2000 - 2019, but widespread gaps among racial and ethnic groups exist.” June 16, 2022
Annuities are long-term contracts designed for retirement. Optional benefits are available for an additional cost.
This material is provided for informational purposes only and should not be construed as investment, tax, or legal advice. Information is based on current laws, which are subject to change at any time. Clients should consult with their accounting or tax professionals for guidance regarding their specific financial situations.
Pacific Life is a product provider. It is not a fiduciary and therefore does not give advice or make recommendations regarding insurance or investment products.
Investors should carefully consider a variable annuity’s risks, charges, limitations, and expenses, as well as the risks, charges, expenses, and investment goals of the underlying investment options. This and other information about Pacific Life are provided in the product and underlying fund prospectuses. These prospectuses should be read carefully before investing.
Annuity withdrawals and other distributions of taxable amounts, including death benefit payouts, will be subject to ordinary income tax. For nonqualified contracts, an additional 3.8% federal tax may apply on net investment income. If withdrawals and other distributions are taken prior to age 59½, an additional 10% federal income tax may apply. A withdrawal charge and a market value adjustment (MVA) also may apply. Withdrawals will reduce the contract value and the value of the death benefit, and also may reduce the value of any optional benefits.
Pacific Life refers to Pacific Life Insurance Company and its affiliates, including Pacific Life & Annuity Company. Insurance products are issued by Pacific Life Insurance Company in all states except New York and in New York by Pacific Life & Annuity Company. Product availability and features may vary by state. Each insurance company is solely responsible for the financial obligations accruing under the products it issues.
Variable insurance products are distributed by Pacific Select Distributors, LLC (member FINRA & SIPC), a subsidiary of Pacific Life Insurance Company and an affiliate of Pacific Life & Annuity Company.
The home office for Pacific Life & Annuity Company is located in Phoenix, Arizona. The home office for Pacific Life Insurance Company is located in Omaha, Nebraska.
VLQ3180-0923H
Pacific Life, its distributors, and respective representatives do not provide tax, accounting, or legal advice. Any taxpayer should seek advice based on the taxpayer's particular circumstances from an independent tax advisor or attorney.
Pacific Life is a product provider. It is not a fiduciary and therefore does not give advice or make recommendations regarding insurance or investment products.
Unless otherwise noted, all aforementioned money managers, their distributors, and affiliates are unaffiliated with Pacific Life and Pacific Select Distributors, LLC.
Pacific Life refers to Pacific Life Insurance Company and its subsidiary Pacific Life & Annuity Company. Insurance products can be issued in all states, except New York, by Pacific Life Insurance Company and in all states by Pacific Life & Annuity Company. Product/material availability and features may vary by state. Each insurance company is solely responsible for the financial obligations accruing under the products it issues.
Variable insurance products are distributed by Pacific Select Distributors, LLC (member FINRA & SIPC), a subsidiary of Pacific Life Insurance Company and an affiliate of Pacific Life & Annuity Company.
The home office for Pacific Life & Annuity Company is located in Phoenix, Arizona. The home office for Pacific Life Insurance Company is located in Omaha, Nebraska.
No bank guarantee • Not a deposit • Not FDIC/NCUA insured • May lose value • Not insured by any federal government agency
For financial professional use only. Not for use with the public.
