COMMENTARY: Unlocking retirement security and business growth for Hispanic Americans

As we observe National Hispanic Heritage Month, we’re excited to celebrate the outstanding achievements of Hispanic Americans — from small business owners to community leaders who are making a real difference across the country and here in Nevada.

A lesser-known fact, but one worth highlighting during this monthlong celebration, is that Latinos start more businesses per capita than any other group in the United States and in 2023, they founded 36 percent of all new businesses nationwide. Despite these successes, many Hispanic families and businesses still struggle to access the financial tools they need for a secure future, which includes security for workers’ retirements.

According to the 2023 Insurance Barometer Study, nearly half of Hispanic Americans say they are “very worried” about affording retirement — 6 percentage points higher compared to other populations. Hispanic workers are also less likely than the general population to have access to and contribute to employer-sponsored plans.

And, when inflation increased dramatically in 2022, the TIAA Institute found that nearly a quarter of Hispanic workers stopped saving for retirement altogether.

It’s not just a challenge for workers and families — it’s a problem for our Hispanic-owned businesses, which are often small and have few employees. This can make it tough for them to scale or secure the capital they need. It’s true, however, that these businesses could benefit if our retirement system were to evolve to reflect today’s investment landscape.

A recent Trump administration’s executive order directs the Department of Labor to provide safeguards for private sector employers to offer private market investments, such as private equity, private credit, infrastructure and real estate, for their employees’ retirement plans. This could be the necessary boost that gives Hispanic businesses and workers more options, opportunities,and security.

Investing in private markets isn’t new for Americans. But so far, only the wealthy and public pension plan beneficiaries have access to these opportunities. In Nevada, public pension plans such as the Public Employees’ Retirement System of Nevada already have a presence in private markets, which have consistently generated strong, long-term returns for state employees. In fact, this year, PERS is expanding its private markets allocation range from 8 percent to 16 percent to 10 percent to 20 percent over a market cycle — evidence of the real benefits it brings to beneficiaries’ nest eggs.

Investing in private markets through retirement accounts has a proven record of delivering solid returns to hard-working Americans. The Cliffwater Private Equity Index, which monitors private equity investments made by state pensions, produced a 10.7 percent net annualized return over the past 24 years. This return outperformed public stocks by 4.1 percent over the same period.

So why are Hispanic workers and small-business owners in Nevada being deprived of these opportunities to grow their savings?

For too long, Hispanics working in the private sector have been denied access to private market investments in their retirement plans because of abusive litigation. Over the past five years, 401(k) plan lawsuits have averaged more than 50 per year. This needs to change, as it keeps Hispanic-owned businesses from obtaining private capital and stunts workers’ retirement plans.

It’s time to provide Hispanic workers and entrepreneurs with the same tools that others already have. Because financial security shouldn’t be a privilege — it should be a guarantee. The Labor Department should act swiftly to establish a clear, formal rulemaking process with a public comment period to help modernize 401(k)s and ensure a safer financial future for Hispanic Americans.

Peter Guzman is the president and CEO of the Latin Chamber of Commerce, Nevada