Latino-Owned Businesses Are Booming, but Retirement Savings Lag

As of August 2024, CalSavers had enrolled nearly 526,000 workers, with combined account assets exceeding $1 billion, according to the Center for Retirement Initiatives at Georgetown University, which tracks auto IRA programs nationwide. Enrollment in the program is automatic, but the California treasurer’s office, which oversees CalSavers, says roughly 36 percent of eligible workers opt out.

“I set up the CalSavers account for small businesses, but none of the employees chose to save there,” Manzano says.

A 2024 Pew Charitable Trusts survey of why people opted out of a similar state-run auto IRA program in Illinois found that 41 percent said they needed money for more immediate financial concerns. Among Hispanic respondents, 30 percent said they needed more money for immediate needs and 11 percent said they needed to pay off debt.

When she retires, Socorro Manzano (L), will hand the reins of Tacos Manzano to her daughter, Ashley Manzano (R).

Jessica Pons

Still, auto IRAs are gaining currency among policymakers. Ten states have active mandated retirement plans, with penalties for companies that don’t comply. Another 25 have proposed such plans, with several approved and awaiting implementation. Texas and Florida, which have large Hispanic populations and many Latino-owned businesses, do not have any IRA mandates.

Changing of the guard

Ashley Manzano prepares a tlayuda, a dish also known as an Oaxacan pizza.

Jessica Pons

As Manzano prepares to retire this year, her daughter Ashley, 29, is taking over the family business. Her approach to retirement planning reflects both the lessons learned from her mother and a vision for growth.

“Ever since I was little, my mom always told me that you should always have an emergency plan,” Ashley Manzano says. “So you always have to work and save, no matter what.”

A mother to two young children, she sees potential in expanding the family business as a path to financial security.  

“Now that I’m in charge of the restaurant, my vision of retirement is that I’d like to grow the business by expanding the restaurants,” she explains. “My plans for the next five years are to expand Tacos Manzanos, hopefully adding two or three more locations.”

This growth-oriented approach is not just about personal gain.

“The restaurant has uplifted not just my mom but our entire family. It shows how much it can give, how much it can improve our lives,” Ashley Manzano says. “That’s why, for me, retirement means expanding further into restaurants and real estate. As they say, creating generational wealth to secure a better future, not just for myself and my children but for the whole family.”

An entrepreneur who helps entrepreneurs

While the Manzano family has found ways to plan for retirement through their business and property investments, many Latino entrepreneurs struggle with access to traditional retirement plans for themselves and their employees.

Gustavo Suarez, 37, looked at the difficulties some of those business owners encounter with administrative responsibilities and worker benefits and saw an opportunity.

Suarez, who is based in Houston, is the cofounder and CEO of Trez, a financial-technology start-up that offers financial services like processing payroll and managing retirement benefits to small businesses, targeting the millions of Latino entrepreneurs nationwide. He came up with the idea when he had an accounting company that provided services to small-business owners like himself. Ironically, he notes, “I had no formal retirement plan before … we started this company.”

Suarez attributes this lack of retirement planning to several factors, but two stand out. “Accessibility is the most prominent factor,” he says. “We don’t have access to traditional retirement plans so we can retire with dignity.”

Also, he adds, “there is this misconception that Social Security benefits, based on your contributions as an employee, is your retirement plan. No, that is called supplemental income.”

As more states consider auto IRA programs like CalSavers, there are expectations that access to retirement savings options could improve for Latino small-business owners and their employees. The Manzano family’s and Suarez’s experiences underscore some of the challenges and innovative approaches that Latino entrepreneurs can take to secure their financial futures and a stable retirement for themselves and their employees.

"The restaurant has uplifted not just my mom but our entire family," says Ashley Manzano (R). "It shows how much it can give, how much it can improve our lives."

Jessica Pons