Asian-Americans Start To Embrace New Attitudes Toward Retirement
Financial advisors see Asian-Americans as members of a rapidly growing market learning a new approach to retirement planning.
U.S. census projections show that Asian-Americans will probably make up 4.2% of the population over age 65 in 2020, up from 2.5% today.
In most Asian countries, “my retirement would be my children,” says Tariq Khan, an assistant vice president at MetLife Inc., New York. “The system is that, when I grow up, I have to take care of my parents.”
But some Asian children have always done a better job of taking care of their parents than others, expectations are changing even in Asia, and Khan says traditions that worked well back in the old country are often unrealistic in the United States.
Although many Asian-American parents still hope to depend on their children, “most of those people are in denial,” Khan says.
Financial advisors who want to crack the “Asian-American retirement market” have to start by recognizing that, really, there is no such thing.
The term might conjure up an image of a Chinese immigrant shopkeeper, but it could refer just as easily to an engineer born in Korea who is in the U.S. on a temporary work visa, an Indian engineer who became a U.S. citizen 20 years ago, or grandchildren of Japanese immigrants who think of themselves as “just plain Americans.”
The term could also include immigrants from Asian countries such as Tajikistan, Iran, Saudi Arabia or Israel, although demographers and marketers usually put Americans from the Middle East, north central Asia and East Asia in separate categories.
What all Asian-Americans share with one another–and other American consumers–is a need for advisors to take the time to understand their particular situations.
In the end, “every household and every person has different needs and different wants,” Khan says.
Marketers cant help themselves from making some generalizations, and Asian-Americans have developed a reputation for having solid incomes, a well-developed propensity to save for retirement, and a strong belief that children should try to support their aged parents.
But experts see big differences in the retirement planning cultures of the many groups lumped together in the Asian-American demographic category.
Muslims from India or Pakistan, for example, might want to avoid retirement savings vehicles that pay interest. They might prefer to invest in “Islamic funds” that generate strong returns without violating the Korans prohibitions on usury.
New immigrants from Japan and Korea, countries with sophisticated life insurance industries, might be more comfortable with insurance-based savings vehicles than new immigrants from countries with primitive life insurance industries.
Some people within any demographic group will be more conscientious about saving for retirement than others, and some immigrants or descendants of immigrants may resent clumsy efforts to single them out because of their ethnic heritage.
Khan says the distinction that might have the biggest practical effect on life insurance marketing programs is the difference between immigrants who have lived in the United States less than 10 years and those who have lived here longer.
For the newer immigrants, “the concept of retirement is always, Ill go back where I came from,” he says. “They dont want to give up their link to their home country.”
Some new immigrants might dream of going back to live in their old home countries permanently, and others dream of spending winters there and summers in the United States, Khan says.
But surveys show many Asian-Americans continue to live up their reputation for believing that children should support their elderly parents.
When AARP, Washington, surveyed U.S. adults between the ages of 45 and 55 in 2001, it found only 48% of all U.S. residents said they should be doing, or should have done, more for their parents, and that fewer than one-quarter reported they were actually caring for older adults.