Want to be financially independent? Be born Asian or maybe marry one
When it comes to savings, retirement, and emergency funds, Asian Americans are way better off than other Americans.
A report from Prudential Financial says the financial success of Asian Americans comes from their focus on taking care of family, and it shows: they have a higher median personal income, believe they can retire earlier, and save more money than the general population.
“Today’s Asian Americans are devoting substantial resources to helping their families, and many also want to retire at an earlier age than most Americans,” says Sri Reddy, senior vice president and head of full-service investments at Prudential Retirement. “America is more diverse than ever, which means we need to understand the unique financial situations faced by such communities as Asian Americans.”
You might expect taking responsibility for family financial obligations would make saving harder — but the research shows the opposite. The study says that 33 percent of Asian Americans are caregivers for family members, like a spouse, parent, or other relative. Of those, almost 3-in-4 pay for living expenses for the person they are helping. Only 22 percent of other Americans say they are caregivers.
When it comes to college, more than 20 percent of Asian American parents believe in paying for college tuition for their children is really important, compared to 14 percent of the general population.
It doesn’t just stop at immediate family: the report says that 20 percent of Asian Americans financially help out extended family. When it comes to other Americans, that number is 6 percent.
Major money differences
The Prudential report says Asian Americans tend to earn more than their general population counterparts — maybe they have to, to maintain big households. Eight percent of the general population says they have at least $500,000 of equity in their homes. When it comes to Asian Americans, that percentage more than doubles.
When it comes to money problems, Asian Americans and the general population have the same issues: retirement. Almost half of Asian American say their top financial priority is to have enough money to maintain their lifestyle throughout retirement. It’s the second-highest priority that differs: 38 percent of Asian Americans don’t want to become a financial burden on their families. The general population ranks this fourth-highest, behind reducing debt and covering unexpected medical costs. (For some, these may all be the same thing.) Comparatively, 35 percent of Asian Americans admit that reducing debt is a top priority, but it also comes down to generational difference.
“Younger Asian Americans are more focused on debt reduction and nest building, like buying a home and building an emergency savings account,” the survey says. “Older Asian Americans are primarily concerned about sustainability and self-reliance, like maintaining their lifestyle in retirement and not outliving savings.”
Asian Americans plan to retire, on average, more than a year sooner than the general population, at 64.6 years old. Only 1-in-4 of them plan to work, even part-time, during retirement. When it comes to the rest of the nation, almost 40 percent plan to work to supplement their income.
Asian Americans are also much better prepared than the general population for financial emergencies. Thirty-six percent say if they lost all of their regular monthly income, they could maintain their current lifestyle for a year or more. More than one-third of other Americans admit to living paycheck-to-paycheck.