Clearly, first-generation immigrants need to examine their assumptions about retirement and plan ahead for the future. As the Social Security Administration (SSA) explains, immigrants may have fewer quarters of covered earnings, which could lead to lower Social Security payments in retirement. According to the SSA, foreign-born individuals may need to fill those gaps with private savings and wealth-building options.
A fair number of my clients that have come to the United States later to work, also bring a mindset of earlier retirement. For instance, the traditional retirement age in India is 60. What is important here is that my clients understand the implications of a lower social security payment without the 35 years of funding and the implications of living longer with increasing health care expenses. The challenge is to guide them through this to plan appropriately.
For some immigrants, their employers may be an excellent source of retirement planning, including employer-sponsored 401(K) accounts. However, it is always prudent to seek insight and guidance from professional financial representatives. By consulting with financial professionals, your clients can learn general retirement tips and understand the resources they need, such as whole life insurance, which can be used for retirement income, and other retirement savings or investment accounts, to achieve their desired retired lifestyle. Equipped with this insight, immigrants can set savings goals and choose the right mix of financial tools to help meet financial objectives for retirement.
It’s common for generations to view the world and engage with money differently. Immigrant families though have the added complexity of dealing with various different cultural assumptions.
Learning about retirement options and strategies is critical to overcome these challenges. Not only can this education help first-generation immigrants prepare for a solid financial future, but it also helps second-generation immigrants understand how to best help their parents and themselves meet all their financial goals.