Academic journal article The International Journal of Business and Finance Research

Variations in Retirement Account Holdings: Evidence from Native and Immigrant Women in the U.S

Academic journal article The International Journal of Business and Finance Research

Variations in Retirement Account Holdings: Evidence from Native and Immigrant Women in the U.S

Article excerpt


This study investigated how immigrant status and life expectancy in the country of origin relate to variations in retirement savings among working age women in the U.S. Specifically, utilizing the National Longitudinal Survey of Youth 1979 Cohort data, this study compared native-born Americans, naturalized citizens, and female, non-U.S. citizens in regards to retirement-specific accounts. Overall, naturalized U.S. citizens had higher odds of saving for retirement than non-U.S. citizens; however, after controlling for socio-economic backgrounds, the difference was not significant. Variations in female life expectancies provided weak support to correlate with saving for retirement among female immigrants. Rather, variations in the demographic characteristics of these women explained the differences in the odds of having savings in a U.S. retirement account. The findings gave support for immigrants' economic assimilations corresponding with delayed cultural assimilations and implications for financial service professionals who work with immigrant clients.

JEL:D14, Gil

KEYWORDS: Foreign Born, Immigrant, Naturalized Citizen, Retirement, Savings, Women


For working class individuals and families in the U.S., their primary income sources after retirement are Social Security, employer sponsored savings, and personal savings (McCourt, 2006). With the future anticipation for reduced Social Security benefits and a decline in the coverage rates among workers supported by employer sponsored defined benefit pensions, the relative importance of more selfdirected plans, such as personal savings, has increased. Therefore, the current trend in retirement financial preparation requires women, who often live longer than men do, to be even more responsible for financing their retirement through voluntary saving. Due to increased life expectancy, everyone in the U.S. faces the possibility of living longer after retirement. At the same time, an individual's perception toward such risk is highly personal and relative. Individual perception toward his or her own future economic well-being varies as to the absolute distance of his or her retirement future. With the changes in retirement and the individual and family financial environment being the only consistency, understanding retirement preparedness among immigrant and non-immigrant women is essential.

A significant number of people living in the U.S. are immigrants. In 2010, 5.6% of the population was naturalized citizens, and 7.3% was non-citizens (U.S. Census Bureau, 2012). Moreover, foreign-born nonU.S. citizens have the highest poverty rate at 21.6%, compared to 12.1% among native-born and 9.8% among naturalized citizens (U.S. Census Bureau, 2012). Overall, reflecting such statistics, are naturalized citizens more prepared for retirement than native-born Americans are, and does the opposite hold true for non-citizens compared to their native-born counterparts? How immigrants are preparing for eventual retirement is a great concern not only for them but also from the public policy perspective.

Recent studies show that immigrants are at a disadvantage regarding financial preparedness, because immigrants are less likely to hold financial assets (Chatterjee, 2009b) and have more relaxed attitudes about financial preparations for retirement than native-born U.S. citizens (Fontes & Gutter, 2006). Further, women have greater needs for financial preparedness than men do. Lastly, countries of origin, marital status, presence of children, and educational attainment affect women's economic well-being and thus retirement preparedness.

The variations in cultural assimilation patterns, beyond economic assimilation, among immigrants from different countries may explain the variations in retirement preparedness among immigrants. One such example might be life expectancy in their home countries. Although this study did not find any association between the female life expectancy in the home country and the odds of retirement account holding status among immigrant women, variations in lifestyle customs and expectations or cultural assimilation patterns may be reflected in the life expectancies of their home countries, which may or may not correlate with their economic assimilation. …

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