Pop quiz: Which was the fastest-growing demographic in America over a 20-year period? The answer is Asian Americans, according to Pew Research Center, exploding by 81% over that timeframe.
That means more Asian Americans than ever are facing the financial concerns that demographic rates especially important, such as educational funding, retirement readiness (or lack thereof), and whether hiring a planner is the right option for one's financial life.
Some good starting points for any financial plan:
How can I fund my family's education?
Perhaps as a reflection of cultural values, Asian Americans report prioritizing schooling extremely highly. In fact, they spend more on higher education than any other racial or ethnic demographic, and by a significant amount, according to the Bureau of Labor Statistics.
Of course, educational costs are at record highs, according to the College's Board's "Trends in College Pricing" report. One key tool to deploy is the 529 plan, where you can invest for growth and later withdraw tax-free to cover qualified educational expenses. Invest as early as possible after your child is born, to enjoy the benefits of long-term compound growth.
Depending on your location and your plan, parents also typically enjoy large state-tax breaks on contributions. Research firm Morningstar rates the nation's best 529 plans here.
When does hiring a financial planner make sense?
Interestingly, Asian Americans seem to be skeptical of hiring financial planners to manage their wealth, according to one survey by Allianz Life. Only 36% are getting professional help with their money, the lowest of any racial or ethnic demographic.
The reasoning isn't that consultation doesn't provide value, but that they are worried about the costs involved (cited by 45% of respondents). In that case, different pricing models might appeal, such as fee-only options.
Am I right to be worried about retirement readiness?
Asian Americans appear highly attuned to issues of retirement funding. In fact, 62% say they are worried they won't have enough saved by the time retirement rolls around, more than any other group.
This anxiety is not misplaced, and is largely accurate, considering that most Americans across the board are not where they need to be in their retirement savings. For example, the primary financial worry cited by Asian Americans is healthcare costs (76%), followed up by inflation (74%), both of which are extremely valid concerns.
The good news is that this realistic view of retirement needs should spur positive money habits. Only with an accurate view of the costs that are coming, can we properly prepare for our financial future.