The U.S. Census Bureau has released data showing that the foreign-born population in the United States has increased by over 15% between 2010 and 2022, totaling more than 46 million people and making up nearly 14% of the country’s total population. These individuals will become part of a vast middle market, with some struggling and others becoming affluent or wealthy. However, they do not all share a common retirement heritage.
Retirement heritage, different from financial literacy, includes the stories, attitudes, and behaviors that individuals learn from previous generations about retirement. Many foreign-born individuals may not have a retirement heritage, leading to questions about how they will learn to retire and what they should do to prepare for this life stage. Retirement is not a universally shared experience, and many people in industrial economies have the opportunity to enjoy it.
Even native-born Americans may not have a robust retirement heritage, with many being first-generation retirees or having parents who did not retire. Retirement planning often assumes that individuals understand what retirement is, have basic financial knowledge, and trust the financial system. However, this is not always the case, especially for foreign-born individuals who may have different cultural backgrounds.
The growing population of foreign-born individuals has diverse ideas about life in older age, with many lacking a retirement heritage or having one that differs from traditional U.S. retirement norms. Changing demographics present new opportunities for the financial services industry to educate and engage this market, particularly with the increasing number of Hispanic and Asian immigrants. These populations come from various countries with different cultures and experiences, leading to different levels of trust in financial institutions.
Many foreign-born individuals may be self-employed or affluent professionals unfamiliar with retirement planning, leading them to believe retirement is not for them. It is essential for the financial services industry to adapt to the increasing diversity in the U.S. by developing culturally competent retirement education and solutions that cater to a broad spectrum of retirement traditions and expectations. This new generation of Americans presents a vast market for financial services companies, employers, and professionals to educate and prepare for retirement.
