Asian Americans are more confident in their investments than other retirees and pre-retirees, but worry more about losses in retirement savings than other groups, according to new research from Massachusetts Mutual Life Insurance Company (MassMutual).
On average, Asian-American retirees and pre-retirees are more worried than other Americans about assuming too much risk, (69 percent vs. 44 percent) or making a bad investment decision that could impact retirement savings (67 percent vs. 54 percent) 15 years before or after retirement, according to the MassMutual Asian American Retirement Risk Study.
More Asian Americans avoid reducing their retirement savings. They make fewer withdrawals, take out fewer hardship loans and avoid suspending plan contributions. One in four American retirees and pre-retirees (25 percent) said they have made withdrawals, while Asian American participants were less than half as likely to have done the same (11 percent), according to the study.
Perception Versus Reality
Asian Americans have a more cautious investment outlook than the general retiree and pre-retiree population; however their approach does not reflect their disposition, according to the report.
For example, Asian Americans said they were more likely to have more conservative investment strategies, with the goal of “matching the market” (43 percent vs. 32 percent) rather than outperforming it (55 percent vs. 65 percent). In addition, more Asian American retirees and pre-retirees believe workers nearing retirement should reduce their investments in equities (64 percent vs. 53 percent).
In reality, there were no major differences between Asian Americans and the general population of retirees and pre-retirees when evaluating their overall risk tolerance and allocation of retirement assets (between equities and fixed income investments), according to the report.
Hands-On Investors
Asian Americans prefer to be active in managing their finances and investments. Asian American retirees (80 percent) are more likely to find managing their money more enjoyable than the general population of retirees (59 percent), according to the report. Further, Asian Americans are less likely to choose “set-it-and-forget-it” investments. Only 42 percent of the group said they prefer these types of investments, compared with 72 percent overall, the study finds.
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