May marks the observance of Asian American and Pacific Islander Heritage Month in the United States and brings with it a time of celebration and contemplation of the growing prevalence of multigenerational households.
Asian Americans and Pacific Islanders (AAPI) comprise an immense diversity of cultures and ethnicities. This community includes people from over 75 countries across the Asian continent, including East Asia, Southeast Asia, and South Asia, and it further extends to the Pacific Islands of Melanesia, Micronesia, and Polynesia.
This diversity makes AAPI a unique and complex community, with various languages, religions, traditions, and values that enrich and shape their identity. President George H.W. Bush first declared May Asian Pacific American Heritage Month in 1992.
Multigenerational families living under one roof are becoming more common, which has significant implications for individuals, specific communities, and society at large. The AAPI population is no exception to this growing trend.
For example, the U.S. Asian population is “projected to surpass 46 million by 2060, nearly four times their current total,” according to Pew Research Center analysis. Additionally, “Single-race, non-Hispanic Asians are projected to become the largest immigrant group in the country, surpassing Hispanics in 2055.”
Nearly 28% of immigrants in the U.S. live in multigenerational households, according to the Pew Research Center. As the number of immigrants in the country continues to rise, it becomes increasingly important to consider the unique financial planning needs of households with multiple generations living together. These households may require specialized financial planning strategies to ensure that the needs of all family members are met and that economic stability is maintained for the long term.
Raj Guduru, a financial representative with Northwestern Mutual based in Allen, Texas, spoke with The Dallas Express to help unpack the complexities of multigenerational households and their financial needs.
Guduru spoke personally and professionally, as his parents came to America from India in 1986.
“My dad came here with nothing,” explained Guduru, adding that his dad came to America with very little cash and did not know the English language. “He came with nothing but the dream of making life better for his kids—to make sure we as kids didn’t suffer the way he suffered.”
Guduru explained the culture of respect that comes with immigrant families and the importance of younger generations honoring their elders. He also noted that his father taught him two important lessons: you will never fail if you work hard, and kindness goes a long way.
“Any immigrant parent and immigrant child that you talk to across the AAPI, whether it’s Indian, Pakistanis, Chinese, Vietnamese… anything… no matter which part of the Asian continent that you from, they will say hard word beats anything,” said Guduru.
As such, it is crucial to plan ahead to preserve the cultural work ethic and financial legacy for future generations, Guduru explained.
“We have to have a three-legged stool,” said Guduru. “We have to have a relationship with the state, will, and tax attorney. We have to have a CPA. And we also have to have a financial advisor.”
This financial planning stool analogy establishes a solid, custom framework that enables legal, financial, and tax protections to secure the client’s assets.
Guduru explained that in the AAPI culture, financial planning includes factoring in the care of elders. He gave the example of his grandmother living with his family until she passed. The issue is that younger generations often underestimate the cost of caring for their extended family in addition to their parents and children.
“Often, as advisors, we inform younger clients that they need to understand that this is the situation that they are potentially in for, and we need to start planning for it right now so that when that time comes, they are not taken off guard,” said Guduru.
Guduru explained that many older generations look to the younger generations as their long-term care policy. As such, Guduru often helps AAPI adult children acquire a long-term care policy for their parents to offset costs when their parents come to live with them.
Guduru noted that long-term care policies usually help offset the costs of the six activities of daily living: “bathing, eating, dressing, grooming, mobility, and toileting.” If someone needed help with two of the six activities, that would constitute a long-term care event, explained Guduru.
Concerning the AAPI community, Guduru noted that parents and grandparents often split time between America and their native country, adding that his father is no exception.
“My dad has already said, ‘Once I retire, I will be spending six months in India and six months here.’” In Guduru’s case, as with many immigrant families, ‘here’ means living with the child in their home.
“Parents are always taken care of in our culture,” said Guduru. “No matter what.”
The difficulty is that not every adult child has the money to invest in a long-term care policy for their aging parents. Many factors have to be considered: inflation, property taxes, retirement, the fear that Social Security may not be around for too much longer, travel costs between the United States and their native country, currency exchange rates, the length of their visas, and possibly the impending costs of college tuition for their children. Not surprisingly, many in the AAPI community can become overwhelmed by having to consider where to invest their limited funds.
Guduru noted that this is a common quandary for his clients, and he helps create a “full-scope” approach to planning and considers all the encroaching factors. “Planning is so important,” stressed Guduru, adding, “Most folks are saving something, it’s just not enough.”
Guduru explained that the average American needs about 1.4 million to retire comfortably. Still, people are “hovering around the average of $88,000 saved for retirement, and Dallas averages about $74,000, lower than the national average,” he said.
“Everyone is severely behind on their financial planning,” said Guduru, noting that this is true for most Americans, not just the AAPI community.
“My job is to make sure everyone is taken care of,” said Guduru, adding that this requires a custom approach based on respecting the client’s different thought processes, needs, and desires.
Guduru added that when it comes to financial planning, “Starting small now is better than doing something big in the future.”
