Financial Capability and Economic Hardship Among Low-Income Older Asian Immigrants
Background: Older immigrant adults are economically vulnerable. A substantial proportion of older immigrants live in poverty and experience economic hardship, such as food insecurity, housing hardship, and unmet medical needs. Older immigrants’ economic hardship is likely to be associated with their financial capability (i.e., financial knowledge, access to financial services, and financial management). Unfortunately, older immigrants, especially those who came to the U.S. at a later stage of their lives (old-age immigrants) are less likely than their native counterparts to have obtained financial knowledge and management skills essential for financial activities in the U.S. Older immigrants also experience difficulties in using mainstream financial institutions (e.g., banks and credit unions) because of language barriers and documentation requirement.
Methods: This study examines the relationship between financial capability and economic hardship among older Asian immigrants using survey data collected in 2012 from participants in a supported employment program: the Los Angeles, Orange County, and New York City sites of the National Asian Pacific Center on Aging (NAPCA)’s Senior Community Service Employment Program (SCSEP) (N=142). Economic hardship is measured by five indicators on whether older immigrants have enough money to meet their needs for housing, clothing, furniture, food, and medical care. Financial capability is measured by financial literacy, financial access, and financial functioning. Financial literacy is evaluated by respondents’ financial knowledge and knowledge of social programs; financial access is indicated by their comfort level of receiving financial services from mainstream financial institutions; financial functioning is measured by respondents’ financial management (e.g., set financial goals and save for emergency). The study defines economic hardship, financial literacy, financial access, and financial functioning as latent variables, and uses Structural Equation Modeling (SEM) to examine the relationships among these concepts.
Results: Analysis results demonstrate that low-income older Asian immigrants have difficulty meeting their basic needs, and nearly two-third of respondents do not have enough money for needed housing, furniture, and medical care. Overall, low-income Asian immigrants have low levels of financial knowledge and financial management. Less than half of respondents gave correct answers to any financial knowledge questions, and only one-tenth of respondents indicated that they often set financial goals, stick to financial plans, and have emergency savings. Two among three elements of financial capability (i.e., financial access and financial functioning) are negatively associated with economic hardship. However, financial literacy is not associated with economic hardship of older Asian immigrants.
Conclusions: The economic vulnerability demonstrated here calls for active public policies that address economic hardship among older Asian immigrants. It is urgent to provide financial education and financial planning services to improve the financial capability of this population. Financial education should be evaluated by its impact on changing older Asian immigrants’ financial management and other financial functioning. In addition, financial institutions need to improve their business practices to increase financial access for older Asian immigrants; negative experiences with the financial system may increase immigrants’ risk of economic hardship.