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An Asian Perspective on the Racial Retirement Crisis

A Chinese American who retired at 35 on why many Asians prepare for the future

By Sam Dogen

Before reading Richard Eisenberg's recent Next Avenue piece, "America’s Hidden Retirement Crisis is Racial,” I already had a long-standing assumption that any article dealing with race and finances most likely wouldn’t include the Asian race. (I’m a Chinese American who grew up in Malaysia, Taiwan, Japan, the Philippines and China and am founder of the Financial Samurai personal finance site.)
As it turned out, my assumption about the piece was correct. The story, about the recent National Institute for Retirement Security study, Race and Retirement Insecurity in the United States, focused on the survey’s findings showing that blacks and Latinos have far less in savings than whites.
When I emailed Eisenberg about his blog post, he explained the reason he didn't mention Asians was because the gap between the black and Latino communities and whites was larger than between Asians and whites. Fair enough, but this was still disappointing to me, as an Asian person who cares deeply about retiring comfortably as well.

(MORE: America's Hidden Retirement Crisis is Racial)

It's frustrating to be invisible in American society, where Asians make up only 5 percent of the U.S. population. We're outnumbered and overmatched, but I swear if you travel around the world you'll find 4 billion more of us who care about issues such as family, health, and retirement.

Asian Income in America is Lofty

The irony is not lost that the research report was conducted by a UC Berkeley Ph.D. named Nari Rhee, who is Asian. Rhee barely discussed Asians even though the Pew Research Center reports that Asian Americans lead the nation in higher education and income. According to Pew, 49 percent of Asian Americans hold Bachelor's degrees vs. 28 percent of the population and the median income for Asian Americans is $66,000, much more than overall population’s $49,800.

Instead of always discussing how one race is financially ahead of another, wouldn't it be better to write a research paper figuring out what the Asian race does so well and then use that information to help out all races?

(MORE: It's Time for a Rewrite Moment for Retirement)

What Made Me a Serious Saver

Let me share with you the perspective of a Chinese American male who decided to retire at age 35 after saving more than 50 percent of my after-tax income every year and developing a six-figure passive income stream.

I'm not saying my story is the right way. All I'm offering is a different perspective from an Asian person who happens to be a personal finance blogger.

It Started With Discipline

When I was growing up as a middle-schooler in Kuala Lumpur, Malaysia, my Taiwanese mother used to discipline the hell out of me. If I didn't do my homework by a certain hour, she'd give me a good thwack with her favorite chopsticks. The pain was enough for me to tone down my rebellious side.

My laid-back Chinese Hawaiian father, by contrast, tried to talk some sense into me. One evening I went into his office and tore up a 15-page document he had typed on his desk. We didn't have a computer at the time so this was his only draft. Instead of beating or scolding me, he let me sleep and had a talk with me the next day to tell me what I did was wrong. He explained that he’d now have to spend hours re-writing his report. I felt super guilty and also relieved I didn't get a beat down. From then on, I did everything he asked.

My parents had me cornered. There was no getting away with being unpunctual, undisciplined, or a spoiled little brat. The fear of the thwack and the guilt of being bad kept me in line.

(MORE: Asian-American Women and Their Risk of Osteoporosis)

The Importance of Education

My mother also spent a lot of time after school tutoring me in math and science. I hated studying, but she forced me to sit down with her for at least an hour every day to go over my work so I could learn why I got some answers wrong.

I recall one inflection point that made me want to study my heart out.
In the 8th grade, my father told me this was the last year of fun and games because in high school, grades started to matter. If I didn’t begin studying hard, he said, I could end up impoverished like the people we often saw touring the Malaysian countryside. If I studied hard, my dad said, I’d have more options for college, which could lead to a better job. I took my father's advice seriously.

For me, and for many Chinese kids, there was never a question of not going to college — it was something preordained, like eating ice cream after dinner.

Graduating from college was a default assumption; perhaps the next generation will be expected to get graduate degrees, too. (Everyone in my family except my mother has a graduate degree; she doesn’t because she gave up her scholarship at Duke to travel the world with my father in the foreign service.)

I was so sensitive to my family's finances as a teenager that I decided to attend The College of William & Mary, a public school, instead of a private one after weighing the costs of both. At the time, William & Mary cost $2,900 a year in tuition, compared with $25,000 at a private college. I was determined to do well so I could get a decent job to pay my parents back.


The Need to Succeed

My first experience with racial discrimination started in 4 grade, when our school had “Americans” vs. Chinese soccer games (I was American, but of Chinese ethnicity, so I was on the Chinese team; “Americans” was a code word for white, which included my white European classmates.)
But there was no “Americans vs. Chinese” in academics, so academics became the main way my Asian friends and I learned how to compete.

Academics was a level playing field where we strongly believed that if we tried our best, there would be a positive reward in the end.

Every time we felt like not studying, we reminded each other of the lack of Asian role models on TV, in politics and in leadership positions at large corporations. We had to blaze our own trail!

How Humility and Honor Factor In
Humility is very important in the Chinese culture. If we become successful in terms of money, family and career, it’s customary for us to attribute this to luck or fate — not hard work. Asians certainly want to be recognized for their efforts; we just have a tendency to be modest about them.

It's this culture of modesty that helps us quietly get ahead. By staying quiet about our success, we avoid persecution by others and avoid unwanted competition. The “Stealth Wealth movement” is incredibly important in Asian culture in America.

Honor is very important in Chinese culture as well. The children carry the duty (or burden) to bring honor to the family. We think how our actions will make our parents proud and fear failure because it would bring shame on our family. In fact, the fear of dishonoring our parents is as big a motivator as wanting to achieve financial freedom.

The Importance of Self-Education

Our education doesn't stop after college. Asians’ commitment to learning about investing wisely is a key reason why so many prepare so well for retirement.

The key to a successful retirement is aggressive savings, followed by proper allocation of those savings into stocks, bonds, real estate, private equity investments and risk-free assets. With continuing education on subjects such as the proper asset allocation and net worth by age, we can better prepare ourselves for life after full-time work.

Taking Saving and Self-Reliance Seriously

The savings rates in China, India, and Japan are regularly over 25 percent compared to America’s 5 percent savings rate. Such savings rates carry over to Asian American immigrants as well; I saved more than 50 percent of my annual after-tax income for 13 years after college.

There is a continous level of anxiety in Asian cultures that we must amass wealth because we can't count on anybody to take care of ourselves — not the government and not our employers.
And I think that’s a good lesson for people of all races: If you can aggressively save a good portion of your income every year, continuously learn about retirement strategies and tell yourself that nobody is going to save you when you can no longer work, I'm pretty sure you'll be able to achieve financial freedom sooner, rather than later.

Sam Dogen grew up in Asia before coming to the United States for high school and college. After graduating from The College of William & Mary, he worked for Goldman Sachs on its Asian Equities desk and received his MBA from UC Berkeley. In 2012, at age 35, he retired from corporate America to focus on Financial Samurai, a personal finance site about achieving financial independence sooner rather than later.

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