Foreign retirement income among new older immigrants in the United States
| DOI | http://doi.org/10.1111/imig.12325 |
| Author | Emma Aguila,Alma Vega |
| Date | 01 June 2017 |
| Published date | 01 June 2017 |
Foreign retirement income among new older
immigrants in the United States
Alma Vega* and Emma Aguila**
ABSTRACT
Older adults make up an increasing share of new legal immigrants to the United States. These
immigrants are often financially dependent on family since they are often barred from receiv-
ing several US support programmes and are less likely to receive US retirement benefits than
natives. However, little information exists as to whether they receive retirement income from
abroad. Using the New Immigrant Survey (N=2,150), we find that only 8.1 per cent of older
recent immigrants report receiving foreign retirement income. In logistic modelling, older
immigrants from Asia and Latin America were less likely to receive retirement income from
abroad than those from Europe (Odds ratio =0.50, p<0.05; Odds ratio =0.22, p<0.001,
respectively). Results suggest that newly admitted older immigrants from Asia and Latin
America face an additional economic disadvantage compared with older Europeans that cannot
be attributed to their demographic and migration characteristics.
INTRODUCTION
Research shows that older adults generate high budgetary costs (Congressional Budget Office,
2014; The Henry J. Kaiser Family Foundation, 2014), particularly those who are foreign–born
(Smith and Edmonston, 1997). Studies on this topic, however, often focus on the resources which
older immigrants drain from the United States (US) economy but neglect an important income
stream which they might bring into the US economy: retirement income from other countries.
Depending on their work and migration histories, foreign–born older adults may enter the US with
entitlements to old–age pensions from abroad.
The income sources of this group are important given the increasing presence of older adults
among immigrants legally admitted to the US. The proportion of new legally admitted immigrants
aged 50 years and older increased from 11 per cent of the 1981–1986 entry cohorts to 17 per cent
of those who entered between 2006 and 2009 (Carr and Tienda, 2013).
Foreign retirement income takes on added importance in view of current restrictions barring
recent immigrants from receiving several federally-funded programmes in the US. As part of the
Personal Responsibility and Work Opportunity Act (PRWORA) of 1996, immigrants are no longer
eligible to receive Supplemental Security Income (SSI), a means-tested programme which provides
cash benefits to the poor and disabled until at least five years after arrival (Singer, 2004). This
restriction significantly undermines the economic base of recent older immigrants since SSI is the
principle source of welfare support for low-income older adults (Wu, 2013).
* University of Pennsylvania, Philadelphia
** University of Southern California, Los Angeles
doi: 10.1111/imig.12325
©2017 The Authors
International Migration ©2017 IOM
International Migration Vol. 55 (3) 2017
ISS N 00 20- 7985 Published by John Wiley & Sons Ltd.
PRWORA is one of the factors placing greater pressure on families to support older immigrants
financially. Elderly Mexican immigrants, for example, are more likely to receive assistance from
relatives than their US-born counterparts (Glick, 1999). Since children are more likely to financially
assist their parents the lower their income (Silverstein, Gans, & Yang, 2006), it is possible that for-
eign retirement income and family transfers work as substitutes. This may be more so for specific
immigrant groups, since children of Asian and Latin American origin feel greater responsibility
toward helping their parents than those of European origin (Fuligni, Tseng, & Lam, 1999).
The income security of older migrants is a transnational issue that highlights the interconnectivity
between countries’labour, pension, and immigration policies and families’social and economic
mores. This interconnectivity has economic consequences not only for migrants but also for their
families, in that lack of government sponsored support and families’cultural values may promote
family-sponsored flows across borders.
Understanding whether new legal immigrants receive foreign retirement income may illuminate
the satisfactoriness of their income sources. Research shows that the source of one’s income during
later life greatly determines its adequacy (Angel and Angel, 1997). Retirement income is often
independent of fluctuating circumstances since it is determined by individual work histories in
many countries under defined benefit programmes (Social Security Administration [SSA], 2014).
This is in contrast to a defined contribution system in which payments depend on the amount of
contributions made. Family transfers, investment income and other income streams are transitory
income sources that may vacillate as circumstances change but retirement income levels are often
permanent income that will remain constant over time.
The literature on foreign retirement income is scant. Studies that examine the income sources of
older immigrants often only treat wages, US social security, SSI and family transfers (e.g. Angel
et al., 1999; Borjas, 2009; Burr et al., 2008/2009; Finnie, Gray and Zhang, 2013; O’Neil & Tienda,
2014; Terrazas, 2009; Sevak and Schmidt, 2014) but leave out foreign retirement income. Nonethe-
less, indirect evidence provides a sense of its bounds. Terrazas (2009) estimates that foreign–born
older adults draw 11 per cent of their total personal income from retirement income that is not
social security or SSI. While this income may come from annuities, 401ks and other sources, part
of this income may be retirement income from abroad.
Conceptual framework
Prior studies identify four sets of characteristics that may influence whether newly admitted older
immigrants receive foreign retirement income: the pension generosity of individuals’country of
birth, region of origin, demographic characteristics, and migration history.
Older immigrants come from an array of countries (Grieco et al., 2012) with varying generosity
in their pension policies. The generosity of pension systems is generally described with indicators
such as the proportion of GDP spent on pensions, replacement rates (i.e. the ratio between pension
entitlement upon retirement and pre-retirement earnings), and pension coverage rates (i.e. the pro-
portion of the working–age population that contributes to a public pension) (Whitehouse, 2007;
World Bank, 2012). Studies find a wide range in these indicators across countries. For example,
whereas Fiji spends less than one per cent of its GDP on funding its pension system, the Ukraine
spends almost 17.6 per cent (World Bank, 2012). Similarly, replacement rates for the average male
earner range from 95.7 per cent in the Netherlands (Organisation for Economic Cooperation and
Development [OECD], 2015) to 23.7 per cent in the Dominican Republic (OECD, 2014) while
coverage rates range from 93.6 per cent in Luxembourg to less than 1 per cent in Cambodia
(OECD, 2013).
Despite this country-level variability, however, there are substantial similarities within world
regions. For example, the vast majority of Asian countries spend less than 5 per cent of their GDP
Foreign retirement income among new older immigrants 39
©2017 The Authors. International Migration ©2017 IOM
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