AARP

Preparing for Their Future:

A Look at the Financial State of Gen X and Gen Y

Sponsored by The American Savings Education Council and AARP (on behalf of Divided We Fail) Conducted by Mathew Greenwald & Associates



Preparing for Their Future

A Look at the Financial State of Gen X and Gen Y

March 2008 Copyright © 2008 American Savings Education Council and AARP Reprinting with Permission This report is jointly owned by the American Savings and Education Council (ASEC) and AARP. AARP engaged in this research on behalf of Divided We Fail. American Savings Education Council (ASEC) 1100 13th Street, NW, Suite 878 Washington, DC 20005 www.choosetosave.org American Savings Education Council (ASEC), is a program of the Employee Benefit Research Institute (EBRI) Education and Research Fund, a 501 (c) (3) non-profit organization (www.ebri.org and www.choosetosave.org). The ASEC mission: To make saving and retirement planning a priority for all Americans. ASEC is a convener and connector that brings together public- and privatesector partners to share information on best practices and to collaborate on financial security initiatives. For more information visit www.choosetosave.org/asec AARP 601 E Street, NW Washington, DC 20049 http://www.aarp.org AARP is a nonprofit, nonpartisan membership organization that helps people 50+ have independence, choice and control in ways that are beneficial and affordable to them and society as a whole. AARP does not endorse candidates for public office or make contributions to either political campaigns or candidates. We produce AARP The Magazine, published bimonthly; AARP Bulletin, our monthly newspaper; AARP Segunda Juventud, our bimonthly magazine in Spanish and English; NRTA Live & Learn, our quarterly newsletter for 50+ educators; and our website, http://www.aarp.org. AARP Foundation is an affiliated charity that provides security, protection, and empowerment to older persons in need with support from thousands of volunteers, donors, and sponsors. We have staffed offices in all 50 states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands. Mathew Greenwald & Associates of Washington, D.C. conducted the survey on behalf of the American Savings Education Council (ASEC) and Divided We Fail. Subject matter expertise was provided by Divided We Fail and the Employee Benefits Research Institute. All media inquiries about this report should be direct to EBRI’s John MacDonald at (202) 775-6349 or AARP’s Jim Dau or Alejandra Owens at (202) 434-2560. All other inquiries should be directed to AARP’s Colette Thayer at (202) 434-6294.



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Preparing for Their Future

A Look at the Financial State of Gen X and Gen Y

Divided We Fail Divided We Fail, launched nationally in January 2007, has worked to engage the American people, elected officials and the business community to find broad-based, bi-partisan solutions to the most compelling domestic issues facing the nation: health care and the longterm financial security of Americans. AARP, Business Roundtable, Service Employees Union (SEIU), and National Federation of Independent Business (NFIB) are engaging the American people, businesses, non-profit organizations, and elected officials in finding bipartisan solutions to ensure affordable, quality health care and long-term financial security – for all of us. More information about Divided We Fail efforts can be found at www.dividedwefail.org. AARP AARP is a nonprofit, nonpartisan membership organization that helps people 50+ have independence, choice and control in ways that are beneficial and affordable to them and society as a whole. AARP does not endorse candidates for public office or make contributions to either political campaigns or candidates. We produce AARP The Magazine, published bimonthly; AARP Bulletin, our monthly newspaper; AARP Segunda Juventud, our bimonthly magazine in Spanish and English; NRTA Live & Learn, our quarterly newsletter for 50+ educators; and our website, http://www.aarp.org. AARP Foundation is an affiliated charity that provides security, protection, and empowerment to older persons in need with support from thousands of volunteers, donors, and sponsors. We have staffed offices in all 50 states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands. Business Roundtable Business Roundtable (www.businessroundtable.org) is an association of chief executive officers of leading U.S. companies with $4.5 trillion in annual revenues and more than 10 million employees. Member companies comprise nearly a third of the total value of the U.S. stock markets and represent over 40 percent of all corporate income taxes paid. Collectively, they returned $112 billion in dividends to shareholders and the economy in 2005. Roundtable companies give more than $7 billion a year in combined charitable contributions, representing nearly 60 percent of total corporate giving. They are technology innovation leaders, with $90 billion in annual research and development spending - nearly half of the total private R&D spending in the U.S. SEIU With 1.8 million members, SEIU (www.seiu.org) is the fastest-growing union in North America. Focused on uniting workers in three sectors to improve their lives and the services they provide, SEIU is the largest health care union, including hospitals, nursing homes, and home care; the largest property services union, including building cleaning and security; and the second largest public employee union. NFIB NFIB is the nation’s leading small-business advocacy association, with offices in Washington, D.C. and all 50 state capitals. Founded in 1943 as a nonprofit, nonpartisan organization, NFIB gives small- and independent-business owners a voice in shaping the public policy issues that affect their business. NFIB’s powerful network of grassroots activists send their views directly to state and federal lawmakers through our unique member-only ballot, thus playing a critical role in supporting America’s free enterprise system. NFIB’s mission is to promote and protect the right of our members to own, operate and grow their businesses. More information about NFIB is available online at www.NFIB.com.



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Introduction & Methodology

• On behalf of the American Savings Education Council (ASEC) and Divided We Fail, Mathew Greenwald & Associates conducted an online survey with young Americans ages 19 to 39 about their financial attitudes and behaviors. • In total, 1,752 respondents completed the online study. On average, the survey took about 25 minutes to complete. • The data was weighted by age, gender, race and education. Unweighted n sizes are reported throughout. • Throughout the following report, Gen Y includes those ages 19 to 27 and Gen X is comprised of those ages 28 to 39.

3



Profile of Younger People and Households



4



Large majorities of young Americans describe themselves as hard-working and family-oriented. Nearly as many say they are optimistic.

How well do the following phrases describe you? (Total n=1,752; Gen Y n=613; Gen X n=1,139)



Very well

Total



Somewhat well



Not well



Hard-working



Gen Y Gen X



68% 68% 68% 59% 55% 62% 35% 37% 33% 29% 27% 31% 51% 51% 51% 55% 56% 55%



28% 27% 29% 32% 34% 31%



4% 5% 3% 9% 10% 7%



Total



Family-oriented



Gen Y Gen X



Total



14% 12% 16% 15% 17% 14%



Disciplined



Gen Y Gen X



Total



Optimistic



Gen Y Gen X



Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 5 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates



Gen Yers characterize themselves as more technologically savvy than do Gen Xers.

How well do the following phrases describe you? (Total n=1,752; Gen Y n=613; Gen X n=1,139)



Very well

Total



Somewhat well



Not well



Technologically Gen Y savvy Gen X

Total



24% 29% 21% 19% 18% 20% 17% 18% 17% 17% 19% 15%



48% 47% 49% 53% 53% 52% 44% 46% 42% 27% 27% 27%



27% 24% 30% 28% 29% 28% 39% 36% 41% 56% 54% 58%



Charitable



Gen Y Gen X



Total



Carefree



Gen Y Gen X



Total



Expensive taste



Gen Y Gen X



Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 6 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates



Half of young adults with a spouse or partner say financial decisions are made in total partnership.

Which of the following best describes your role in how financial decisions are made in your household? (Total n=991; Gen Y n=236; Gen X n=755) Among those who are married or living with a partner



You are the sole decision-maker



15% 18% 13% 30% 28% 30% 51% 50% 52% 4% 4% 4%



Total Gen Y Gen X



You are the primary decisionmaker, but your spouse/ partner provides input

You and your spouse/partner make decisions in total partnership



Your spouse/partner is the primary decision-maker, but you provide input



Your spouse/partner is <.5% <.5% the sole decision-maker

1%



Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 7 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates



Financial Independence



8



Interestingly, more Gen Yers consider themselves to be “financially independent.”

Do you consider yourself to be “financially independent”? (Total n=1,752; Gen Y n=613; Gen X n=1,139) Percent saying yes



57%



62% 54%



Total



Gen Y



Gen X



Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 9 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates



Young Americans’ perception of being financially independent increases with income.

Do you consider yourself to be “financially independent”? (Total n=1,752; <$30K n=474; $30K49K n=405; $50K-79K n=443; $80K+ n=352) Percent saying yes



66% 57% 48% 58%



69%



Total



<$30K



$30K-$49K



$50K-$79K



$80K+



Income is calculated using personal income for unmarried respondents who do not live with a partner and household income for those who are either married or live with a partner.



Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 10 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates



Despite their purported independence, Gen Yers are nearly twice as likely to receive financial support from family or friends.

In the past year, have you received any financial support from family or friends? (Total n=1,752; Gen Y n=613; Gen X n=1,139) Percent saying yes



45% 33% 25%



Total



Gen Y



Gen X



Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 11 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates



Receipt of financial support from family or friends is relatively consistent among those in different racial and ethnic groups.

In the past year, have you received any financial support from family or friends? (Total n=1,752; Caucasian n=1,227; African-American n=150; Hispanic n=151; Asian/Pac. Islander n=154) Percent saying yes



40% 33% 33% 28%



39%



Total



Caucasian



AfricanAmerican



Hispanic



Asian/Pac. Islander



Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 12 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates



Similarly, younger Gen Yers report receiving more financial assistance from government programs than Gen Xers.

In the past year, have you received any financial assistance from government programs? (Total n=1,752; Gen Y n=613; Gen X n=1,139) Percent yes



18%



23% 14%



Total



Gen Y



Gen X



Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 13 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates



Likelihood of receiving financial assistance from the government is consistent across racial and ethnic groups.

In the past year, have you received any financial assistance from government programs? (Total n=1,752; Caucasian n=1,227; African-American n=150; Hispanic n=151; Asian/Pac. Islander n=154) Percent saying yes



24% 18% 17% 14% 17%



Total



Caucasian



AfricanAmerican



Hispanic



Asian/Pac. Islander



Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 14 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates



Financial support from family is usually less than $2,500 per year; those who receive government assistance report somewhat higher amounts.

Over the past year, approximately how much financial support did you receive from family or friends? (Total n=545; Gen Y n=277; Gen X n=268) Among those who have received financial support from family or friends Over the past year, approximately how much financial support did you receive from government programs? (Total n=267; Gen Y n=129; Gen X n=138) Among those who have received financial assistance from government programs



Total



71%



15% 4% 6% 4%



Total



36%



25%



11%11%17%



Gen Y



71%



12%5% 8% 3%



Gen Y



31%



32%



11% 8%18%



Gen X



71%



17%3% 3% 6%



Gen X



43%



16% 11% 14%16%



<$2,500 $5,000 to <$10,000 Not sure



$2,500 to <$5,000 $10,000 or more



<$2,500 $5,000 to <$10,000 Not sure



$2,500 to <$5,000 $10,000 or more



Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 15 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates



Financial independence was achieved at approximately 20 years old for members of these younger generations.

At what age did you become financially independent? (Total n=1,024; Gen Y n=375; Gen X n=649) Among financially independent individuals



Median Age At Start of “Financial Independence”



20



19



21



Total



Gen Y



Gen X



Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 16 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates



The most commonly cited milestone that marked their financial independence was either graduation or landing their first job.

What, if any, event or life stage would you say marked the start of your financial independence? (Total n=1,024; Gen Y n=375; Gen X n=649) Among financially independent individuals



Top 4 Responses

24% 24% 24% 23% 28% 19% 14% 16% 11% 10% 8% 12%

Total Gen Y Gen X



When you got your first job



High school graduation



Start of college



College graduation



Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 17 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates



For a few, their wedding date marked the start of their financial independence.

What, if any, event or life stage would you say marked the start of your financial independence? (Total n=1,024; Gen Y n=375; Gen X n=649) Among financially independent individuals



Top 5-8 Responses

Getting Married (if not already)

6% 4% 8% 2% 1% 4% 1% 1% 1% 19% 18% 21%

Total Gen Y Gen X



Graduate school graduation



Start of graduate school



Something else



Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 18 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates



College graduation marks the beginning of financial independence for those with at least a bachelor’s degree, with a similar trend among high school grads.

What, if any, event or life stage would you say marked the start of your financial independence? (Total n=1,024; High school or less n=129; Some college n=373; Bachelor’s n=369; Master’s or more n=153) Among financially independent individuals



Top 4 Responses

Total High school or less Some college Bachelor's Master's or more



42% 30% 24%23%23% 23% 16% 25% 16% 8% 6% 14% 5% 12%13% 10% 1% 6% 30% 20%



When you got your first job



High school graduation



Start of college



College graduation



Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 19 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates



In keeping, those with a master’s degree are more likely to say their financial independence coincided with the completion of graduate school.

What, if any, event or life stage would you say marked the start of your financial independence? (Total n=1,024; High school or less n=129; Some college n=373; Bachelor’s n=369; Master’s or more n=153) Among financially independent individuals



Top 5-8 Responses

Total High school or less Some college Bachelor's Master's or more



24% 10% 6% 5% 8% 5% 6%



24%22% 19% 13% 1% 0% 0% 2% 5%



2% 0% 0% 1%



Getting married



Graduate school graduation



Start of graduate school



Something else



Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 20 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates



Current Financial Situations



21



Half of young adults are satisfied with their current financial situation, yet only 9% are very satisfied.

How satisfied would you say you are with your current financial situation? (Total n=1,752; Gen Y n=613; Gen X n=1,139)



Total



Gen Y



Gen X



Net Satisfied: 53%



Net Not Satisfied: 47%



44% 47% 42% 33% 35% 31% 14% 18% 9%



9% 9% 9%



Very satisfied



Somewhat satisfied



Not too satisfied



Not at all satisfied



Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 22 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates



African-Americans express less satisfaction with their current financial situations than others.

How satisfied would you say you are with your current financial situation? (Total n=1,752; Caucasian n=1,227; African-American n=150; Hispanic n=151; Asian/Pac. Islander n=154)



Total



Caucasian



African-American



Hispanic



Asian/Pac. Islander



Net Satisfied: 53%



Net Not Satisfied: 47%



44%46%



46%47%



48% 33% 33% 27% 23% 17%16% 16% 14%12%



29% 15% 10%



9% 9% 6%



Very satisfied



Somewhat satisfied



Not too satisfied



Not at all satisfied



Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 23 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates



Predictably, satisfaction with one’s current financial state improves as income increases. Still, few say they are highly satisfied.

How satisfied would you say you are with your current financial situation? (Total n=1,752; <$30K n=474; $30K-$49K n=405; $50K-$79K n=443; $80K+ n=352)



Total



<$30K



$30K-$49K



$50K-$79K



$80K+



Net Satisfied: 53%

Net Not Satisfied: 47%

58% 55% 44% 40% 35% 40% 36% 33% 26% 17% 20% 14% 14% 9%



19% 9% 5% 9% 10%



5%



Very satisfied



Somewhat satisfied



Not too satisfied



Not at all satisfied



Income is calculated using personal income for unmarried respondents who do not live with a partner and household income for those who are either married or live with a partner.



Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 24 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates



Few feel very financially secure, with Gen Xers significantly more likely to say they feel “not at all secure.”

Overall, how “financially secure” do you feel you are right now? (Total n=1,752; Gen Y n=613; Gen X n=1,139)



Total



Gen Y



Gen X



Net Secure: 49%



Net Not Secure: 51%



42% 41% 43%



36%



40% 33% 15% 18% 12%



7% 7% 6% Very secure Somewhat secure Not too secure



Not at all secure



Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 25 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates



As with satisfaction with their current circumstances, young adults with higher incomes report higher degrees of financial security.

Overall, how “financially secure” do you feel you are right now? (Total n=1,752; <$30K n=474; $30K-49K n=405; $50K-$79K n=443; $80K+ n=352)



Total



<$30K



$30K-$49K



$50K-$79K



$80K+



Net Secure: 49%

58% 57%



Net Not Secure: 51%



49% 42% 43% 36% 26%

18%



37%

23% 19%



7%



3% 5%



7%



21% 15% 16% 11% 7% Not at all secure



Very secure



Somewhat secure



Not too secure



Income is calculated using personal income for unmarried respondents who do not live with a partner and household income for those who are either married or live with a partner.



Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 26 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates



The vast majority feel they should be better prepared for a rainy day. At the same time, two-thirds say they can count on family and friends if times get hard.

Thinking about your current financial situation, to what extent do you agree or disagree with the following statement? (Total n=1,752; Gen Y n=613; Gen X n=1,139)



Strongly agree

You feel you should be more prepared for a “rainy day” You can rely on friends and family to help you financially when you are in a tough situation

Total Gen Y Gen X



Somewhat agree



Disagree



50% 47% 52% 29% 38% 23% 27% 25% 28% 23% 22% 23% 23% 16% 27% 38%



36% 36% 36%



14% 17% 12% 33% 23% 40% 37% 37% 36% 35% 34% 35%



Total Gen Y Gen X



39% 37% 37% 37% 36% 42% 44% 41% 36% 42% 32%



You worry about your financial future, perhaps to the detriment of enjoying today

Making decisions about money makes you feel anxious



Total Gen Y Gen X



Total Gen Y Gen X



Total



You struggle to make ends meet



Gen Y Gen X



41% 41% 41%



Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 27 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates



Young Americans indicate that they have financial goals for themselves.

Thinking about your current financial situation, to what extent do you agree or disagree with the following statement? (Total n=1,752; Gen Y n=613; Gen X n=1,139)



Strongly agree



Somewhat agree



Disagree



You appreciate the material goods you have, even if it’s not a lot



Total Gen Y Gen X



56% 59% 53%



39% 35% 42%



5% 7% 4%



Total



52% 57% 48%



39% 36% 41%



9% 7% 11%



You have financial goals for yourself



Gen Y Gen X



You are proud of how you have lived your life financially so far



Total Gen Y Gen X



20% 22% 19%



41% 44% 38%



39% 34% 43%



Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 28 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates



Relatively few say they feel taken advantage of by the system, Gen Yers slightly more so than Gen Xers.

Thinking about your current financial situation, to what extent do you agree or disagree with the following statement? (Total n=1,752; Gen Y n=613; Gen X n=1,139)



Strongly agree

Total



Somewhat agree



Disagree



18% 20% 17%



42% 45% 39%



40% 35% 44%



You sometimes offer financial advice to others



Gen Y



Gen X



Total



15% 14% 15%



31% 37% 27%



54% 49% 58%



You feel taken advantage of by “the system”



Gen Y



Gen X



Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 29 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates



Two in ten include affording basic needs and the ability to pay bills in their definition of financial security, with enough leftover to save for a rainy day.

How would you define “financial security”? (Total n=1,752; Gen Y n=613; Gen X n=1,139) Multiple responses accepted



Top 6 Reported

Not living paycheck to paycheck / Able to afford basic needs Able to save / Have emergency or rainy day fund

22% 20% 23% 19% 18% 20% 16% 17% 16% 15% 16% 14% 13% 15% 12% 8% 7% 9% Total Gen Y Gen X



Live comfortably

Not having to worry about finances



Able to deal with the unexpected or hard times

Not having debt



Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 30 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates



Only one in twenty associate financial security with being able to travel and engage in other leisure activities.

How would you define “financial security”? (Total n=1,752; Gen Y n=613; Gen X n=1,139) Multiple responses accepted



Top 7-12 Reported

Able to provide for family / Money for children’s education Have money/enough money / dollar amount (general) Can afford travel/entertainment/ leisure/fun

Able to retire / Maintain current lifestyle in retirement Don’t know / Refused

6% 5% 7% 5% 7% 3% 5% 5% 5% 5% 3% 6% 7% 8% 6% Total Gen Y Gen X



Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 31 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates



Savings and Debt



32



Since six in ten say they struggle to make ends meet, it is not surprising that being able to pay bills tops the list of financial concerns.

When it comes to your finances, what is your biggest fear or concern? (Total n=1,752; Gen Y n=613; Gen X n=1,139) Multiple responses accepted



Top 5 Reported

20% 22% 19% 13% 14% 12% 12% 12% 13% 11% 12% 10% 11% 5% 15%



Paying bills / Making ends meet



Total Gen Y Gen X



Unemployment / Job loss / Career



Lack of savings / Having enough for an emergency / Future Having enough money to support self/family

Being able to retire / Afford retirement



Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 33 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates



Half of young adults say they stick to a monthly budget. Far fewer have a written financial plan or a will.

Do you currently…? (Total n=1,752; Gen Y n=613; Gen X n=1,139) Percent saying yes



Total



Gen Y



Gen X 53% 55% 51%



Stick to a monthly budget



Have a formal, written financial plan



14% 12% 16% 14% 11% 16% 14% 9% 17%



Have a living will (also known as a health care directive)



Have a will



Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 34 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates



Married young adults and those living with a partner are more likely to have a financial plan, a will, and a living will.

Do you currently…? (Total n=1,752; Married/Living w/ partner n=991; Unmarried/No partner n=761) Percent saying yes



Stick to a monthly budget



53% 52% 53% 14% 17% 12% 14% 16% 12% 14% 16% 11%



Have a formal, written financial plan



Total Married/Living w/ Partner Unmarried/No partner



Have a living will (also known as a health care directive)



Have a will



Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 35 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates



Just half of members of these younger generations report that they save on a regular basis.

Do you currently save money on a regular basis? (Total n=1,752; Gen Y n=613; Gen X n=1,139)



Total



Gen Y



Gen X



50%



52%



48%



50%



48%



52%



Yes



No



Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 36 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates



Not surprisingly, likelihood of saving regularly increases with income.

Do you currently save money on a regular basis? (Total n=1,752; <$30K n=474; $30K$49K n=405; $50K-$79K n=443; $80K+ n=352)



Total



<$30K



$30K-$49K



$50K-$79K



$80K+



70% 52% 43% 43% 57% 57% 50% 48% 30%



50%



Yes



No



Income is calculated using personal income for unmarried respondents who do not live with a partner and household income for those who are either married or live with a partner.



Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 37 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates



Fewer have savings designated as an emergency fund for unanticipated expenses.

Do you have an “emergency savings” fund or money that you keep in reserve for unexpected expenses, like a big car repair, or in case you were to stop receiving income for any reason? (Total n=1,752; Gen Y n=613; Gen X n=1,139)



Total



Gen Y



Gen X 62% 63%



61%



38%



37%



39%



Yes



No



Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 38 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates



A sizable proportion of employed young Americans say they could not live off their savings for more than one month.

If you were to stop receiving income today from work or other sources, how long would you be able to live on your savings alone? (Total n=1,598; Gen Y n=534; Gen X n=1,064) Among employed individuals



Less than one month



40% 38% 42% 29% 32% 28% 11% 13% 11% 9% 7% 10% 7% 5% 8% 4% 5% 3%



Total Gen Y Gen X



1 to less than 3 months

3 to less than 6 months 6 months to less than 1 year 1 year or longer Not sure



Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 39 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates



Eight out of ten young people do not feel they are saving enough money for the future.

Given your current income and living situation, do you feel you are savings enough money for the future? (Total n=1,752; Gen Y n=613; Gen X n=1,139)



Total



Gen Y



Gen X



83%



80%



84%



17%



20%



16%



Yes



No



Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 40 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates



Those with an income of $80,000 or more are four times more likely than those who earn less than $30,000 to feel they are saving enough money.

Given your current income and living situation, do you feel you are savings enough money for the future? (Total n=1,752; <$30K n=474; $30K-$49K n=405; $50K-$79K n=443; $80K+ n=352)



Total



<$30K



$30K-$49K



$50K-$79K

91% 86% 79%



$80K+



83%



63%



37% 21% 9% 14%



17%



Yes



No



Income is calculated using personal income for unmarried respondents who do not live with a partner and household income for those who are either married or live with a partner.



Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 41 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates



Large shares report that they have credit card and car loan debt. Gen Xers are more apt than Gen Yers to have most kinds of debt.

Do you have any of the following types of debt? (Total n=1,752; Gen Y n=613; Gen X n=1,139) Percent saying yes



Credit card



Car loan Mortgage

Student loan



63% 57% 67% 48% 42% 52% 35% 17% 31% 32% 30% 27% 25% 28% 11% 4% 16% 22% 20% 23% 49%



Total Gen Y Gen X



Medical

Home equity loan



Other



Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 42 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates



Three in ten young adults are $20,000 or more in debt, excluding mortgages.

Approximately, how much non-mortgage debt do you currently have? (Total n=1,496; Gen Y n=503; Gen X n=993) Among those who have non-mortgage debt



Less than $1,000



$1,000 to $2,499 $2,500 to $4,999

$5,000 to $9,999



$10,000 to $19,999 $20,000 to $49,999 $50,000 or more



12% 17% 9% 7% 9% 7% 11% 14% 9% 18% 19% 17% 21% 21% 22% 20% 15% 23% 10% 6% 13%



Total Gen Y Gen X



Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 43 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates



Debt levels seem especially high when considering that the majority of these young people have less than $10,000 in total savings and investments.

In total, about how much money would you say you (and your spouse or partner) currently have in savings and investments, not including the value of your primary residence? (Total n=1,752; Gen Y n=613; Gen X n=1,139)



Less than $10,000

10% 13% 8% 6% 3% 8% 6% 3% 7% 7% 4% 9% 6% 2% 9%



57% 66% 50% Total Gen Y Gen X



$10,000 to $19,999



$20,000 to $29,999



$30,000 to $49,999



$50,000 to $99,999



$100,000 or more



Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 44 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates



Still, just one-third of young adults identify their debt as a major problem.

Thinking about your current financial situation, how would you describe your level of debt? (Total n=1,587; Gen Y n=520; Gen X n=1,067) Among those who have debt



Total



Gen Y



Gen X



47% 50% 45% 35% 38% 30% 17% 19% 15%



Major problem



Minor problem



Not a problem



Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 45 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates



Those with mortgage debt only are far less likely to see their debt as a problem.

Thinking about your current financial situation, how would you describe your level of debt? (Total n=1,587; Non-mortgage debt n=1,513; Mortgage debt only n=72) Among those who have debt



Total



Non-mortgage debt



Mortgage debt only



76%



47% 48% 35% 36% 21% 3% Major problem Minor problem Not a problem 17%



14%



Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 46 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates



It follows, then, that most report being behind schedule regarding saving.

For the following, do you think you are behind schedule, ahead of schedule, or on track compared to others your age? (Total n=1,752; Gen Y n=613; Gen X n=1,139)

Behind schedule On track Ahead of schedule



Saving for an emergency Total or having savings Gen Y in general

Gen X



67% 63% 69%



25% 27% 23%



6% 7% 6%



Total



61% 55% 65%



27% 28% 26%



8% 10% 7%



Saving for retirement Gen Y

Gen X



Total



46% 37% 52%



36% 39% 34%



15% 19% 12%



Debt Gen Y

Gen X



Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 47 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates



By comparison, roughly half feel they are “on track” when it comes to their family lives, careers and their housing situations.

For the following, do you think you are behind schedule, ahead of schedule, or on track compared to others your age? (Total n=1,752; Gen Y n=613; Gen X n=1,139)

Behind schedule Total On track Ahead of schedule



Education Gen Y

Gen X



42% 49% 38% 41% 40% 43% 39% 38% 39% 26% 24% 27%



46% 40% 49%

46% 47% 46% 45% 46% 45% 55% 54% 56%



7% 6% 7% 8% 9% 6% 13% 11% 14% 14% 15% 14%



Total



Career Gen Y

Gen X



Total



Housing Gen Y

Gen X



Total



Family life Gen Y

Gen X



Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 48 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates



Financial Goals



49



Career advancement and retirement savings are priorities for most. Gen X is more focused on retirement savings. Gen Yers focus more on career.

Thinking about the next ten years, which of the following are goals or priorities for you? (Total n=1,752; Gen Y n=613; Gen X n=1,139) Multiple responses accepted



Top 5 Reported

Advancing your career or earning more money

76% 84% 71% 75% 69% 80% 74% 77% 72% 73% 69% 76% 67% 70% 64%



Putting money away for retirement



Minimizing stress in your life



Paying off debt



Buying a home or making major improvements to your home



Total Gen Y Gen X



Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 50 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates



Paying bills on time and focusing on health are also priorities.

Thinking about the next ten years, which of the following are goals or priorities for you? (Total n=1,752; Gen Y n=613; Gen X n=1,139) Multiple responses accepted



Top 6-10 Reported

Paying basic bills in full and on time

Focusing on your health

64% 68% 62% 64% 67% 61% 57% 55% 58% 50% 56% 45% 46% 41% 50% Total Gen Y Gen X



Doing more leisure travel



Purchasing a car



Preparing for a child’s education



Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 51 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates



Over four in ten hope to obtain a higher degree, and a similar share would like to be more spiritual.

Thinking about the next ten years, which of the following are goals or priorities for you? (Total n=1,752; Gen Y n=613; Gen X n=1,139) Multiple responses accepted



Top 11-15 Reported

Receiving a higher education or degree for yourself

Having children or having more children

45% 59% 35% 44% 63% 30% 43% 44% 42% 37% 54% 24%

<.5% <.5%



Total Gen Y Gen X



Living a more spiritual life



Getting married (if not currently)



Starting a business / Grow an existing business



1%



Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 52 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates



Career advancement and earning more is most important. Reducing debt closely follows as the most important goal of young adults.

Thinking about the next ten years, which of the following would you say is the most important goal or priority for you? (Total n=1,741; Gen Y n=609; Gen X n=1,132) Among those who mention goals or priorities



Top 5 Reported



Advancing your career or earning more money



22% 20% 16% 16% 12% 18% 10% 7% 13% 7% 13% 3% 7% 7% 7%



Total Gen Y Gen X



Paying off debt



Living a more spiritual life



Receiving a higher education or degree for yourself

Buying a home or making major improvements to your home



Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 53 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates



Saving for retirement drops significantly lower on the list when asked which goal is most important.

Thinking about the next ten years, which of the following would you say is the most important goal or priority for you? (Total n=1,741; Gen Y n=609; Gen X n=1,132) Among those who mention goals or priorities



Top 6-10 Reported

6% 9% 4% 6% 6% 6% 6% 3% 8% 5% 3% 7% 5% 2% 8%



Getting married (if not currently)



Total Gen Y Gen X



Paying basic bills in full and on time



Putting money away for retirement



Focusing on your health



Preparing for a child’s education



Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 54 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates



Although three-quarters of young adults identify minimizing stress as a goal, it falls low on the list of most important priorities.

Thinking about the next ten years, which of the following would you say is the most important goal or priority for you? (Total n=1,741; Gen Y n=609; Gen X n=1,132) Among those who mention goals or priorities



Top 11-15 Reported

Having children or having more children Minimizing stress in your life

3% 3% 3% 3% 2% 3% 2% 2% 3% 1% 1% 1%

<.5% <.5% <.5%



Total Gen Y Gen X



Purchasing a car



Doing more leisure travel



Start a business / Grow an existing business



Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 55 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates



Younger Americans express confidence that they will achieve their most important goals in the near future.

How confident are you that you will be able to meet your most important goals in the next ten years? (Total n=1,741; Gen Y n=609; Gen X n=1,132) Among those who have goals or priorities for the next ten years



Total



Gen Y



Gen X



53% 53% 53% 39% 41% 37%



7% 5% 9% Very confident Somewhat confident Not too confident



1% 1% 1% Not at all confident



Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 56 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates



Generational Differences



57



Young adults most often cite increased cost of living and retirement issues as the biggest financial difference between the generations.

What do you think is the most significant financial difference between your generation and your parents’ generation? (Total n=1,752; Gen Y n=613; Gen X n=1,139)



Top 6 Reported

Cost of living / Inflation Retirement/ No pensions/ No Social Security/ Medicare

Spend more now / Don’t save

19% 21% 18% 18% 15% 19% 11% 11% 11% 9% 8% 9% 9% 9% 10% 5% 3% 6% Total Gen Y Gen X



Debt / Credit cards



Parents were smarter financially/ Saved sooner/ Disciplined spenders

Work environment/ Work harder now/ Change jobs more often



Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 58 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates



Others think young people spend more and save less than their parents did, even though a few feel their incomes are higher and they have more choices.

What do you think is the most significant financial difference between your generation and your parents’ generation? (Total n=1,752; Gen Y n=613; Gen X n=1,139) Multiple responses accepted



Top 7-11 Reported

More investment options now

4% 3% 4% 3% 3% 3% 3% 3% 2% 3% 3% 2% 3% 1% 3% Total Gen Y Gen X



We make more money



Economy/ Recession



Government policy/spending/ Taxes



No rise in salary



Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 59 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates



Buying a home and finding work are seen as more difficult for many of today’s younger Americans, although obtaining an education is deemed easier.

To the best of your knowledge, do you think it is easier or harder for people in your generation to do the following than it was for your parents’ generation? (Total n=1,752; Gen Y n=613; Gen X n=1,139)

Easier for your generation Total Same Harder for your generation



54% 57% 52%



24% 22% 26%



22% 21% 22%



Getting an education Gen Y

Gen X



Total



28% 25% 30%



25% 27% 24%



47% 48% 46%



Buying a first home Gen Y

Gen X



Total



24% 28% 21%



32% 34% 30%



44% 37% 49%



Finding good Gen Y employment

Gen X



Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 60 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates



Moreover, supporting a family is considered a harder task, and many young adults view saving money for the long term as harder now.

To the best of your knowledge, do you think it is easier or harder for people in your generation to do the following than it was for your parents’ generation? (Total n=1,752; Gen Y n=613; Gen X n=1,139)

Easier for your generation Same Harder for your generation Total



23% 28% 20%



27% 30% 24%



50% 42% 56%



Saving for a child’s Gen Y college education

Gen X



Total



20% 23% 17%



29% 35% 25%



51% 43% 57%



Saving money for the Gen Y long term

Gen X



Total



14% 18%



31% 36% 28%



54% 46% 61%



Supporting a family Gen Y



Gen X 11%



Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 61 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates



Eight in ten anticipate having the same amount of money or more when they reach their parents’ age. Gen Xers are more likely to say they will have less.

Do you expect that by the time you are your parents’ age you will have accumulated more money than your parents, less money, or about the same amount of money as your parents? (Total n=1,752; Gen Y n=613; Gen X n=1,139)



Total



Gen Y



Gen X



54% 54% 53% 34% 27% 23% 19% 12% 24%



More money



About the same



Less money



Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 62 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates



Young people with higher incomes are more apt to feel they will eventually accumulate more money than their parents.

Do you expect that by the time you are your parents’ age you will have accumulated more money than your parents, less money, or about the same amount of money as your parents? (Total n=1,752; <$30K n=474; $30K-$49K n=405; $50K-$79K n=443; $80K+ n=352)



Total



<$30K



$30K-$49K



$50K-$79K



$80K+



61% 54% 49%47%



65%



27%



32%30% 23%21% 19%19% 23% 16%14%



More money



About the same



Less money



Income is calculated using personal income for unmarried respondents who do not live with a partner and household income for those who are either married or live with a partner.



Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 63 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates



African-Americans and Hispanics are especially likely to foresee having more money than their parents.

Do you expect that by the time you are your parents’ age you will have accumulated more money than your parents, less money, or about the same amount of money as your parents? (Total n=1,752; Caucasian n=1,227; African-American n=150; Hispanic n=151; Asian/Pac. Islander n=154)



Total



Caucasian



African-American



Hispanic



Asian/Pac. Islander



68% 66% 54% 47%

52%



27%



32%

22% 25%



16%



19%21%



23%



16%13%



More money



About the same



Less money



Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 64 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates



Most of these young Americans report that they come from middle or lower-middle class upbringings.

When you were growing up, how would you describe your family’s lifestyle? (Total n=1,752; Gen Y n=613; Gen X n=1,139)



Total



Gen Y 1% 1% 1% 11% 11% 11%



Gen X



Upper class



Upper middle class



Middle class

31% 28% 32% 8% 7% 10%



49% 54% 45%



Lower middle class



Lower class



Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 65 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates



Many still consider themselves part of the middle class.

Thinking about your current lifestyle, do you consider it to be…? (Total n=1,752; Gen Y n=613; Gen X n=1,139)



Total



Gen Y

1% 1% 1% 9% 8% 10%



Gen X



Upper class



Upper middle class



Middle class

30% 31% 29% 9% 8% 9%



52% 52% 51%



Lower middle class



Lower class



Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 66 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates



Still nearly one-quarter indicate that they have experienced some upward mobility.

Class change (Total n=1,752; Gen Y n=613; Gen X n=1,139)



Total



Gen Y

23%



Gen X



Class improved



21% 25% 54%



Class remained the same



52% 55% 23%



Class declined



27% 20%



Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 67 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates



Views toward the Workplace and Benefits



68



Similar shares (about half) believe that employers have employees’ best interest at heart and that people their age feel loyal to their employers.

To what extent to you agree or disagree with the following statements? (Total n=1,752; Gen Y n=613; Gen X n=1,139)



Strongly agree

Total



Somewhat agree



Disagree



7% 8% 7%



39% 35% 43%



53% 57% 51%



People your age feel loyal to their employers



Gen Y



Gen X



Total



6% 9% 4%



42% 45% 39%



52% 46% 57%



Employers generally have their employees’ best interest at heart



Gen Y



Gen X



Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 69 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates



Health insurance is clearly viewed as a critical benefit for employers to offer, while wellness programs are seen as less essential.

How important is it that your employer…? (Total n=1,598; Gen Y n=534; Gen X n=1,064) Among employed individuals



Very important

Total



Somewhat important



Not important



80% 77% 82%



14% 6% 17% 6% 13% 6%



Provides health insurance



Gen Y



Gen X



Total



39% 41% 39%



39% 38% 39%



22% 22% 22%



Offers a wellness program



Gen Y



Gen X



Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 70 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates



Retirement plans and company matches are also seen as very important benefits, with Gen Xers even more likely to stress their importance.

How important is it that your employer…? (Total n=1,598; Gen Y n=534; Gen X n=1,064) Among employed individuals



Very important



Somewhat important



Not important



Matches or contributes money to a retirement savings plan in addition to what you save



Total Gen Y Gen X



59% 52% 63%



30% 33% 29%



11% 15% 8%



Total



57% 51% 62%



31% 35% 28%



12% 15% 10%



Provides a retirement savings plan



Gen Y Gen X



Total



37% 35% 38%



40% 41% 39%



23% 24% 23%



Offers education and/or advice on how to save for retirement



Gen Y Gen X



Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 71 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates



When asked which benefit is most critical, health insurance is by far seen as the most important benefit; retirement plans are second.

Which of these is most important? (Total n=1,598; Gen Y n=534; Gen X n=1,064) Among employed individuals



Provides health insurance

Matches or contributes money to a retirement savings plan in addition to what you save Provides a retirement savings plan

21% 19% 22% 12% 10% 13% 2% 3% 2% 1% 1% 1%



64% 68% 61% Total Gen Y Gen X



Offers education and/or advice on how to save for retirement Offers a wellness program



Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 72 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates



African-Americans and Asian/Pacific Islanders place slightly less emphasis on health insurance as a workplace benefit.

Which of these is most important? (Total n=1,598; Caucasian n=1,166; African-American n=123; Hispanic n=126; Asian/Pac. Islander n=118) Among employed individuals



Total

67% 64%



Caucasian



African-American



Hispanic



Asian/Pac. Islander



63% 48% 34% 21% 17% 30% 22%



53%



17% 12%12% 11%11% 2% 2%



Provides health insurance

* Less than 0.5%



Matches or Provides a contributes money retirement to a retirement savings savings plan plan



*



3% 4% 1% 2% 1%



Offers education and/or advice on how to save for retirement



Offers a wellness program



*



1%



Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 73 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates



Individuals who earn at least $80,000 are more inclined than those who earn less to prefer that their employer provides a retirement savings plan.

Which of these is most important? (Total n=1,598; <$30K n=392; $30K-$49K n=376; $50K-$79K n=421; $80K+ n=343) Among employed individuals



Total



<$30K



$30K-$49K



$50K-$79K



$80K+



65% 65%65% 64% 54%



25% 21% 22% 20% 19% 12%



19% 8% 12%12%



2% 3% 3% 2% 2% 1% 2% 1% 1%



Provides health insurance



Provides a Matches or contributes money retirement savings to a retirement plan savings plan



Offers education and/or advice on how to save for retirement



Offers a * wellness program



Income is calculated using personal income for unmarried respondents who do not live with a partner and household income for those who are either married or live with a partner.



Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 74 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates



More than half of young adults receive health insurance through their or their spouse’s employer. Still, one-quarter indicate that they are not insured.

Are you currently covered by health insurance? (Total n=1,752; Gen Y n=613; Gen X n=1,139)



Total



Gen Y



Gen X



51% 44% 35% 11% 15% 5% 28% 20% 14% 30% 24% 19% 1% 1% 1% Yes, from some other source No Not sure



Yes, through your employer



Yes, through spouse's employer



Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 75 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates



Likelihood of being insured by an employer increases with income.

Are you currently covered by health insurance? (Total n=1,752; <$30K n=474; $30K-$49K n=405; $50K-$79K n=443; $80K+ n=352)



Total



<$30K



$30K-$49K



$50K-$79K



$80K+



61% 58% 59% 44% 33% 21% 44% 28% 24% 20% 18% 18% 15% 11% 9% 7% 9% 6% 8% 1% Yes, through spouse's employer Yes, from some other source No



1% 1% 3%



*

Not sure



*



Yes, through your employer

* Less than 0.5%



Income is calculated using personal income for unmarried respondents who do not live with a partner and household income for those who are either married or live with a partner.



Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 76 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates



African-American and Hispanic young adults are less likely to have health insurance coverage than others.

Are you currently covered by health insurance? (Total n=1,752; Caucasian n=1,227; AfricanAmerican n=150; Hispanic n=151; Asian/Pac. Islander n=154)



Total



Caucasian



African-American



Hispanic



Asian/Pac. Islander



44%



47%



41% 42%



33% 11%13% 7% 6% Yes, through your employer

15%



27% 20% 19% 21% 22%



30% 31% 24% 21%

19%



Yes, through spouse's employer



Yes, from some other source



No



Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 77 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates



Nearly one-quarter of those employed say they are covered by a traditional pension plan. Half report that no such plan is available.

Are you currently covered by a traditional pension plan, also known as a defined benefit plan? (Total n=1,598; Gen Y n=534; Gen X n=1,064) Among employed individuals



Total



Gen Y



Gen X



53% 53% 53%



23% 16%



28% 10% 12% 9% No, such a plan is available, but you are not covered No, no such plan is available 13% 19% 10%



Yes, currently covered



Not sure



Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 78 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates



Far more young adults are eligible for a defined contribution plan than a defined benefit plan.

Are you eligible for your employer’s defined contribution retirement savings plan, such as a 401(k) or 403(b)? (Total n=1,598; Gen Y n=534; Gen X n=1,064) Among employed individuals



Total



Gen Y



Gen X



57% 50% 39% 31% 32% 31% 9% Yes, currently covered 12% 17% 7% No, no such plan is available 10% 6%



No, such a plan is available, but you are not covered



Not sure



Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 79 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates



Although the majority do, roughly one-quarter of young adults do not contribute money to their defined contribution retirement savings plan.

Do you personally contribute money to your employer-sponsored 401(k) or 403(b) retirement savings plan? (Total n=866; Gen Y n=213; Gen X n=653) Among employed individuals who are eligible for a DC retirement savings plan



Total 76% 62%



Gen Y



Gen X



71%



37% 27% 22% 2% Yes No 1% Not sure 2%



Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 80 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates



Propensity to contribute money to an employersponsored retirement savings plan increases with income.

Do you personally contribute money to your employer-sponsored 401(k) or 403(b) retirement savings plan? (Total n=866; <$30K n=100; $30K-$49K n=227; $50K-$79K n=259; $80K+ n=256) Among employed individuals who are eligible for a DC retirement savings plan



Total 89% 71% 69% 63% 60%



<$30K



$30K-$49K



$50K-$79K



$80K+



39%36% 27% 27% 11% 2% 1% 1% 4%



*

Yes No Not sure

Income is calculated using personal income for unmarried respondents who do not live with a partner and household income for those who are either married or live with a partner.



Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 81 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates



The vast majority of young adults show support for voluntary automatic enrollment into retirement plans; nearly half say it’s a very good idea.

Generally, do you feel it is a good idea or a bad idea for employers to voluntarily enroll workers automatically in a retirement savings plan and set up automatic contributions from the workers’ paychecks? (Total n=1,752; Gen Y n=613; Gen X n=1,139)



Total



Gen Y



Gen X



45%



49% 40% 40%



46% 35%



11% 10% 11%



4% 3% 5% Very bad idea



Very good idea



Somewhat good idea



Somewhat bad idea



Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 82 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates



Full-time employees are especially likely to view automatic enrollment favorably.

Generally, do you feel it is a good idea or a bad idea for employers to voluntarily enroll workers automatically in a retirement savings plan and set up automatic contributions from the workers’ paychecks? (Total n=1,752; Full-time n=1,163; Part-time n=435; Unemployed n=154)



Total



Full-time/35+ hrs/wk



Part-time/<35 hrs/wk



Unemployed



50% 45%



39% 31%



45% 46% 40% 37%



11% 9% 14%13%



4% 4% 2%



10%



Very good idea



Somewhat good idea



Somewhat bad idea



Very bad idea



Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 83 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates



Retirement Mindset



84



Six in ten young adults have given at least some thought to their own retirement, although Gen Xers have thought about it more.

In general, how much thought have you given to your own retirement? (Total n=1,752; Gen Y n=613; Gen X n=1,139)



Total



Gen Y



Gen X



42% 20% 13% 26%



38%



44% 29% 33% 25% 9% 15% 5%



A great deal of thought



Some thought



Not too much thought



No thought at all



Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 85 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates



Young people with higher incomes are more likely to have thought about their own retirement.

In general, how much thought have you given to your own retirement? (Total n=1,752; <$30K n=474; $30K-$49K n=405; $50K-$79K n=443; $80K+ n=352)



Total



<$30K



$30K-$49K



$50K-$79K



$80K+



39% 20% 23% 20% 12%



49% 42% 44% 45% 36%



35% 29% 29% 26% 14% 17% 9% 8% 3% 2% No thought at all



A great deal of thought



Some thought



Not too much thought



Income is calculated using personal income for unmarried respondents who do not live with a partner and household income for those who are either married or live with a partner.



Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 86 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates



Most young adults expect to live to be (at least) octogenarians.

Based on what you know about your health, your family history, and other factors, until what age do you expect to live? (Total n=1,752; Gen Y n=613; Gen X n=1,139)



Total



Gen Y



Gen X

Gen Y 81

81



Total



Gen X 82

80



Mean



81

80



44% 44% 44% 23% 21%20% 8%8%8%



Median



20% 20% 20% 6%7% 5% 1%1%1% Not sure



Younger than 70



70 to 79



80 to 89



90 to 99



100 or older



Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 87 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates



Most expect to retire between age 60 and 69. Gen Xers are more apt than Gen Yers to say ages 70 to 79.

At what age do you think you will retire? (Total n=1,752; Gen Y n=613; Gen X n=1,139)



Total



Gen Y



Gen X

Gen Y 61 Gen X 64



Total



60% 58% 56%



Mean



63



Median



65



65



65



18% 17% 16% 5% 7% 4% Younger than 50 50 to 59 60 to 69



18% 21% 13% 3% 1% 3% 70 to 79 80 or older



Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 88 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates



Members of both the younger and older generations expect to retire at roughly the same age.

At what age do you think you will retire? (This study’s Total n=1,752; RCS Total n=615)



This study's respondents



RCS respondents ages 40+



58% 59%



17% 5% 3% Younger than 50



18% 11%



14% 3% 2%



50 to 59



60 to 69



70 to 79



80 or older



Source: 2007 Retirement Confidence Survey (RCS) (Base: non-retirees ages 40+; n=615) Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 89 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates



Many say that they have not saved for retirement, outside of Social Security and employer-provided monies.

Not including Social Security taxes or employer-provided money, have you and/or your spouse personally saved any money for retirement? (Total n=1,752; Gen Y n=613; Gen X n=1,139)



Total



Gen Y



Gen X



67% 58% 52% 45% 38% 27%



4% Yes No



5% Not sure



3%



Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 90 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates



Likelihood of personally saving for retirement falls precipitously as income decreases.

Not including Social Security taxes or employer-provided money, have you and/or your spouse personally saved any money for retirement? (Total n=1,752; <$30K n=474; $30K-$49K n=405; $50K-$79K n=443; $80K+ n=352)



Total



<$30K



$30K-$49K



$50K-$79K



$80K+



77% 58% 38% 46% 39%



77% 61% 50%



17%



21% 4% 6% Yes No 1% 4% 2%



Not sure



Income is calculated using personal income for unmarried respondents who do not live with a partner and household income for those who are either married or live with a partner.



Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 91 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates



African-American young adults lower rates of personal retirement savings.

Not including Social Security taxes or employer-provided money, have you and/or your spouse personally saved any money for retirement? (Total n=1,752; Caucasian n=1,227; AfricanAmerican n=150; Hispanic n=151; Asian/Pac. Islander n=154)



Total



Caucasian



African-American



Hispanic



Asian/Pac. Islander



69% 58% 55% 43% 38% 28%27% 39%



64% 53%



4% 2% 4% Yes No



9% 8%



Not sure



Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 92 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates



Overall, these young adults are far less likely than those who are older to say they have personally saved for retirement.

Not including Social Security taxes or employer-provided money, have you and/or your spouse personally saved any money for retirement? (This study’s Total n=1,752; RCS Total n=615)



This study's respondents



RCS respondents ages 40+



71% 58% 38% 28%



Yes



No



Source: 2007 Retirement Confidence Survey (RCS) (Base: non-retirees ages 40+; n=615) Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 93 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates



Still, six in ten young Americans say they are confident that they will eventually save enough to retire comfortably.

How confident are you that, when you retire, you will have saved enough money to afford a comfortable lifestyle in retirement? (Total n=1,752; Gen Y n=613; Gen X n=1,139)



Total



Gen Y



Gen X



Net Confident: 59%

Net Not Confident: 41%

47% 52% 44% 31% 28% 33% 11% 13% 10% 11% 8% 13% Somewhat confident Not too confident Not at all confident



Very confident



Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 94 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates



Confidence in having saved sufficiently for a comfortable retirement is expectedly higher among those with higher incomes.

How confident are you that, when you retire, you will have saved enough money to afford a comfortable lifestyle in retirement? (Total n=1,752; <$30K n=474; $30K-$49K n=405; $50K$79Kn=443; $80K+ n=352)



Total



<$30K



$30K-$49K



$50K-$79K



$80K+



Net Confident: 59%



Net Not Confident: 41%

54% 57%



47% 43% 43%



18% 11% 10% 11% 8% Very confident Somewhat confident



34%38% 31% 28% 19%



12% 11% 10%8% 6% Not at all confident



Not too confident



Income is calculated using personal income for unmarried respondents who do not live with a partner and household income for those who are either married or live with a partner.



Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 95 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates



Older Americans (who aren’t yet retired) are even more likely to express such positive outlooks for their retirement savings.

How confident are you that, when you retire, you will have saved enough money to afford a comfortable lifestyle in retirement? (This study’s Total n=1,752; RCS Total n=615)



This study's respondents



RCS respondents ages 40+



This Study Net Confident: 59% RCS Net Confident: 69%



This Study Net Not Confident: 41% RCS Net Not Confident: 30%

47% 44% 26% 11% 31% 19% 11% 11%



Very confident



Somewhat confident



Not too confident



Not at all confident



Source: 2007 Retirement Confidence Survey (RCS) (Base: non-retirees ages 40+; n=615) Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 96 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates



Employer-sponsored defined contribution retirement plans are the largest expected source of retirement income. Few plan to rely on Social Security.

Which of these possible sources of income do you think will provide you (and your spouse) with the LARGEST share of income in retirement? (Total n=1,752; Gen Y n=613; Gen X n=1,139)



Employer-sponsored retirement savings plan, like a 401(k) Other personal savings/investments, not in a work-related retirement plan

19% 20% 18% 8% 5% 11% 7% 8% 6% 6% 9% 5% 2% 2% 2% 1% 1% 1% 15% 20% 12%



41% 35% 46%



Total Gen Y Gen X



Employer-provided traditional pension

Social Security Employment The sale or refinancing of your home Something else



Not sure



Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 97 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates



Far more than the older generations, young adults expect to rely on 401(k)-type retirement plans for their retirement income.

Which of these possible sources of income do you think will provide you (and your spouse) with the LARGEST share of income in retirement? (This study’s Total n=1,752; RCS Total n=615)



Employer-sponsored retirement savings plan, like a 401(k) Other personal savings/investments, not in a work-related retirement plan



41% 26% 19% 22% 8% 15% 7% 17% 6% 9% 2% 2% 1% 3% 15% 3%



Employer-provided traditional pension Social Security

Employment The sale or refinancing of your home



This study's respondents RCS respondents ages 40+



Something else Not sure



Source: 2007 Retirement Confidence Survey (RCS) (Base: non-retirees ages 40+; n=615) Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 98 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates



Very few young Americans have faith that the Social Security system will provide them with benefits comparable to those received by retirees today.

How confident are you that, when you retire, the Social Security system will provide you with benefits of at least equal value to the benefits received by retirees today? (Total n=1,752; Gen Y n=613; Gen X n=1,139)



Total



Gen Y



Gen X



Net Not Confident: 78% Net Confident: 22%

44% 19% 22% 16% 4% 4% 3% Very confident Somewhat confident Not too confident Not at all confident 39%



47% 34% 34% 34%



Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 99 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates



Lack of confidence in Social Security's ability to deliver comparable benefits is consistent, regardless of education.

How confident are you that, when you retire, the Social Security system will provide you with benefits of at least equal value to the benefits received by retirees today? (Total n=1,752; High school or less n=243; Some college n=719; Bachelor’s n=571; Master’s or more n=219)



Total



High school or less



Some college



Bachelor's



Master's or more



Net Not Confident: 78%

Net Confident: 22%

49% 44% 43% 42% 42%



4% 4% 2%



10% 3%



24% 19% 18% 16% 12%



34% 37% 31% 35%31%



Very confident



Somewhat confident



Not too confident



Not at all confident



Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 100 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates



Older Americans express more confidence in Social Security benefits than do younger Americans.

How confident are you that, when you retire, the Social Security system will provide you with benefits of at least equal value to the benefits received by retirees today? (This study’s Total n=1,752; RCS Total n=615)



This study's respondents



RCS respondents ages 40+



This Study Net Not Confident: 78% RCS Net Confident: 63% This Study Net Confident: 22% RCS Net Confident: 35%

44% 35% 28% 19% 4% 7% Somewhat confident Not too confident Not at all confident 34% 28%



Very confident



Source: 2007 Retirement Confidence Survey (RCS) (Base: non-retirees ages 40+; n=615) Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 101 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates



Members of Generations Y and X have similarly low expectations that Medicare will deliver benefits equal to those received by retirees today.

How confident are you that, when you retire, the Medicare system will provide you with benefits of at least equal value to the benefits received by retirees today? (Total n=1,752; Gen Y n=613; Gen X n=1,139)



Total



Gen Y



Gen X



Net Confident: 28%

44% 24% 3% 5% 3% Very confident Somewhat confident 30% 20%



Net Not Confident: 72%



48% 39% 28% 26% 29%



Not too confident



Not at all confident



Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 102 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates



Confidence in Medicare maintaining current benefit levels is low across education levels.

How confident are you that, when you retire, the Medicare system will provide you with benefits of at least equal value to the benefits received by retirees today? (Total n=1,752; High school or less n=243; Some college n=719; Bachelor’s n=571; Master’s or more n=219)



Total



High school or less



Some college



Bachelor's



Master's or more



Net Confident: 28%



Net Not Confident: 72%

50% 46% 44% 40% 40%



30% 24% 22% 25% 18% 3% 4% 2%4% 6% Very confident Somewhat confident Not too confident



29% 28% 30% 25% 28%



Not at all confident



Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 103 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates



Again, the older generations surveyed in RCS have more faith in Medicare benefits than younger adults in this study.

How confident are you that, when you retire, the Medicare system will provide you with benefits of at least equal value to the benefits received by retirees today? (This study’s Total n=1,752; RCS Total n=615)



This study's respondents



RCS respondents ages 40+



This Study Net Confident: 28% RCS Net Confident: 41%



This Study Net Not Confident: 72% RCS Net Not Confident: 57%



44% 33% 24% 3% 8% Somewhat confident Not too confident Not at all confident 32% 28% 25%



Very confident



Source: 2007 Retirement Confidence Survey (RCS) (Base: non-retirees ages 40+; n=615) Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 104 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates



Over one-third anticipate helping their retired parents financially; many are understandably unsure whether they will help.

Do you expect to provide some sort of financial support to your parents during their retirement? (Total n=1,752; Gen Y n=613; Gen X n=1,139)



Total



Gen Y



Gen X



43% 37% 33% 34% 25%



40% 29% 32% 26%



Yes



No



Not sure



Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 105 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates



African-Americans and Asian/Pacific Islanders are especially inclined to expect to provide financial support to their retired parents.

Do you expect to provide some sort of financial support to your parents during their retirement? (Total n=1,752; Caucasian n=1,227; African-American n=150; Hispanic n=151; Asian/Pac. Islander n=154)



Total



Caucasian



African-American



Hispanic



Asian/Pac. Islander



55%

43%



55%



37% 30%



34%



39%

29% 29%



29%31%26%28%

16%



20%



Yes



No



Not sure



Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 106 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates



Financial Education and Literacy



107



Young people do not feel very knowledgeable about certain critical financial tasks. Many say they know more about their iPod than how to do their taxes.

How knowledgeable do you feel when it comes to…? (Total n=1,752; Gen Y n=613; Gen X n=1,139) Very knowledgeable Somewhat knowledgeable

Total



How to use an iPod



Gen Y Gen X



40% 53% 31% 32% 34% 30% 32% 34% 30% 32% 33% 32% 26% 23% 29%



27% 27%



67% 27% 80% 58% 84% 84% 84% 80% 83% 77% 86% 82% 88%



Total



Eliminating or avoiding debt



Gen Y Gen X



52% 49% 54% 48% 49% 48% 53% 49% 56% 40% 37% 42% 66% 60% 70%



Total



How to stick to a budget



Gen Y Gen X



Total



Buying a car



Gen Y Gen X



Total



Doing your taxes



Gen Y Gen X



Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 108 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates



Gen Xers feel marginally more knowledgeable about saving for retirement. Knowledge of how the Social Security system works is low among both generations.

How knowledgeable do you feel when it comes to…? (Total n=1,752; Gen Y n=613; Gen X n=1,139)



Very knowledgeable

Total



Somewhat knowledgeable



Buying a home Gen Y

Gen X



21% 17% 24% 15%



41% 62% 34% 51% 46% 70% 47% 41% 52% 31% 33% 31% 31% 27% 34% 47% 50% 44% 45% 42% 47% 62% 57% 66%



Total



Saving for retirement Gen Y



16% Gen X 14%

Total



How to invest your money Gen Y outside of the workplace

Gen X



15% 18% 14% 14%



Total



How the Social Security Gen Y 15% system works 13%

Gen X



Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 109 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates



Though most answer correctly, two in ten young adults are not sure what it means to purchase a company’s stock.

If you buy a company’s stock… (Total n=1,752; Gen Y n=613; Gen X n=1,139)



Total

57% 59% 56%



Gen Y



Gen X



22% 23% 22% 7% 9% 4% 1% 1% 1% You are liable for The company will the company's return your debts original investment to you with interest Not sure 12% 12% 13%



You own part of the company*

* Correct answer



You have lent money to the company



Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 110 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates



Research among FINRA’s experienced investors show they are more likely than young adults in this study to grasp what purchasing a stock means.

If you buy a company’s stock… (This study’s Total n=1,752; FINRA Total n=1,086)



This Study

You have lent money to the company, 7% You are liable for the company's debts, 1% The company will return your original investment to you with interest, 12%



FINRA’s Study

You are liable for the company's You have lent debts, 1% money to the company, 10%



The company will return your original investment to you with interest, 5% Not sure, 5%



You own part of the company*, 57%



Not sure, 22%



You own part of the company*, 79%



* Correct answer

Source: Financial Industry Regulatory Authority’s (FINRA’s) 2003 Investor Literacy Research, with 1,086 investment decision-makers ages 21 to 69 who performed at least one stock, bond, or mutual fund transaction between October 2002 and April 2003

Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 111 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates



Only one-quarter of young adults understand that when interest rates are lowered, bond prices rise; four in ten do not even venture a guess.

In general, if interest rates go down, then bond prices… (Total n=1,752; Gen Y n=613; Gen X n=1,139)



Total



Gen Y



Gen X



40% 31% 24% 23% 25% 23% 24% 23% 12% 12% 13%



39%



Go down

* Correct answer



Go up*



Are not affected



Not sure



Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 112 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates



FINRA’s investors are more apt to be aware of the relationship between interest rates and bond prices than the young adults quizzed in this study.

In general, if interest rates go down, then bond prices… (This study’s Total n=1,752; FINRA Total n=1,086)



This Study

Go down, 24%



FINRA’s Study

Go down, 25%



Go up*, 23%

Not sure, 23%



Go up*, 40%



Not sure, 40%



Are not affected, 12%



Are not affected, 12%



* Correct answer

Source: Financial Industry Regulatory Authority’s (FINRA’s) 2003 Investor Literacy Research, with 1,086 investment decision-makers ages 21 to 69 who performed at least one stock, bond, or mutual fund transaction between October 2002 and April 2003

Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 113 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates



Two-thirds of young people understand that riskier investing generates higher returns in the long run.

True or False: In general, investments that are riskier tend to provide higher returns over time than investments with less risk. (Total n=1,752; Gen Y n=613; Gen X n=1,139)



Total



Gen Y



Gen X



65% 64% 66%



16% 15% 16%



19% 21% 18%



True*

* Correct answer



False



Not sure



Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 114 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates



FINRA’s investors are also more apt to know that riskier investments yield higher returns. Young adults are more likely to admit they don’t know.

True or False: In general, investments that are riskier tend to provide higher returns over time than investments with less risk. (This study’s Total n=1,752; FINRA Total n=1,086)



This Study

False, 16%



FINRA’s Study



False, 19%



Not sure, 19%



Not sure, 9%



True*, 65%



True*, 72%



* Correct answer

Source: Financial Industry Regulatory Authority’s (FINRA’s) 2003 Investor Literacy Research, with 1,086 investment decision-makers ages 21 to 69 who performed at least one stock, bond, or mutual fund transaction between October 2002 and April 2003

Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 115 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates



Four in ten are uncertain about the reasonable rate of return on diversified domestic mutual funds. Gen Xers are more likely to answer correctly.

What is a reasonable average of annual return that can be expected from a broadly diversified U.S. stock mutual fund over the long run? (Total n=1,752; Gen Y n=613; Gen X n=1,139)



Total



Gen Y



Gen X



46% 41% 36% 28% 25% 20% 12% 12% 12%



15% 14% 14% 6% 5%



8% 2% 2% 2% 25% Not sure



5%

* Correct answer



10%*



15%



20%



Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 116 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates



FINRA’s investors are more likely to know the average rate of return on a diversified stock mutual fund, while young adults are again more likely to be unsure.

What is a reasonable average of annual return that can be expected from a broadly diversified U.S. stock mutual fund over the long run? (This study’s Total n=1,752; FINRA Total n=1,086)



This Study

Five percent, 12% Ten percent*, 25% Not sure, 41%



FINRA’s Study

Five percent, 15%



Not sure, 24%



Source: Financial Industry Regulatory Authority’s (FINRA’s) 2003 Investor Literacy Research, with 1,086 investment decision-makers ages 21 to 69 who performed at least one stock, bond, or mutual fund transaction between October 2002 and April 2003

Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 117 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates



Twentyfive percent, 2% * Correct answer



Fifteen Twenty percent, 14% percent, 6%



Twentyfive percent, 2% Twenty percent, 4%



Ten percent*, 40%



Fifteen percent, 15%



For the most part, those in the younger generations are unsure as to which investment vehicle produces the best returns.

Over the last 20 years in the U.S., the best average returns have been generated by… (Total n=1,752; Gen Y n=613; Gen X n=1,139)



Total



Gen Y



Gen X 28% 25% 30%



Stocks* Money Market accounts Bonds CDs Precious metals Not sure

* Correct answer



13% 11% 15% 8% 11% 5% 8% 9% 8% 5% 4% 6% 38% 40% 36%



Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 118 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates



A sizeable share of FINRA’s investors are also unsure as to which investment vehicle generates the best average returns, though most still answer correctly.

Over the last 20 years in the U.S., the best average returns have been generated by… (This study’s Total n=1,752; FINRA Total n=1,086)



This study's respondents



FINRA respondents



Stocks*

Money market accounts Bonds CDs Precious metals Not sure

* Correct answer



28% 51% 13% 10% 8% 9% 8% 6% 5% 2% 38% 22%



Source: Financial Industry Regulatory Authority’s (FINRA’s) 2003 Investor Literacy Research, with 1,086 investment decision-makers ages 21 to 69 who performed at least one stock, bond, or mutual fund transaction between October 2002 and April 2003

Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 119 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates



Most understand the tax implications of certain financial actions, though sizable shares are still uncertain.

To the best of your knowledge, is the following statement true or false? (Total n=1,752; Gen Y n=613; Gen X n=1,139)



True

Total



False



Not sure



Interest paid on a mortgage Gen Y is tax-deductible (True)

Gen X



67% 53% 78% 66% 51% 77% 59% 48% 67% 68% 59% 75%



10% 15%



23% 32% 6% 16% 16%



Interest earned in a bank Total savings account is subject Gen Y to federal income taxes (True) Gen X

When an employee retires, the Total money they withdraw from their Gen Y traditional 401(k) plan is subject to federal income taxes (True) Gen X

Total 10%



18% 28%



21% 11% 12% 23% 30% 16% 17% 22% 29% 17%



18% 22%



Interest paid on credit card Gen Y 12% bills is tax-deductible (False)

Gen X 8%



Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 120 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates



Only about three in ten young Americans grade themselves an A or B when it comes to saving and investing; more give themselves a D or F.

How would you grade…? (Total n=1,752; Gen Y n=613; Gen X n=1,139)



A

Total 8%



B



C



D



F



23% 25% 22%



27% 27% 27%



20% 22% 18%



22% 17% 26%



How well you are saving money



Gen Y 10%



Gen X 7%



Total 6%



21% 20% 22%



27% 29% 24%



18% 17% 18%



29% 28% 30%



How well you are investing money



Gen Y 5%



Gen X 6%



Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 121 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates



Nearly half grade their parents an A or B for the job they did teaching them about finances, while half give their schools a D or F.

How would you grade…? (Total n=1,752; Gen Y n=613; Gen X n=1,139)



A

Total



B



C



D



F



18% 21% 16%



28% 33% 25%



22% 23% 22%



15%



16%



The job your parents did teaching you about Gen Y saving and investing

Gen X



10% 12% 18%



19%



Total 4% 14%



26% 29% 23%



23% 20% 25%



33% 30% 36%



The job your schools did teaching you about Gen Y 5% 16% saving and investing

Gen X 3% 13%



Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 122 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates



Sources of Information



123



Many say their parents are a major source of financial advice. Gen Yers seek advice from their parents more often.

Please indicate whether the following is a major, minor, or not a source of financial advice. (Total n=1,752; Gen Y n=613; Gen X n=1,139)



Major source

Total



Minor source



Not a source



Your parents (or in-laws) Gen Y

Gen X



38% 51% 28% 20% 17% 22%



32% 31% 49% 50% 48% 49% 52% 47%



30% 32% 17% 40% 31% 33% 30% 40% 37% 42% 45% 47% 44%



Total



The internet Gen Y

Gen X



Total 11%



Your friends or co-workers Gen Y 11%

Gen X 11% Total 11%



Periodicals (newspaper, magazines, etc.) Gen Y 9%

Gen X



13%



44% 45% 43%



Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 124 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates



Financial professionals are a source of advice for some, especially Gen Xers, while the media is a lessutilized source of financial advice.

Please indicate whether the following is a major, minor, or not a source of financial advice. (Total n=1,752; Gen Y n=613; Gen X n=1,139)



Major source

Total



Minor source



Not a source



A financial professional



Gen Y Gen X



23% 18% 27% 15% 14% 16% 10% 10% 9% 7% 5% 9% 8% 10% 7%



31% 33% 30% 38% 41% 36% 38% 48% 31% 37% 36% 37%



46% 50% 43% 47% 45% 48% 52% 42% 60% 56% 59% 54% 63% 63% 64%



Your (or your spouse’s) employer



Total Gen Y Gen X



Total



Other relatives



Gen Y Gen X



Total



Television or radio



Gen Y Gen X



Total



Someone or something else



Gen Y Gen X



28% 27% 29%



Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 125 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates



After parents and financial professionals, the internet is young adults’ third primary source of financial advice.

Which of these would you say is your primary source of financial advice? (Total n=1,603; Gen Y n=565; Gen X n=1,038) Among those who have more than one source of financial advice



Your parents (or in-laws) A financial professional

The internet Your (or your spouse’s) employer Your friends or co-workers Periodicals (newspaper, magazines, etc.)

26% 20% 15% 23% 16% 14% 18%



36%



50%



Total Gen Y Gen X



7% 5% 8% 5% 5% 5% 5% 2% 7% 3% 4% 3% 2% 1% 3% 5% 4% 6%



Other relatives Television or radio

Something else



Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 126 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates



Demographics



127



Demographics

Total (n=1,752) Age Gen Y (n=613) Gen X (n=1,139)



19 to 27

28 to 39



42%

58



100%

--



-100%



Mean age

Race



29 12%

5



23 15%

4



34 11%

6



African-American / Black

Asian



Caucasian / White

Hispanic, Spanish, or Latino



60

19



60

17



60

20



Pacific Islander

Other



*

2



*

2



*

2



Prefer not to answer

Marital Status



1 41%

41 11 4 1 * 1



1 59%

25 13 1 * -1



1 28%

53 10 7 2 * *



Single, never married

Married Unmarried, living with a partner Divorced Separated Widowed Other



* Less than 0.5% Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 128 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates



Demographics

Total (n=1,752) Current Employment Status

Employed full-time 65% 58% 69%



Gen Y (n=613)



Gen X (n=1,139)



Employed part-time

Self-employed either full-time or part-time



16

6



22

3



12

7



Both full-time and part-time jobs

Unemployed Spouse’s Current Employment Status Employed full-time Employed part-time Self-employed either full-time or part-time Both full-time and part-time jobs Unemployed



1

13 70% 7 5 2 16



1

16 74% 8 3 2 14



1

10 69% 7 6 2 17



Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 129 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates



Demographics

Total (n=1,752) Income** Gen Y (n=613) Gen X (n=1,139)



Less than $30,000

$30,000 to $49,999



14%

27



24%

30



9%

27



$50,000 to $79,999

$80,000 to $99,999



30

11



34

6



29

14



$100,000 to $199,999

$200,000 or more Home Ownership Own Rent Some other arrangement Have Children Under the Age of 18



11

1 42% 44 14



4

1 26% 56 18



14

2 54% 35 11



Yes

No



45%

55



25%

75



60%

40



* Less than 0.5%

**Income is calculated using personal income for unmarried respondents who do not live with a partner and household income for those who are either married or live with a partner.



Source: 2008 ASEC & AARP (on behalf of Divided We Fail) Preparing for Their Financial Future: A Look at the Financial State 130 of Gen X and Gen Y, conducted by Mathew Greenwald & Associates