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.
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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