preparing for their future: a look at the financial state of gen x and gen y sponsored by the...

Preparing for Their Future:A Look at the Financial State of Gen X and Gen YSponsored byThe American Savings Education Council and AARP (on behalf of Divided We Fail)

Conducted byMathew Greenwald & Associates

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Preparing for Their FutureA Look at the Financial State

of Gen X and Gen YMarch 2008

Copyright © 2008American 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 878Washington, DC 20005www.choosetosave.orgAmerican 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 private-sector partners to share information on best practices and to collaborate on financial security initiatives. For more information visit www.choosetosave.org/asec

AARP601 E Street, NWWashington, DC 20049http://www.aarp.orgAARP 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 FutureA Look at the Financial State

of Gen X and Gen YDivided We FailDivided 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 long-term 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 bi-partisan 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.

AARPAARP 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 RoundtableBusiness 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.

SEIUWith 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.

NFIBNFIB 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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• 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.

Introduction & Methodology

5

Profile of Younger People and Households

6

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)

27%

29%

33%

37%

35%

62%

55%

59%

68%

68%

68%

55%56%

55%

51%

51%

51%

31%

34%

32%

14%17%

15%

16%

12%

14%

7%

10%

9%

31%

28%

27%

29% 3%

5%

4%

Gen X

Gen Y

Total

Gen X

Gen Y

Total

Gen X

Gen Y

Total

Gen X

Gen Y

Total

Very well Somewhat well Not well

Hard-working

Optimistic

Disciplined

Family-oriented

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

7

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)

15%19%

17%

17%

18%

17%

20%

18%

19%

21%

29%

24%

27%27%

27%

42%

46%

44%

52%

53%

53%

58%54%

56%

41%

36%

39%

28%

29%

28%

30%

24%

48%

47%

49%

27%

Gen X

Gen Y

Total

Gen X

Gen Y

Total

Gen X

Gen Y

Total

Gen X

Gen Y

Total

Very well Somewhat well Not well

Technologicallysavvy

Expensive taste

Carefree

Charitable


8

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

15%

30%

4%

18%

28%

50%

4%

13%

30%

52%

4%

1%

51%

Total

Gen Y

Gen X

You are the sole decision-maker

You are the primary decision-maker, but your spouse/

partner provides input

You and your spouse/partner makedecisions in total partnership

Your spouse/partner is theprimary decision-maker,

but you provide input

Your spouse/partner isthe sole decision-maker

<.5%<.5%


9

Financial Independence

10

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


11

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; $30K-49K n=405; $50K-79K n=443; $80K+ n=352) Percent saying yes

57%

48%

58%66% 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.


12

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

33%

45%

25%

Total Gen Y Gen X


13

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

33% 33%40%

28%

39%

Total Caucasian African-American

Hispanic Asian/Pac.Islander


14

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


15

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

18% 17%24%

14% 17%

Total Caucasian African-American

Hispanic Asian/Pac.Islander


16

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

71%

71%

71% 15%

12%

17%

4%

5%

3%6%

3%

4%

3%

8%

6%

Gen X

Gen Y

Total

<$2,500 $2,500 to <$5,000$5,000 to <$10,000 $10,000 or moreNot sure

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

43%

31%

36%

16%

32%

25%

16%

18%

17%11%

11%

11% 14%

8%

11%

Gen X

Gen Y

Total

<$2,500 $2,500 to <$5,000$5,000 to <$10,000 $10,000 or moreNot sure


17

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

20 1921

Total Gen Y Gen X

Median Age At Start of “Financial Independence”


18

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

When you got your first job

High school graduation

Start of college

College graduation

24%

23%

10%

24%

28%

16%

8%

24%

19%

11%

12%

14%

Total

Gen Y

Gen X

Top 4 Responses


19

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

Getting Married(if not already)

Something else

Start of graduate school

Graduate school graduation

6%

2%

19%

4%

1%

1%

18%

8%

4%

1%

21%

1%

TotalGen YGen X

Top 5-8 Responses


20

10%

42%

5%1%

16%

25%

6%

30%

8%12%

30%

16%

6%13%

20%24% 23%

14%

23%23%

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

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

When you got your first job

High school graduation

Start of college

College graduation

Top 4 Responses


21

19%

0% 0%

24%

0% 0%

22%

5%1% 2%

13%10%

24%

6% 5%6%2% 1%

5% 8%


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

Getting married Graduate school graduation

Start of graduate school

Something else

Top 5-8 Responses


22

Current Financial Situations

23

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)

9%

44%

33%

14%9%

47%

35%

9%9%

42%

31%

18%

Very satisfied Somewhat satisfied Not too satisfied Not at all satisfied

Total Gen Y Gen X

Net Satisfied: 53%

Net Not Satisfied: 47%


24

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)

9%14%

9%

46%

12%6%

29%

48%

17%15%

46%

23%

10%

47%

27%33%

44%

33%

16% 16%


Total Caucasian African-American Hispanic Asian/Pac. Islander

Net Satisfied: 53%

Net Not Satisfied: 47%


25

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)

9%14%

5%

35%

20%

9%

40%

14%10%

55%

26%19%

58%

17%

33%

44%40%

36%

9%5%


Total <$30K $30K-$49K $50K-$79K $80K+

Net Satisfied: 53%

Net Not Satisfied:47%



26

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)

7%

42%36%

15%7%

41% 40%

12%6%

43%

33%

18%

Very secure Somewhat secure Not too secure Not at all secure

Total Gen Y Gen X

Net Secure: 49%

Net Not Secure:51%


27

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)

7%

42%36%

3%

49%

21%

5%

43%

16%

7%

23%18% 15%

26%

37%

58%

11%7%

19%

57%

Very secure Somewhat secure Not too secure Not at all secure

Total <$30K $30K-$49K $50K-$79K $80K+

Net Secure: 49%

Net Not Secure: 51%



28

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)

27%16%

23%

23%22%23%

28%25%27%

23%38%

29%

52%47%50%

42%36%

41%44%42%

36%37%37%

36%36%

36%

41%41%41%

35%34%35%

36%37%37%

40%23%

33%

32%

37%39%

38%

12%17%14%

Gen X

Gen Y

Total

Gen X

Gen Y

Total

Gen X

Gen Y

Total

Gen X

Gen Y

Total

Gen X

Gen Y

Total

Strongly agree Somewhat agree Disagree

You feel you should be moreprepared for a “rainy day”

You can rely on friends and familyto help you financially whenyou are in a tough situation

You worry about your financialfuture, perhaps to the detriment

of enjoying today

Making decisions about moneymakes you feel anxious

You struggle to make ends meet


29

Young Americans indicate that they have financial goals for themselves.


19%

22%

20%

48%

57%

52%

53%

59%

56%

44%

41%

41%

36%

39%

42%

35%

39%

43%

34%

39%

11%

7%

9%

7%

38%

4%

5%

Gen X

Gen Y

Total

Gen X

Gen Y

Total

Gen X

Gen Y

Total


You appreciate the material goods you have, even if

it’s not a lot

You have financial goalsfor yourself

You are proud of how you have lived your life

financially so far


30

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


15%

14%

15%

17%

20%

18%

27%

37%

31%

39%

45%

42%

58%

49%

54%

44%

35%

40%

Gen X

Gen Y

Total

Gen X

Gen Y

Total


You sometimes offer financial advice to others

You feel taken advantageof by “the system”


31

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

22%

19%

15%

8%

20%

18%

17%

16%

15%

7%

23%

20%

16%

14%

12%

9%

16%

13%

Total

Gen Y

Gen X

Not living paycheck to paycheck /Able to afford basic needs

Not having to worry about finances

Live comfortably

Able to save / Haveemergency or rainy day fund

Able to deal with theunexpected or hard times

Top 6 Reported

Not having debt


32

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

6%

5%

5%

5%

7%

5%

3%

8%

7%

3%

5%

6%

6%

5%

7%

Total

Gen Y

Gen X

Able to provide for family /Money for children’s education

Able to retire / Maintaincurrent lifestyle in retirement

Can afford travel/entertainment/leisure/fun

Have money/enough money /dollar amount (general)

Top 7-12 Reported

Don’t know / Refused


33

Savings and Debt

34

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

20%

13%

11%

22%

14%

12%

12%

5%

19%

12%

13%

10%

15%

12%

11%

Total

Gen Y

Gen X

Paying bills / Making ends meet

Having enough moneyto support self/family

Lack of savings / Having enoughfor an emergency / Future

Unemployment / Job loss / Career

Being able to retire /Afford retirement

Top 5 Reported


35

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

Stick to a monthly budget

Have a will

Have a living will (also knownas a health care directive)

Have a formal, written financial plan

53%

14%

14%

55%

12%

11%

9%

51%

16%

16%

17%

14%

Total Gen Y Gen X


36

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

Have a will

Have a living will (also knownas a health care directive)

Have a formal, written financial plan

53%

14%

14%

52%

17%

16%

16%

53%

12%

12%

11%

14%

Total

Married/Living w/ Partner

Unmarried/No partner


37

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)

50% 50%52%48%48%

52%

Yes No

Total Gen Y Gen X


38

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)

50% 50%43%

57%

43%

57%52%

48%

70%

30%

Yes No

Total <$30K $30K-$49K $50K-$79K $80K+



39

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)

38%

62%

37%

63%

39%

61%

Yes No

Total Gen Y Gen X


40

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

40%

29%

9%

4%

38%

32%

13%

7%

5%

5%

42%

28%

11%

10%

8%

3%

11%

7%

Total

Gen Y

Gen X

Less than one month

6 months to less than 1 year

3 to less than 6 months

1 to less than 3 months

1 year or longer

Not sure


41

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)

17%

83%

20%

80%

16%

84%

Yes No

Total Gen Y Gen X


42

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)

17%

83%

9%

91%

14%

86%

21%

79%

37%

63%

Yes No

Total <$30K $30K-$49K $50K-$79K $80K+



43

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

63%

48%

31%

11%

22%

42%

32%

25%

4%

20%

67%

52%

49%

30%

28%

16%

23%

35%

27%

57%

17%

Total

Gen Y

Gen X

Credit card

Medical

Mortgage

Car loan

Student loan

Other

Home equity loan


44

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

12%

7%

18%

20%

10%

17%

9%

14%

19%

21%

15%

6%

9%

17%

22%

23%

13%

11%

21%

9%

7%

Total

Gen Y

Gen X

Less than $1,000

$10,000 to $19,999

$2,500 to $4,999

$1,000 to $2,499

$5,000 to $9,999

$50,000 or more

$20,000 to $49,999


45

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)

57%

10%

6%

6%

66%

4%9%

6%

7%

2%

3%

3%

13%

9%

7%

50%

8%

8%Total

Gen Y

Gen X

Less than $10,000

$50,000 to $99,999

$20,000 to $29,999

$10,000 to $19,999

$30,000 to $49,999

$100,000 or more


46

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

35%

47%

17%

30%

50%

19%

38%45%

15%

Major problem Minor problem Not a problem

Total Gen Y Gen X


47

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

35%

47%

17%

36%

48%

14%

3%

21%

76%

Major problem Minor problem Not a problem

Total Non-mortgage debt Mortgage debt only


48

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)

52%

37%

46%

65%

55%

61%

69%

63%

67%

34%

39%

36%

26%

28%

27%

23%

27%

25%

15%

7%

10%

8%

6%

7%

6%

19%

12%Gen X

Gen Y

Total

Gen X

Gen Y

Total

Gen X

Gen Y

Total

Behind schedule On track Ahead of schedule

Saving for an emergency or having savings

in general

Saving for retirement

Debt


49

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)

27%24%

26%

39%

38%

39%

43%

40%

41%

38%

49%

42%

56%54%

55%

45%

46%

45%

46%

47%

46%

14%

14%

11%

13%

6%

9%

8%

7%

6%

7%46%40%

49%

15%

14%

Gen X

Gen Y

Total

Gen X

Gen Y

Total

Gen X

Gen Y

Total

Gen X

Gen Y

Total

Behind schedule On track Ahead of schedule

Housing

Family life

Career

Education


50

Financial Goals

51

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

76%

75%

73%

84%

69%

77%

69%

70%

71%

80%

72%

76%

64%

74%

67% Total

Gen Y

Gen X

Putting money away for retirement

Minimizing stress in your life

Paying off debt

Advancing your career orearning more money

Buying a home or making majorimprovements to your home

Top 5 Reported


52

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


64%

64%

50%

68%

67%

55%

56%

41%

62%

61%

58%

45%

50%

57%

46%

Total

Gen Y

Gen X

Paying basic bills in fulland on time

Preparing for a child’s education

Doing more leisure travel

Focusing on your health

Purchasing a car

Top 6-10 Reported


53

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


45%

44%

37%

59%

63%

44%

54%

35%

30%

42%

24%

1%

43%

Total

Gen Y

Gen X

Living a more spiritual life

Getting married (if not currently)

Receiving a higher educationor degree for yourself

Having children orhaving more children

Starting a business /Grow an existing business

Top 11-15 Reported

<.5%<.5%


54

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

22%

16%

7%

20%

12%

7%

13%

7%

16%

18%

13%

3%

7%

10%

7%

Total

Gen Y

Gen X

Paying off debt

Advancing your career orearning more money

Buying a home or making majorimprovements to your home

Living a more spiritual life

Receiving a higher educationor degree for yourself

Top 5 Reported


55

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


6%

6%

5%

9%

6%

3%

3%

2%

4%

6%

8%

7%

8%

6%

5%

Total

Gen Y

Gen XPaying basic bills in fulland on time

Preparing for a child’s education

Focusing on your health

Getting married (if not currently)

Putting money away for retirement

Top 6-10 Reported


56

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


Top 11-15 Reported

3%

3%

1%

3%

2%

2%

1%

3%

3%

3%

1%

2%

Total

Gen Y

Gen X

Having children orhaving more children

Start a business /Grow an existing business

Minimizing stress in your life

Purchasing a car

Doing more leisure travel

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


57

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

39%

53%

7%1%

41%

53%

5%1%

37%

53%

9%1%

Very confident Somewhatconfident

Not too confident Not at all confident

Total Gen Y Gen X


58

Generational Differences

59

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)

19%

18%

9%

5%

21%

15%

11%

8%

9%

3%

18%

19%

11%

9%

6%

11%

9%

10%

Total

Gen Y

Gen X

Top 6 Reported

Cost of living / Inflation

Debt / Credit cards

Spend more now / Don’t save

Retirement/ No pensions/ No Social Security/ Medicare

Parents were smarter financially/Saved sooner/ Disciplined spenders

Work environment/ Work hardernow/ Change jobs more often


60

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

4%

3%

3%

3%

3%

3%

3%

1%

4%

3%

2%

2%

3%

3%

3%

Total

Gen Y

Gen X

More investment options now

Economy/ Recession

We make more money

Government policy/spending/ Taxes

No rise in salary


61

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)

21%

28%

24%

30%

25%

28%

52%

57%

54%

30%

34%

32%

24%

27%

25%

26%

22%

24%

49%

37%

44%

46%

48%

47%

22%

21%

22%

Gen X

Gen Y

Total

Gen X

Gen Y

Total

Gen X

Gen Y

Total

Easier for your generation Same Harder for your generation

Getting an education

Buying a first home

Finding good employment


62

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)

11%

18%

14%

17%

23%

20%

20%

28%

23%

28%

36%

31%

25%

35%

29%

24%

30%

27%

61%

46%

54%

57%

43%

51%

56%

42%

50%

Gen X

Gen Y

Total

Gen X

Gen Y

Total

Gen X

Gen Y

Total

Easier for your generation Same Harder for your generation

Saving for a child’scollege education

Saving money for thelong term

Supporting a family


63

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)

54%

27%19%

54%

34%

12%

53%

23% 24%

More money About the same Less money

Total Gen Y Gen X


64

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)

54%

27%19%

49%

32%

19%

47%

30%23%

61%

23%16%

65%

21%14%


Total <$30K $30K-$49K $50K-$79K $80K+



65

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)

54%

27%19%

32%

21%

68%

16% 16%22%

13%

25% 23%

47%

66%

52%




66

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)

1%

11%

31%

1%

11%

54%

28%

7%

1%

11%

45%

32%

10%

49%

8%

Total Gen Y Gen X

Upper class

Middle class

Upper middle class

Lower middle class

Lower class


67

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)

1%

9%

30%

1%

8%

52%

31%

8%

1%

10%

51%

29%

9%

52%

9%

Total Gen Y Gen X

Upper class

Middle class

Upper middle class

Lower middle class

Lower class


68

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)

23%

54%

21%

52%

27%

25%

55%

20%

23%

Total Gen Y Gen X

Class improved

Class remained the same

Class declined


69

Views toward the Workplace and Benefits

70

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)

9%

6%

7%

8%

7%

39%

45%

42%

43%

35%

39%

57%

46%

52%

51%

57%

53%

4%Gen X

Gen Y

Total

Gen X

Gen Y

Total


Employers generally have their employees’ best

interest at heart

People your age feel loyalto their employers


71

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

39%

41%

39%

82%

77%

80%

39%

38%

39%

13%

17%

14%

22%

22%

22%

6%

6%

6%

Gen X

Gen Y

Total

Gen X

Gen Y

Total

Very important Somewhat important Not important

Offers a wellness program

Provides health insurance


72

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

38%

35%

37%

62%

51%

57%

63%

52%

59%

39%

41%

40%

28%

35%

31%

29%

33%

30%

23%

24%

23%

10%

15%

12%

8%

15%

11%

Gen X

Gen Y

Total

Gen X

Gen Y

Total

Gen X

Gen Y

Total

Very important Somewhat important Not important

Matches or contributes moneyto a retirement savings plan in

addition to what you save

Offers education and/or adviceon how to save for retirement

Provides a retirement savings plan


73

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

64%

21%

2%

68%

19%

10%

3%

1%

61%

22%

13%

2%

1%

12%

1%

Total

Gen Y

Gen X

Provides health insurance

Offers education and/or adviceon how to save for retirement

Provides a retirement savings plan

Matches or contributes moneyto a retirement savings planin addition to what you save



74

Offers education and/or advice

on how to save for retirement

21%

2%

67%

2% 2%

34%

1%

63%

3%

30%

17%

4% 1%

64%

12%

1%

12%17%11%

53%

22%

11%

48%


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

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

Provides health

insurance

Provides a retirement savings

plan

Matches or contributes money

to a retirement savings plan


* *

* Less than 0.5%


75

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

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.

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

19%

2%

21%

64%

12%

1%

65%

8%

22%19%12%

65%65%

20%

12%

25%

54%

Total <$30K $30K-$49K $50K-$79K $80K+

Provides health

insurance

Offers education and/or advice

on how to save for retirement

Provides a retirement savings

plan

Matches or contributes money

to a retirement savings plan


*



76

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)

1% 1% 1%

24%20%11%

44%

30%28%

5%

35%

19%14%15%

51%

Yes, throughyour employer

Yes, throughspouse'semployer

Yes, from someother source

No Not sure

Total Gen Y Gen X


77

1%1% 3%

24%20%11%

44% 44%

33%

1%

21% 18%15%8%

58%

9%9%

18%

61%

6%7%

28%

59%

Yes, throughyour employer

Yes, throughspouse'semployer


No Not sure

Total <$30K $30K-$49K $50K-$79K $80K+

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)

* *

* 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.


78

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; African-American n=150; Hispanic n=151; Asian/Pac. Islander n=154)

41%

7%15%

24%20%

11%

44%

21%19%13%

47%

30%27%

6%

33% 31%

21% 19%22%

42%

Yes, through youremployer

Yes, throughspouse's employer


No



79

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

23%

10%

53%

13%16%12%

53%

19%28%

9%

53%

10%

Yes, currentlycovered

No, such a plan isavailable, but youare not covered

No, no such plan isavailable

Not sure

Total Gen Y Gen X


80

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

10%

31%

9%

50%

39%

12%

32%

17%

6%

31%

7%

57%

Yes, currentlycovered

No, such a plan isavailable, but youare not covered

No, no such plan isavailable

Not sure

Total Gen Y Gen X


81

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

71%

27%

2% 1%

76%

2%

37%

62%

22%

Yes No Not sure

Total Gen Y Gen X


82

71%

27%

2% 1%

63%

1%

69%

27%

4%

89%

11%

39%

60%

36%

Yes No Not sure

Total <$30K $30K-$49K $50K-$79K $80K+

Propensity to contribute money to an employer-sponsored 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

*



83

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)

45%40%

11%4%

40%46%

10%3%

49%

35%

11%5%

Very good idea Somewhat goodidea

Somewhat bad idea Very bad idea

Total Gen Y Gen X


84

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)

45%

11%4%

50%

37%

9%4%

45%

14%

2%

13% 10%

40%39%31%

46%

Very good idea Somewhat goodidea

Somewhat bad idea Very bad idea

Total Full-time/35+ hrs/wk Part-time/<35 hrs/wk Unemployed


85

Retirement Mindset

86

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)

20%

42%

29%

9%13%

38%33%

15%

26%

44%

25%

5%

A great deal ofthought

Some thought Not too muchthought

No thought at all

Total Gen Y Gen X


87

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)

20%

42%

29%

9%

35%

49%

3%

39%45%

14%

2%

17%

36%

12% 8%

29%20%

44%

26%23%

A great deal ofthought

Some thought Not too muchthought

No thought at all

Total <$30K $30K-$49K $50K-$79K $80K+



88

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)

8% 6%1%

8% 7%1%

8%1%

21% 20%

44%

20%

44%

20%

5%

20%

44%

23%

Youngerthan 70

70 to 79 80 to 89 90 to 99 100 or older Not sure

Total Gen Y Gen X

TotalGen

YGen

X

Mean 81 81 82

Median 80 81 80


89

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)

5%

17%

58%

18%

3%7%

18%

60%

13%

1%4%

16%

56%

21%

3%

Younger than50

50 to 59 60 to 69 70 to 79 80 or older

Total Gen Y Gen X

TotalGen

YGen

X

Mean 63 61 64

Median 65 65 65


90

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)

5%

17%

58%

18%

3%3%11%

59%

14%

2%

Younger than50

50 to 59 60 to 69 70 to 79 80 or older

This study's respondents RCS respondents ages 40+

Source: 2007 Retirement Confidence Survey (RCS) (Base: non-retirees ages 40+; n=615)


91

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)

38%

58%

4%

27%

67%

5%

45%52%

3%

Yes No Not sure

Total Gen Y Gen X


92

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)

38%

58%

4%

17%

77%

6%

39%

61%

1%

46%50%

4%

77%

21%

2%

Yes No Not sure

Total <$30K $30K-$49K $50K-$79K $80K+



93

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; African-American n=150; Hispanic n=151; Asian/Pac. Islander n=154)

38%

4%

43%

55%

2%

28%

69%

4%

27%

9%

39%

8%

58%64%

53%

Yes No Not sure



94

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)

38%

58%

71%

28%

Yes No




95

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)

11%

47%

31%

11%13%

52%

28%

8%10%

44%

33%

13%



Total Gen Y Gen X

Net Confident:59%

Net Not Confident:41%


96

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)

34%

12%11%

47%

31%

11%

43%

11%8%

43%38%

10%10%

54%

28%

8%18%

57%

19%

6%



Total <$30K $30K-$49K $50K-$79K $80K+

Net Confident:59% Net Not Confident:

41%



97

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)

11%

47%

31%

11%

26%

44%

19%11%




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

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



98

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)

41%

19%

7%

2%

1%

15%

20%

8%

9%

2%

1%

20%

46%

18%

11%

6%

2%

1%

12%

8%

6%

5%

35%

5%

TotalGen YGen X

Employer-sponsored retirement savings plan, like a 401(k)

Social Security

Employer-provided traditional pension

Other personal savings/investments, not in a work-related retirement plan

Employment

The sale or refinancing of your home

Something else

Not sure


99

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)

41%

19%

7%

2%

1%

15%

22%

17%

9%

2%

3%

3%

8%

6%

15%

26%

This study's respondentsRCS respondents ages 40+

Employer-sponsored retirement savings plan, like a 401(k)

Social Security

Employer-provided traditional pension

Other personal savings/investments, not in a work-related retirement plan

Employment

The sale or refinancing of your home

Something else

Not sure



100

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)

4%

19%

44%

34%

4%

22%

39%34%

3%

16%

47%

34%



Total Gen Y Gen X

Net Confident: 22%

Net Not Confident: 78%


101

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)

4%

19%

44%

34%

4%

24%

42%

31%

2%

18%

43%37%

3%12%

49%

35%

10%16%

42%

31%




Net Confident: 22%

Net Not Confident: 78%


102

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)

4%

19%

44%

34%

7%

28%35%

28%





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



103

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)

3%

24%

44%

28%

5%

30%39%

26%

3%

20%

48%

29%



Total Gen Y Gen X

Net Confident:28%



104

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)

3%

24%

44%

28%

4%

30%

40%

25%22%

46%

30%

4%

18%

50%

6%

25%

2%

28%

40%

29%




Net Confident:28%



105

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)

3%

24%

44%

28%

8%

33% 32%25%





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



106

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)

37% 34%29%

43%

25%32%33%

40%

26%

Yes No Not sure

Total Gen Y Gen X


107

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)

37% 34%29%30%

39%31%

55%

20%26%

43%

29% 28%

55%

29%

16%

Yes No Not sure



108

Financial Education and Literacy

109

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)

29%23%26%

32%33%32%

30%34%32%

30%34%32%

31%53%

40%

42%37%

40%

56%49%53%

48%49%

48%

27%27%

27%

70%60%

66%

88%82%

86%

77%83%

80%

84%84%84%

58%80%

67%

52%49%

54%

Gen X

Gen Y

Total

Gen X

Gen Y

Total

Gen X

Gen Y

Total

Gen X

Gen Y

Total

Gen X

Gen Y

Total

Very knowledgeable Somewhat knowledgeable

Buying a car

Eliminating or avoiding debt

How to stick to a budget

How to use an iPod

Doing your taxes


110

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)

13%15%

14%

14%

18%

15%

14%

16%

15%

24%

17%

21%

34%27%

31%

31%

33%

31%

52%

41%

47%

47%42%

45%

44%

50%

47%

66%

57%

62%

70%

51%

62%41%

34%

46%

Gen X

Gen Y

Total

Gen X

Gen Y

Total

Gen X

Gen Y

Total

Gen X

Gen Y

Total

Very knowledgeable Somewhat knowledgeable

Buying a home

Saving for retirement

How to invest your moneyoutside of the workplace

How the Social Securitysystem works


111

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)

57%

7%1%

12%

22%

59%

4%1%

12%

23%

56%

9%

1%

13%

22%

You own part ofthe company*

You have lentmoney to the

company

You are liable forthe company's

debts

The company willreturn your

original investmentto you with interest

Not sure

Total Gen Y Gen X

* Correct answer


112

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)

Not sure, 22%

You own part of the

company*, 57%

You are liable for the

company's debts, 1%

You have lent money

to the company,

7% The company will return your

original investment to you with

interest, 12%

* Correct answer

Not sure, 5%

You own part of the

company*, 79%

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

money to the company,

10%

The company will return your

original investment to you with interest, 5%

This Study FINRA’s Study

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


113

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)

24% 23%

12%

40%

23% 24%

12%

31%25% 23%

13%

39%

Go down Go up* Are not affected Not sure

Total Gen Y Gen X

* Correct answer


114

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)

Go down, 24%

Are not affected,

12%

Go up*, 23%

Not sure, 40%

Go down, 25%

Are not affected,

12%

Go up*, 40%

Not sure, 23%



* Correct answerSource: 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

115

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)

65%

16% 19%

64%

15%21%

66%

16% 18%

True* False Not sure

Total Gen Y Gen X

* Correct answer


116

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)

True*, 65%

Not sure, 19%

False, 16%

True*, 72%

Not sure, 9%

False, 19%




117

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)

12%

41%

2%6%14%

25%

12%20%

15%

5% 2%

46%

36%

2%8%

14%

28%

12%

5% 10%* 15% 20% 25% Not sure

Total Gen Y Gen X

* Correct answer


118

Twenty percent,

4%

Ten percent*,

40%

Fifteen percent,

15%

Five percent,

15%

Twenty-five

percent, 2%

Not sure, 24%

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)

Twenty percent,

6%

Ten percent*,

25%

Fifteen percent,

14%

Five percent,

12%

Twenty-five

percent, 2%

Not sure, 41%

* 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

119

28%

13%

8%

38%

25%

11%

11%

9%

4%

40%

30%

15%

5%

8%

6%

36%

8%

5%

Total Gen Y Gen X

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)

Stocks*

Bonds

CDs

Money Market accounts

Precious metals

Not sure

* Correct answer


120

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)

28%

13%

8%

38%

51%

10%

9%

6%

2%

22%

8%

5%

This study's respondents FINRA respondents

Stocks*

Bonds

CDs

Money market accounts

Precious metals

Not sure



121

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)

8%12%

10%

67%

48%

59%

77%

51%

66%

78%

53%

67%

75%59%

68%

16%

22%

18%

11%

28%

18%

17%29%

22%

17%

30%

23%

12%

21%

16%

16%

32%

23%10%

15%

6%

Gen X

Gen Y

Total

Gen X

Gen Y

Total

Gen X

Gen Y

Total

Gen X

Gen Y

Total

True False Not sure

Interest paid on a mortgageis tax-deductible (True)

Interest earned in a banksavings account is subject

to federal income taxes (True)

When an employee retires, themoney they withdraw from theirtraditional 401(k) plan is subject

to federal income taxes (True)

Interest paid on credit cardbills is tax-deductible (False)


122

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)

20%

21%

22%

25%

23%

24%

29%

27%

27%

27%

27%

18%

17%

18%

18%

22%

20%

30%

28%

29%

26%

17%

22%8%

10%

7%

6%

5%

6% 22%Gen X

Gen Y

Total

Gen X

Gen Y

Total

A B C D F

How well you are saving money

How well you are investing money


123

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)

16%

14%

25%

33%

28%

23%

29%

26%

22%

23%

22%

25%

20%

23%

19%

10%

15%

36%

30%

33%

18%

12%

16%18%

21%

16%

4%

5%

3%13%Gen X

Gen Y

Total

Gen X

Gen Y

Total

A B C D F

The job your parentsdid teaching you about

saving and investing

The job your schoolsdid teaching you about

saving and investing


124

Sources of Information

125

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)

13%9%

11%

11%

11%

11%

22%

17%

20%

28%

51%

38%

43%45%

44%

47%

52%

49%

48%

50%

49%

44%47%

45%

42%

37%

40%

30%

33%

31%

40%

17%

30%32%

32%

31%

Gen X

Gen Y

Total

Gen X

Gen Y

Total

Gen X

Gen Y

Total

Gen X

Gen Y

Total

Major source Minor source Not a source

Your parents (or in-laws)

The internet

Your friends or co-workers

Periodicals (newspaper,magazines, etc.)


126

Financial professionals are a source of advice for some, especially Gen Xers, while the media is a less-utilized 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)

10%8%

9%

9%10%10%

16%14%15%

27%18%23%

29%27%

28%

37%36%

37%

31%48%

38%

30%33%

31%

64%63%63%

54%59%56%

60%42%

52%

48%45%47%

43%50%46%

7%

5%7%

38%41%36%

Gen X

Gen Y

Total

Gen X

Gen Y

Total

Gen X

Gen Y

Total

Gen X

Gen Y

Total

Gen X

Gen Y

Total

Major source Minor source Not a source

Other relatives

Television or radio

Someone or something else

A financial professional

Your (or yourspouse’s) employer


127

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

20%

7%

5%

3%

2%

5%

50%

14%

5%

4%

1%

4%

3%

3%

6%

36%

16%

5%

2%

5%

15%

7%

5%

8%

18%

23%

26% Total

Gen Y

Gen X

Your parents (or in-laws)

Your (or your spouse’s) employer

The internet

A financial professional

Periodicals (newspaper, magazines, etc.)

Your friends or co-workers

Something else

Other relatives

Television or radio


128

Demographics

129

Total(n=1,752)

Gen Y(n=613)

Gen X(n=1,139)

Age

19 to 27 42% 100% --

28 to 39 58 -- 100%

Mean age 29 23 34

Race

African-American / Black 12% 15% 11%

Asian 5 4 6

Caucasian / White 60 60 60

Hispanic, Spanish, or Latino 19 17 20

Pacific Islander * * *

Other 2 2 2

Prefer not to answer 1 1 1

Marital Status

Single, never married 41% 59% 28%

Married 41 25 53

Unmarried, living with a partner 11 13 10

Divorced 4 1 7

Separated 1 * 2

Widowed * -- *

Other 1 1 *

Demographics

* Less than 0.5%


130

Total(n=1,752)

Gen Y(n=613)

Gen X(n=1,139)

Current Employment Status

Employed full-time 65% 58% 69%

Employed part-time 16 22 12

Self-employed either full-time or part-time 6 3 7

Both full-time and part-time jobs 1 1 1

Unemployed 13 16 10

Spouse’s Current Employment Status

Employed full-time 70% 74% 69%

Employed part-time 7 8 7

Self-employed either full-time or part-time 5 3 6

Both full-time and part-time jobs 2 2 2

Unemployed 16 14 17

Demographics


131

Total(n=1,752)

Gen Y(n=613)

Gen X(n=1,139)

Income**

Less than $30,000 14% 24% 9%

$30,000 to $49,999 27 30 27

$50,000 to $79,999 30 34 29

$80,000 to $99,999 11 6 14

$100,000 to $199,999 11 4 14

$200,000 or more 1 1 2

Home Ownership

Own 42% 26% 54%

Rent 44 56 35

Some other arrangement 14 18 11

Have Children Under the Age of 18

Yes 45% 25% 60%

No 55 75 40

Demographics

* 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.


preparing for their future: a look at the financial state of gen x and gen y sponsored by the...

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