Financial Independence Biggest Hurdle For Young Adults, Study Finds – InsuranceNewsNet

InsuranceNewsNet — Your Industry. One Source.ā„¢

Sign in
  • Subscribe
  • About
  • Advertise
  • Contact
Home Now reading Top Stories
Topics
    • Life Insurance News
    • Annuity News
    • Health/Employee Benefits
    • Property and Casualty
    • Advisor News
    • Washington Wire
    • Regulation News
    • Sponsored Articles
    • Monthly Focus
  • INN Exclusives
  • NewsWires
  • Magazine
  • Webinars
  • Free Newsletters
Sign in or register to be anĀ INNsider.
  • Exclusives
  • NewsWires
  • Magazine
  • Webinars
  • Free Newsletters
  • Insider Pro
  • About
  • Advertise
  • Editorial Staff
  • Contact
  • Newsletters

Get Social

  • Facebook
  • Twitter
  • LinkedIn
Newswires
Top Stories RSS Get our newsletter
Order Prints
April 22, 2019 Top Stories No comments
Share
Share
Tweet
Email

Financial Independence Biggest Hurdle For Young Adults, Study Finds

Targeted News Service (Press Releases)

A new study by Merrill conducted in partnership with Age Wave finds that financial independence defines adulthood today (75 percent) - more so than the traditional milestones of employment (61 percent), homeownership (30 percent) or starting a family (20 percent).

However, due to mounting debt, higher costs of living and other hurdles, 80 percent of early adults (ages 18-34) say it is harder to become financially independent than it was for previous generations.

Seventy percent of baby boomers, the parents of most of today's early adults, agree. The study also found that despite unique financial challenges, today's women are progressing through early adulthood faster and more successfully than men.

Related stories

  • DNC: DeSantis Proposes Tax Breaks for Wealthy Developers While Cutting Medicaid
  • What does the end of the federal COVID emergency mean for your wallet in Florida? [Miami Herald]

"Early Adulthood: The Pursuit of Financial Independence" takes an in-depth look at the experiences and challenges of contemporary early adulthood: pressures of new roles and responsibilities; pursuit of education and burden of student loans; the power of intergenerational interdependence; and the ripple effects of debt. The study revealed that one in four early adults with a retirement account have already made an early withdrawal, primarily to pay off credit card or student loan debt.

"Early adulthood is an exciting time of exploration and self-discovery, but there are new choices and challenges as well. Today's young adults are encountering more complex financial paths than prior generations, forcing them to postpone life milestones and putting their ability to save for retirement at risk," said Lorna Sabbia, head of Retirement and Personal Wealth Solutions at Bank of America. "To achieve financial independence, early adults can focus on developing smart financial habits, identifying areas to cut expenses to free up money for their goals, and seeking out financial education and guidance."

The study surveyed a nationally representative sample of more than 2,700 respondents in the United States, with a focus on Americans ages 18 to 34. Key findings include:

* Financial resources are the top barrier to achieving goals. Early adults cite finances as their No. 1 source of stress and top barrier to achieving their life goals, such as buying a home and starting a family.

* Being debt-free defines financial success. As early adults confront nearly $1.6 trillion in cumulative student debt today/1, 60 percent define financial success as being debt-free, compared to only 19 percent who say financial success is being rich.

* Early adults crave financial guidance and role models. Seventy-two percent of early adults say they would benefit from more financial guidance - more so than those in any other life stage.

* Parental financial support is the norm. Seventy percent of early adults have received financial support from their parents in the last year, and as many as 58 percent say they would not be able to afford their current lifestyles without ongoing parental support. The aggregate amount spent by parents today on their early adult children is enormous - over $500 billion annually/2.

* Support goes both ways. As lifespans increase, children may also be providing more support - both financial and caregiving - to their parents down the road. Eighty-nine percent of early adults say they would be willing to "pay it back" by financially supporting their parents in the future.

* Social media is exacerbating financial pressures. With 68 percent of early adults fearing they are continually missing out (FOMO) on what their peers are experiencing and 49 percent feeling addicted to social media, early adults are comparing their financial accomplishments to their peers online. Eighty-two percent of early adults say they feel pressure to make a lot of money, and 60 percent feel pressure to buy things they cannot easily afford.

* Work isn't "working" for many. Forty-six percent say they plan to look for a new job in the next 12 months, the top reason being higher pay (69 percent). Finding work that combines meaning with adequate pay is a growing challenge. Less than half of employed early adults feel that in their current job, they have career potential (44 percent), fair compensation (41 percent), or work that aligns with their passions/interests (35 percent).

According to Ken Dychtwald, Ph.D., psychologist/gerontologist and CEO of Age Wave, "More than ever, early adulthood is a complex matrix of new choices, freedoms and financial responsibilities - and it's a life stage as exhilarating as it is challenging. As early adulthood becomes redefined by multiple forces, from the dominance of technology and rising levels of debt to an increasingly diverse workforce, it is a mistake to assume that you understand early adulthood today if you experienced it decades ago. When we reviewed the results of this study, I realized that I was never their age!"

Young women's and men's paths are not parallel

According to the study, women are outpacing men in the quest for financial independence - despite greater student debt, unequal pay and more family caregiving involvement. Today, women carry almost two-thirds of the cumulative student debt in the U.S.

To view the chart, click here: https://newsroom.bankofamerica.com/press-releases/global-wealth-and-investment-management/financial-independence-ultimate-goal-and

* Launching faster - and with less parental support. Among those in their early thirties, 49 percent of women receive support from parents, compared to 62 percent of men. Women are around half as likely to be receiving support across nearly all expense categories, including food and groceries (40 percent of men vs. 23 percent of women), rent/mortgage payments (33 percent of men vs. 15 percent of women), vacations (36 percent of men vs. 17 percent of women) and student loans (32 percent of men vs. 14 percent of women).

* More highly educated and ready for the jobs of the future. For every 100 young men who completed college last year, there were 141 women. /4 Today's young women are better prepared to succeed in a workforce where more jobs are requiring a college education.

* Long-term view on finances. Women are more likely than men to say that their highest financial priority is saving for the future and paying down debt (72 percent of women vs. 60 percent of men). Meanwhile, men are significantly more likely to say their highest financial priority is to "enjoy life now" (40 percent of men vs. 28 percent of women).

* Investing remains the exception. Only 27 percent of early adult women surveyed reported holding investments outside employer-sponsored retirement plans, compared to 46 percent of men. Women report less confidence than men in managing investments5, and their biggest fear about investing is not about market volatility or rate of return, but rather not feeling they know enough about what they're doing (41 percent of women vs. 28 percent of men).

"Each generation experiences early adulthood differently. Young adults today have opportunities - technology at their fingertips, advanced education, and new career options - that their parents didn't have," says Lisa Margeson, head of Retirement Client Experience and Communications, Bank of America. "Those, in addition to more accessible guidance and advice, can help guide their path to financial independence."

This study marks the fifth in a multi-year research series from Merrill Lynch and Age Wave that examines five distinct life stages: early adulthood, parenting, caregiving, widowhood, and end of life/legacy.

1 Federal Reserve Bank of New York, "Center for Microeconomic Data," 2018

2 Age Wave/Merrill Lynch, "The Financial Journey of Parenting: Joy, Complexity and Sacrifice," 2018

3 AAUW, "Deeper in Debt: Women and Student Loans," 2017

4 National Center for Education Statistics, 2018

5 Age Wave/Merrill Lynch, "Women & Financial Wellness: Beyond the Bottom Line," 2018

Older

Annuity Check Arrived Every Month For 40 Years, Then ā€˜Just Disappeared’

Newer

Principal Research Shows Annuities Improve Retirement Outcomes

Advisor News

  • Fed slows rate hikes even as Powell says there's more work to do
  • Mortgage rates in U.S. fall again, hit 6.09%
  • 1 in 3 Americans struggling financially but goal-setting is a game-changer
  • Advisors bet on US stocks to outperform in 2023 amid tech rebound
  • Investors want more ESG information from companies
More Advisor News

Annuity News

  • Study: Does pessimism really suppress annuity sales?
  • Sweet streams of income: ChatGPT, the bard of annuities
  • F&G Annuities & Life announces equity investment in life IMO SYNCIS
  • Investors scrambling to lock in rates propel annuity sales to record highs
  • North American and Annexus launch new fixed index annuity
Sponsor
More Annuity News

Health/Employee Benefits News

  • State: all insurers failed to comply with Oregon Reproductive Health Equity Act
  • Will plan fix California health care?
  • Insurance giant Elevance to move into 15th state
  • Medicare card scam targets seniors for personal info
  • Yes, states are re-checking Medicaid and CHIP eligibility starting in April
More Health/Employee Benefits News

Life Insurance News

  • Maid's son tells judge Alex Murdaugh took $4M for her death
  • Chris Wilson tells court former friend Murdaugh confessed he was ā€˜stealing money’
  • State's motive testimony could prolong Alex Murdaugh murder trial
  • Equitable expands portfolio in VUL market
  • New date set for billionaire suspect accused of bribing state cabinet member
More Life Insurance News

- Presented By -

Top Read Stories

  • Chicago news roundup: PPP fraud uncovered in Chicago, informant reveals $100K bounty on FBG Duck and more
  • Gov. Carney: Enrollment on Delaware's Health Insurance Marketplace for 2023 Reaches All-Time High
  • 25 people charged in fake nursing diploma operation
  • Connecticut addressing broker shortage amid The Great Unwinding
  • Missouri Department of Insurance: Over $24 Million Returned To Missouri Insurance Consumers In 2022
More Top Read Stories >

FEATURED OFFERS

Meet Encova Life
We know agents matter. You can count on our life team to be high tech, high touch and responsive.

How to Write For InsuranceNewsNet

Find out how you can submit content for publishing on our website.
View Guidelines

Topics

  • Life Insurance News
  • Annuity News
  • Health/Employee Benefits
  • Property and Casualty
  • Advisor News
  • Washington Wire
  • Regulation News
  • Sponsored Articles
  • Monthly Focus

Top Sections

  • Life Insurance News
  • Annuity News
  • Health/Employee Benefits News
  • Property and Casualty News
  • AdvisorNews
  • Washington Wire
  • Insurance Webinars

Our Company

  • About
  • Editorial Staff
  • Magazine
  • Write for INN
  • Advertise
  • Contact

Sign up for our FREE e-Newsletter!

Get breaking news, exclusive stories, and money- making insights straight into your inbox.

select Newsletter Options
Facebook Linkedin Twitter
Ā© 2023 InsuranceNewsNet.com, Inc. All rights reserved.
  • Terms & Conditions
  • Privacy Policy
  • AdvisorNews

Sign in with your Insider Pro Account

Not registered? Become an Insider Pro.