T. Rowe Price 2015 FAMILY FINANCIAL TRADE-OFFS SURVEY

Transcription

1 T. Rowe Price 2015 FAMILY FINANCIAL TRADE-OFFS SURVEY

2 Contents Perceptions About Saving for Retirement & College Education Respondent College Experience Family Financial Profile Saving for College Paying for College Saving for Retirement Saving for Findings on Millennials vs. Gen Xers kids education Gender Data Cuts Respondent Profile Objectives & Methodology Saving for retirement 2

3 PERCEPTIONS ABOUT SAVING FOR RETIREMENT & COLLEGE EDUCATION

4 Agree Statements College Perceptions How much do you agree or disagree with each of the following statements? (Four-point scale displaying percent that agree) My kids believe they will go to college 91% I think my kids are smarter than their peers 85% Investing in my kids college education is actually an investment in my own retirement If my kids don t have a college education, they won t get a job and will live with me Saving for kids education 54% 62% I don t care if my children go to college at all. It is their choice 40% College isn t worth the expense 37% N=2,000 (Total respondents) 4

5 Agree Statements Paying for College How much do you agree or disagree with each of the following statements? (Four-point scale displaying percent that agree) Kids who contribute toward paying for college care more and work harder at getting good grades I want my kids to worry about money less than I did while I was in college After experiencing the burden of student loans, I would not want my kids to experience the same thing* 74% 79% 85% I feel guilty that I won t be able to pay more for their college If a family member is saving for my kids college education, I m comfortable asking how much they are planning on saving I regularly talk to my children about how their college will be paid for I d be willing to get a second or part-time job to pay for my kids college education I d be willing to delay my retirement to pay for my kids college education 63% Saving for kids 56% education 54% 51% 49% 60% saying either I ve raised my kids for 18 years; they re on their own financially after that 43% N=2,000 (Total respondents) * Only asked to those who had student loans (N=837) 5

6 Agree Statements Retirement Perceptions How much do you agree or disagree with each of the following statements? (Four-point scale displaying percent that agree) I sometimes feel like a failure because I m not providing enough for my family and our future 58% I am trying not to think about retirement and will worry about it later 51% I don t think I will ever retire Instead of retiring, I plan on starting a new career Saving for kids education 49% 47% I lose sleep worrying about how I m going to pay for retirement 43% I don t worry about retirement because I will have a large inheritance 34% N=2,000 (Total respondents) 6

7 Agree Statements Saving for Retirement How much do you agree or disagree with each of the following statements? (Four-point scale displaying percent that agree) It s important for me that my savings are easily accessible so that I can easily get to my money if I need it 80% How my parents have managed saving for retirement has impacted how I save for retirement 70% Compared to my peers, I feel ahead of the curve in terms of saving for retirement Seeing what happened to my parents' retirement savings during the recession has really had an impact on how much I save and where I put my money I m more likely to win the lottery than receive any money from Social Security Saving for kids education 61% 58% 56% Because my parents are struggling with retirement (or will be), I started saving early for my retirement so I don t end up like them 55% N=2,000 (Total respondents) 7

8 Agree Statements Balancing How much do you agree or disagree with each of the following statements? (Four-point scale displaying percent that agree) I would rather pay any college loans (mine or my kids ) later than divert money now away from retirement saving to college savings 63% I feel overwhelmed by financial pressures 63% Conversations about saving for retirement or college usually fill me with a lot of anxiety Because my kids will go to college before I retire, I feel like I should put money towards that first and save for retirement after Saving for kids education 60% 59% I would rather dip into my retirement savings to pay for my kids college education than have them take on student loans 53% You shouldn t put any money in savings until you ve paid off all your debt 46% N=2,000 (Total respondents) 8

9 RESPONDENT COLLEGE EXPERIENCE

10 Education Level Q9. What is the highest level of education you ve completed? Did not graduate HS 1% HS graduate 10% Some college Associate degree 14% 17% Bachelor's degree 42% Graduate degree 18% Note: Rounding may cause percentages not to add to 100% The majority of respondents attended college (89%*), with 60% having a Bachelor s degree or higher N=2,000 (Total respondents) * Because of rounding, combined percentage may differ than sum of bars in chart 10

11 Who Paid for Respondents College Education Q10. Thinking about all of your undergraduate college expenses, who helped pay for the cost? (Check all that apply) Myself 76% Parents 48% Grants or scholarships 39% Other relatives 4% For respondents who attended college, three-quarters paid at least some of the expense themselves, while just under half relied on their parents to help pay N=1,799 (Attended college) 11

12 Paying for Undergraduate Expenses Q11. Which of the following have you used to pay for the portion of your undergraduate college expenses that you covered yourself? (Check all that apply) Q12. Are you still paying off student loans? Regular income from working 74% 34% Student loans 61% No Yes Savings 52% 66% For respondents who helped pay for their own college expense, three-quarters have used regular income, and 61% took college loans Two-thirds of respondents who took out a student loan are still paying it off N=1,368 (Helped pay for their own college expense); N=837 (Took student loan) 12

13 The Impact of Student Loans Q13. Looking back, do you think that you took on too much debt to pay for your college education? Q14. Has paying off student loans impacted your ability to do any of the following? (Check all that apply) Take better vacations 45% 37% No Yes 63% Save for retirement Save for my kids' college Buy a house Buy a car Pay for my kids' preschool or primary ed. 44% 44% 37% 33% 23% Get married 17% None of the above 25% The majority of respondents who took out a student loan say they took on too much debt to pay for college, and three-quarters say that paying off student loans has impacted their ability to pay for other things N=837 (Took student loan) 13

14 How Parents Paid for Respondents College Education Q15. Which of the following did your parents use to pay for the portion of your undergraduate college expenses that they paid for? (Check all that apply) Regular income from working Regular savings accounts College savings accounts Student loan in my name Credit cards Personal loan in their name Money given to them by my grandparents Retirement savings accounts Home equity loan 27% 22% 22% 20% 16% 13% 12% 41% 55% Parents who contributed to respondents college education did so primarily through regular income and regular savings accounts Parents were equally likely to take out a loan themselves or pay off a student loan that was in the respondent s name N=854 (Parents helped pay for their college education) 14

15 FAMILY FINANCIAL PROFILE

16 Saver vs. Spender Q16. Would you consider yourself to be more of a saver or a spender? Q17. Would you consider your spouse/partner to be more of a saver or spender? 10% 18% 10% 23% 38% 31% 34% 36% Definitely a spender More of a saver More of a spender Definitely a saver Definitely a spender More of a saver More of a spender Definitely a saver Respondents are split relatively evenly between savers (48%) and spenders (52%) 59% of married respondents say their spouse/partner is a spender N=2,000 (Total respondents); N=1,726 (Married) 16

17 Financial Advisors Q18. Do you have a financial advisor (who is paid for their service)? Yes 39% 61% No Slightly more than one-third of respondents have a paid financial advisor N=2,000 (Total respondents) 17

18 Kids Monetary Gifts Q62. Do your kids receive monetary gifts from grandparents, friends, and/or family members each year? Q63. On average, how much in total does each child receive as gifts each year? 33% Less than $100 24% No $100 to $499 43% Yes $500 to $999 24% 67% $1,000 or more 9% Two-thirds of respondents say their kids regularly receive monetary gifts N=2,000 (Total respondents); N=1,338 (Kids receive monetary gifts) 18

19 What Happens to Monetary Gifts Q64. What usually happens to the money your kids receive as gifts? (Check all that apply) We let our kids spend it on an item they want 43% We put it in a regular savings account We put it in a college savings account We place it in our kids piggy bank Saving for kids education Saving for 28% retirement 26% 41% I spend it on things they need such as clothes and school supplies 23% Respondents are most likely to let kids spend the monetary gifts they receive, or they put the money in a regular savings account N=1,338 (Kids receive monetary gifts) 19

20 Windfall Q60. If you suddenly had a windfall of money like an inheritance or bonus, which of the following would you do with the money? (Choose up to three) Put it toward college savings Put it toward retirement savings Use it to reduce my debt Add it to my emergency fund Put it toward a major purchase Put it toward a vacation or trip Give to charity Spend on everyday purchases 29% Saving for 21% kids education 17% 14% 12% 44% 44% 44% Saving for retirement With a windfall, respondents are equally likely to use it for college savings, retirement savings or reducing debt N=2,000 (Total respondents) 20

21 Marital Arguments Q20. How often do you and your spouse/partner disagree about each of the following? Top 2 Box Money in general 8% 25% 41% 26% 67% How to raise our kids 11% 31% 35% 23% 58% Saving for retirement Saving for kids' education 23% 24% 30% 31% 28% 25% 19% 20% 47% 45% 54% top 2 box for either Never Rarely Occasionally Frequently Married respondents argue with their spouse/partner most frequently about money in general, followed by how to raise their kids Spenders are more likely than savers to argue about saving for retirement (58% vs. 36%) and saving for kids education (56% vs. 34%) N=1,726 (Married) 21

22 Planning for Kids Education With an Ex Q21. How often do you and your ex-spouse/partner disagree or argue about the best way to save for your kid s education? Never 32% Rarely 22% Occasionally 30% Frequently 16% Just under half of separated/divorced respondents argue with their ex-spouse/partner about saving for kids education at least occasionally N=94 (Divorced/separated) 22

23 Parental Concerns Q19. How concerned are you with each of the following? (Five-point scale displaying top 2 box) The cost of health care when I'm retired My kids having the financial resources to go to college Balancing the need to save for retirement and my kids' education Running out of money in retirement My kids being able to support themselves after college Being able to retire young enough to enjoy myself My kids acting irresponsibly in college or as a young adult My parents being able to support themselves through retirement My kids being a target of bullying Having enough money to take regular vacations Giving my kids all the presents I want to this holiday season 64% 63% 60% 60% 60% 59% 50% 48% 48% 45% 40% Respondents are most concerned with the rising cost of health care and being able to pay for kids college education N=2,000 (Total respondents) 23

24 Family Saving Priorities Q22. Which of the following is the higher priority for you and your family? Saving for kids' education 57% Saving for retirement 43% Respondents are more focused on saving for kids college than saving for retirement N=2,000 (Total respondents) 24

25 SAVING FOR COLLEGE

26 Saving for College Frequency Q23. Currently, how often do you put money aside for your kids college education? Never 10% Sometimes, but not as often as I should 25% I frequently put money aside I save automatically each month from my bank account I'm not currently saving, but I already have money set aside for my kids' college education 5% Saving for kids education 24% Saving for retirement 30% I am not saving yet but plan to 5% I'm not sure 1% Currently, 79% of respondents put away money for their kids college education at least sometimes, and an additional 5% are not currently saving, but have some money put aside N=2,000 (Total respondents) 26

27 Saving for College Starting Q24. When did you first start saving for your kids education? Once my first child was born When my first child started school When my kids started thinking about which college to go to When we were planning to have children When my second child was born When I heard my friends were saving 24% 11% Saving for kids 9% education 8% 6% 41% Saving for retirement Respondents are most likely to begin saving for kids college education once their first child is born N=1,683 (Have college savings) 27

28 Saving for College Types of Accounts Q25. What types of accounts do you use for college savings? (Check all that apply) Regular savings account 529 account 401(k) account Checking account Savings bond Certificate of deposit (CD) Traditional IRA Roth IRA Individual securities Annuity UGMA or UTMA account I'm not sure 31% 30% 26% 24% 18% 15% 13% 12% 9% 8% 2% 45% Saving for kids education Saving for retirement Average number of accounts = 2.3 Regular savings accounts are the most common account used for college savings An almost equal number of respondents use a 529 account and a 401(k) N=1,683 (Have college savings) 28

29 Why Not a 529? Q26. Why aren t you using a 529 account to save for college? (Check all that apply) I don't know what that is I want to be able to access the money I save at any time for any reason I want to, but haven't had the time to open an account I don't know in which state my kid(s) will go to college Because then I won't be able to get financial aid I've heard negative things about them I can't afford the minimum requirements and fees I don't know how to open an account I don't like the plan that is offered by my state 28% 25% 19% Saving 18% for Saving for 15% retirement kids education 13% 12% 9% 9% Lack of awareness is the primary reason respondents don t use a 529 One-quarter of respondents believe there is limited access to money in a 529 N=1,167 (Have college savings, but not a 529) 29

30 Negative Things About 529 Accounts Q27. What negative things have you heard about 529 accounts? (Check all that apply) There are high fees The money you don't use for college is lost You can lose money in them There are better accounts for college savings Our state doesn't have a good plan Saving for kids education 23% 47% 43% Saving for 43% retirement 41% There are several misperceptions about 529 accounts N=155 (Have college savings, but not a 529; have heard bad things about 529s) 30

31 Current College Savings Q28. How much money do you have saved for your kids college education? Q29. How comfortable are you with where you are, in terms of saving for your kids college education? Less than $1,000 9% Not at all comfortable 8% $1,000 to $4,999 17% Not very comfortable 23% $5,000 to $9,999 $10,000 to $19,999 $20,000 to $49,999 17% 22% 19% Somewhat comfortable Very comfortable 23% 34% $50,000 to $99,999 10% Extremely comfortable 12% $100,000 or more 6% 43% of respondents have less than $10,000 saved for their kids college education One-third of respondents are very/extremely comfortable with their current college savings N=1,683 (Have college savings) 31

32 Reducing College Saving Q30. Which of the following would cause you to reduce the amount you regularly save for your kids college education? (Check all that apply) Loss of a job Need a new car Support your parents or other relatives Realize the need to catch up on retirement savings Need to pay for home improvement project Birth or adoption of a new child Need to relocate Holiday shopping Feel it will be impossible to meet increased cost of college Expensive family vacation Discouraged by the low college graduation rates 22% 21% 20% 19% 18% Saving for 18% kids 17% education 17% 14% 8% 54% Saving for retirement Job loss would be the primary reason respondents would reduce the amount they save for college N=1,584 (Currently saving for college) 32

33 Saving Differently for Different Kids Q44. Do you save differently for your kids college education depending on which kid? Q45. Which of the following are true? I save more for my older kid(s) because they will go first 49% 64% No Yes 36% The amount I save for my kids college is based on how well I think they ll do I base how much I save for each kid based on where they want to go I base college savings for each kid based on how much they will receive in grants and scholarships 41% 40% 37% I base how much I save on how well they do in school before college 32% More than one-third of respondents who have more than one kid say they save differently, depending on which kid they are saving for N=1,221 (Have more than one kid); N=437 (Save differently) 33

34 PAYING FOR COLLEGE

35 Paying for Kids College Q31. Which of the following best describes how you feel about saving for your kids college education? Q32. How do you think you will cover the remaining cost for your kids college? (Check all that apply) I don t plan to save anything for college 4% Grants and/or scholarships Student loans (kids responsible) 53% 52% I will be able to save enough to pay for some of the cost of college 50% Kids will work Through regular income Personal loan (I am responsible) 46% 34% 20% I will be able to save enough to pay for most of the cost of college 30% Credit cards Money from retirement accounts 16% 15% I will be able to save enough to pay for the entire cost of college 16% Home equity loan or 2nd mortgage Other family members Sale of real estate 11% 8% 7% All but 16% of respondents will need help paying for their kids college education Parents plan to rely on grants/scholarships and their kids (through loans and working) to help cover the cost of their college education N=2,000 (Total respondents); N=1,678 (Will not be able to cover all college costs) 35

36 Taking on Debt to Pay for College Q33. How much debt are you willing to take on personally to provide your kids with a college education? Q34. How much debt are you willing to let your kids take on to get a college education? None 11% None 9% Less than $10,000 18% Less than $10,000 18% $10,000 to $24,999 20% $10,000 to $24,999 23% $25,000 to $49,999 17% $25,000 to $49,999 17% $50,000 to $74,999 12% $50,000 to $74,999 10% $75,000 to $99,999 9% $75,000 to $99,999 7% $100,000 to $150,000 5% $100,000 to $150,000 4% Whatever it takes 9% Whatever it takes 12% Just over half of respondents are willing to take on $25K or more of debt to pay for their kids college education Respondents are consistent in the amount of debt they think is acceptable for themselves and their kids N=1,678 (Will not be able to cover all college costs) 36

37 Paying Off Student Loans Q35. How likely are you to help your kids pay off their student loans after they graduate? Q36. Why aren t you more likely to help your kids pay off their student loans after they graduate? (Check all that apply) Not at all likely Not very likely 6% 13% If they are working, then they can afford to pay off loans 57% Somewhat likely 33% It s not my responsibility to pay off their loans 52% Very likely 28% I ll need to be saving for retirement 39% Extremely likley I'm not sure 4% 16% I d prefer my kids live at home after college so they can have money to pay their own loans 14% 44% of respondents say they are very/extremely likely to help their kids pay off student loans N=1,678 (Will not be able to cover all college costs); N=316 (Not likely to help pay off student loans) 37

38 Payback Q37. Do you expect your kids to pay you back for any of their college expenses that you cover? Yes, partially 30% Yes, in full No 13% Saving for kids education 57% Nearly half (43%) of respondents expect their kids to pay them back (at least partially) for college expenses N=2,000 (Total respondents) 38

39 Acceptable Monthly Loan Payments Q38. Assuming they will have 10-year student loans, how much of a monthly payment are you willing to let your kids take on after college to pay off their student loan debt? None Less than $100 $100 to $199 $200 to $299 $300 to $399 $400 to $499 $500 to $599 $600 to $699 $700 to $799 $800 to $899 $900 to $999 Whatever it takes 7% 9% 8% 7% 7% 4% 5% 3% 3% 10% 20% 17% Saving for kids education Nearly half of respondents (47%) are willing to let their kids take on monthly debt payments of $300 or more N=2,000 (Total respondents) 39

40 Asking for Help With College Expenses Q39. Have you asked any of the following people to help pay for your kids college education? In-Laws 35% 12% Parents 26% 13% Other Family 14% 14% Saving for kids education Yes Plan on Asking Friends 16% 10% 0% 10% 20% 30% 40% 50% Respondents are more likely to ask for help from their spouse s/partners parents than their own N=2,000 (Total respondents) 40

41 Reasons for Not Asking for Help Q40. Why haven t you asked family or friends for help paying for your kids college education? (Check all that apply) It's not their responsibility 68% I never ask others for money 37% I would feel uncomfortable asking I don't need any help We don't talk about money in our family 9% 18% 30% Saving for kids education I'm too embarrassed 7% I wouldn't want to reveal anything about my finances 6% The majority of respondents who have not asked anyone for help believe that it is not others responsibility to pay for their kids college education N=949 (Have not asked anyone for help) 41

42 Does Having a Plan Facilitate Asking for Help? Q41. Would you be more likely to ask others to help pay for your kids college if you had a specific plan in place for college savings and knew exactly how much help you needed? Yes 20% No 80% For one in five respondents, having a college savings plan would make them more likely to ask others for help N=949 (Have not asked anyone for help) 42

43 Expectations About Who Will Help Q42. Whether or not you ve asked, who of the following do you expect to help pay for your kids college education? (Check all that apply) Your spouse's/partner's parents 38% Your parents Friends Other family members None of the above 7% 13% 33% Saving for kids education 43% Over half (57%) of respondents are expecting help from family/friends in paying for their kids college education N=2,000 (Total respondents) 43

44 Expectations About Who Will Help Q43. Are you aware of how much each of the following is planning on contributing to your kids college education? Friends 77% Your spouse's/partner's parents Your parents 69% Saving for kids 59% education Other family members 41% Respondents are more likely to be aware of how much friends and in-laws will contribute than how much their parents will N=Varies by category (based on positive responses to Q42) 44

45 SAVING FOR RETIREMENT

46 Saving for Retirement Frequency Q47. Currently, how often do you put money aside for your retirement? Never 5% Sometimes, but not as often as I should 19% I frequently put money aside I save automatically each month from my bank account I'm not currently saving, but I already have money set aside for my retirement 4% 22% Saving for kids education Saving for retirement 48% I am not saving yet but plan to 2% I'm not sure 1% Currently, 89% of respondents put away money for their retirement at least sometimes, and an additional 4% are not currently saving, but have some money put aside N=2,000 (Total respondents) 46

47 Saving for Retirement Types of Accounts Q48. What types of accounts do you have for your retirement savings? (Check all that apply) 401(k) account 69% Regular savings account 33% Traditional IRA Roth IRA Regular investment account 25% 24% 20% Saving for kids education Saving for retirement Certificate of deposit (CD) 16% Annuity 15% 401(k) accounts are the most common account used for retirement savings N=2,000 (Total respondents) 47

48 Why Not a Roth IRA? Q49. Why don t you have a Roth IRA account to save for retirement? (Check all that apply) I m already contributing the maximum to my workplace plan I don't know what that is I m already saving in a Roth 401(k) at work I want to but haven t had time to open an account I m saving enough in my workplace plan and don t need to save more I want to be able to take out my contributions at any time without penalty I don t know how to open an account I ve heard negative things about Roth IRAs I do not meet the eligibility requirements to contribute to a Roth IRA Saving for kids education 9% 6% 8% 20% 20% 17% Saving 16% for 16% retirement 15% Lack of awareness is one of the primary reasons respondents do not have a Roth IRA N=1,512 (Do not have a Roth IRA) 48

49 IRA Savings Frequency Q50. How often do you put money aside in your IRA? Sometimes, but not as often as I should 20% I frequently put money aside I save automatically each month from my bank account I haven't put money in my IRA for awhile Saving for kids education 13% 31% Saving for retirement 34% I'm not sure 2% Two-thirds of those who have an IRA put money in frequently or automatically each month N=815 (Have an IRA) 49

50 Current Retirement Savings Q51. How much money do you have saved for your retirement? Q52. How comfortable are you with where you are, in terms of saving for your retirement? Less than $10,000 17% Not at all comfortable 15% $10,000 to $24,999 12% Not very comfortable 21% $25,000 to $49,999 $50,000 to $74,999 $75,000 to $99,999 15% 14% 15% Somewhat comfortable Very comfortable 20% 33% $100,000 to $149,999 13% Extremely comfortable 11% $150,000 or more 14% Retirement savings amounts vary consistently from low to high, with 31% saying they are very/extremely comfortable with where they are in terms of saving for retirement N=2,000 (Total respondents) 50

51 Old Job Retirement Plans Q53. Thinking back on old retirement plans you had at previous jobs, what have you done with those accounts? (Check all that apply) Rolled it over into IRA 31% Rolled it into new employer s workplace retirement plan Cashed it out Left it in my former employer s workplace retirement plan 28% Saving 27% for kids education 20% Saving for retirement I ve never had a retirement plan with a previous job 21% Of those who have had a retirement plan with a previous employer, the majority roll it over into an IRA or workplace retirement plan N=2,000 (Total respondents) 51

52 Why Cash Out Retirement Accounts Q54. Why did you cash out a retirement account held with a former employer? (Check all that apply) Needed it for day-to-day living I was young and didn t know any better It was a really small amount and wouldn t have made much of a difference Put it toward paying off credit card debt Put it toward student loans or college costs Put it toward a medical expense Put it toward a major purchase (e.g., house, car, etc.) I have plenty of time to save for retirement and needed the money more I didn t know what else to do with it Saving for kids education 12% 37% 29% Saving 28% 25% for retirement 21% 21% 19% 19% Day-to-day expenses is the primary reason given by those who cashed out a retirement plan N=531 (Cashed out a retirement account) 52

53 Converting to a Roth IRA Q55. Have you ever converted assets held in a Traditional IRA or tax-deferred workplace retirement plan into a Roth IRA? Q56. Why did you convert assets into a Roth IRA? (Check all that apply) 21% Yes For the tax-free savings that Roth IRAs offer 58% Someone advised me to do so 44% No I m young, and it s not a big deal to pay taxes now 36% 79% One in five respondents have converted a traditional IRA or workplace plan to a Roth IRA N=2,000 (Total respondents); N=424 (Converted account to Roth IRA) 53

54 Reducing Retirement Saving Q57. Which of the following would cause you to reduce the amount you regularly save for your retirement? (Check all that apply) Loss of a job Need a new car Support your parents or other relatives Need to pay for home improvement project Birth or adoption of a new child Saving for future health care costs Need to relocate Holiday shopping Reading about the cost of college Expensive family vacation Reading about the cost of retirement 18% 17% 16% 16% Saving for 16% kids 16% education 14% 13% 11% 9% 58% Saving for retirement Job loss would be the primary reason respondents would reduce the amount they save for retirement N=1,780 (Currently saving for retirement) 54

55 Paying for Things With Retirement Money Q58. Which of the following things have you paid for with money taken from a retirement account? (Check all that apply) Pay off debt Day-to-day expenses Kids' education To cover expenses while unemployed Car purchase or repair Vacation To pay taxes Health care costs Downpayment on a home Home repair/renovation Replenish emergency fund Wedding I have never taken money out of retirement savings to pay for something 20% 13% 12% 12% 11% 11% 11% Saving for 10% kids 10% education 9% 9% 8% Saving for retirement 42% 58% of respondents have taken money out of a retirement account to pay for something else, with the top response being pay off debt N=2,000 (Total respondents) 55

56 FINDINGS ON MILLENNIALS VS. GEN XERS

57 Age Differences (21-34 vs ) Younger respondents are more likely than older respondents to still be paying off student loans (74% vs. 56%), feel that they took on too much debt to pay for college (70% vs. 55%), and say that paying off student loans has impacted their ability to save for their kids college education (48% vs. 38%). In prioritizing saving for kids college and saving for retirement, younger respondents are more likely to say kids education is the higher priority (62% vs. 53%), and they are more likely to put aside money for college frequently (28% vs. 20%). Saving Younger respondents are less likely to be using a 529 for college savings (22% vs. 39%), for and for those who aren t using a 529, younger respondents are more likely Saving to say they for are retirement unaware of what a 529 is (29% vs. 26%). kids education While younger respondents appear to have more financial concerns, they are more likely than older respondents to say they feel comfortable with where they are for college savings (45% vs. 26%) and retirement savings (38% vs. 24%), and they are more likely to say they will be able to pay for most or all of their kids college education (52% vs. 39%). * A complete list of significant findings by gender is available in the appendix 57

58 Age Differences (21-34 vs ) (Cont.) Younger respondents appear to have lower expectations about their kids level of responsibility, as they are more likely to say they will help pay off student loans (48% vs. 39%) and less likely to say they expect kids to pay them back for the college expenses they cover (49% vs. 65%). Younger respondents are more likely than older respondents to have a Roth IRA (19% vs. 29%), and of those who do not have a Roth account, younger respondents are more likely to say they don t know what it is (23% vs. 17%). Saving for kids education Saving for retirement * A complete list of significant findings by gender is available in the appendix 58

59 Agree Statements Findings by Age How much do you agree or disagree with each of the following statements? (Four-point scale displaying percent that agree) I feel overwhelmed by financial pressures 58% 68% I would rather dip into my retirement savings to pay for my kids college education than have them take on student loans I m more likely to win the lottery than receive any money from Social Security 44% Saving for kids education 49% 62% 64% I lose sleep worrying about how I m going to pay for retirement 37% 49% Millennials Gen X N=2,000 (Total respondents) 59

60 The Impact of Student Loans Q13. Looking back, do you think that you took on too much debt to pay for your college education? Millennials Gen X 30% No Yes 45% No Yes 55% 70% N=837 (Took student loan) 60

61 How Parents Paid for Respondents College Education Q15. Which of the following did your parents use to pay for the portion of your undergraduate college expenses that they paid for? (Check all that apply) Retirement savings accounts 18% 9% Millennials Gen X N=854 (Parents helped pay for their college education) 61

62 Saving for College Types of Accounts Q25. What types of accounts do you use for college savings? (Check all that apply) 401(k) account Saving for kids 25% education 34% Saving for retirement Millennials Gen X N=1,683 (Have college savings) 62

63 Paying for Things With Retirement Money Q58. Which of the following things have you paid for with money taken from a retirement account? (Check all that apply) I have never taken money out of retirement savings to pay for something 35% Saving for kids education Saving for retirement 49% Millennials Gen X N=2,000 (Total respondents) 63

64 Converting to a Roth IRA Q55. Have you ever converted assets held in a Traditional IRA or tax-deferred workplace retirement plan into a Roth IRA? Millennials Gen X 24% 19% Yes Yes No No 76% 81% N=2,000 (Total respondents); N=424 (Converted account to Roth IRA) 64

65 GENDER DATA CUTS

66 Gender Differences In terms of paying for their own college expenses, women are more likely than men to rely on grants and scholarships (43% vs. 35%) and have used student loans (64% vs. 58%). Men are more likely to have parents who used home equity loans (14% vs. 8%) and retirement savings (17% vs. 9%) to pay for their college education. Similarly, women are more likely than men to say they will use grants and scholarships (60% vs. 46%) and student loans (56% vs. 49%) to cover the cost of their kids college education. Women are more likely than men to expect their kids to work to help pay for college Saving (49% vs. 43%) and to pay them (parents) back for the expenses they incur paying for college for (64% vs. 50%). Saving for retirement kids education In general, women are willing to take on less debt (for themselves or their kids) than men are, and men are more willing to ask others to help pay for their kids education. Women are more likely than men to be concerned about running out of money in retirement (63% vs. 57%) and the cost of health care when they are retired (66% vs. 61%), while men are more concerned about their ability to buy presents during the holiday season (43% vs. 36%). * A complete list of significant findings by gender is available in the appendix 66

67 Gender Differences (Cont.) Men are more likely than women to save regularly/frequently for retirement (61% vs. 47%), have more money saved for kids education (45% vs. 32% - $10K or more), and have more money saved for retirement (80% vs. 62% - $25K or more). Women are more likely than men to be unaware of what a 529 is (32% vs. 23%) and what a Roth IRA is (25% vs. 15%). Women are more likely than men to say they have never taken money out of retirement to pay for something else (47% vs. 38%). Saving for Women are more likely than men to say they feel overwhelmed by financial Saving for pressures retirement (68% vs. 58%). kids education * A complete list of significant findings by gender is available in the appendix 67

68 RESPONDENT PROFILE

69 Respondent Profile Q1. Age Q2. Region Q3. Gender South 27% Northeast 25% 50% % West 24% 50% Women Men 50% Midwest 23% Q4. # Kids in HH (<16) Q5. Expecting Q8. Marital Status % 13% 39% 43% 72% No Yes 28% Married Single Separated/Divorced Widow/Widower 9% 5% 0% 86% N=2,000 (Total respondents) Note: Rounding may cause percentages not to add to 100% 69

70 Respondent Profile Q66. What is your annual household income before taxes? Q67. What is your current employment status? Less than $25,000 $25,000 to less than $30,000 $30,000 to less than $35,000 $35,000 to less than $40,000 $40,000 to less than $50,000 $50,000 to less than $75,000 $75,000 to less than $100,000 $100,000 to less than $125,000 $125,000 to less than $150,000 $150,000 to less than $175,000 $175,000 to less than $200,000 $200,000 to less than $225,000 $225,000 to less than $250,000 $250,000 or more Prefer not to answer 3% 3% 3% 4% 6% 22% 23% 14% 7% 4% 3% 2% 1% 2% 2% Employed full time Stay-at-home parent Employed part time Self-employed Not currently employed Student Retired Prefer not to answer 11% 9% 4% 2% 1% 0% 0% 73% N=2,000 (Total respondents) 70

71 OBJECTIVES & METHODOLOGY

72 Objective & Methodology Objective Primary Objective: After T. Rowe Price's 2014 Parents, Kids & Money Survey found that 52% of parents said it was more important to save for their kids' college rather than their own retirement, the firm endeavored to further understand how families balance the competing priorities of saving for retirement and college. Methodology Saving T. Rowe Price commissioned an online survey of parents of children age 15 and younger for who have a retirement savings account Saving for retirement kids education The survey was fielded from December 18-29, 2014, with 50/50 quotas for gender and age group A total of 2,000 parents in the U.S. participated; the sampling error for a sample of 2,000 is +/-2.2% at the 95% confidence interval The survey was fielded through MarketTools, Inc. 72