: Back to the future How livin throuh both fruitful and frual times has affected the outlook of today s youner workers A Retirement Across the Aes Study from the Voya Retirement Research Institute
In this report Study - Methodoloy and demoraphics... 1 Back to the future.....2 Children of the reat recession...3 Payin off student loan debt comes first - but ets in the way of savin...6 Understandin the value of solid employment in a weak economy...7 Retirement is far off and not yet in focus...8 Confident and interested investors - but still lookin for more information...9 Seakin financial advice...10 Reapin the benefits of contributin to a workplace retirement plan...11 Helpin et back on track and prepared for the future... 13 Back to the future. This study looks at youn adults born after 1980, between the aes of 20 and 34 years old who are now the younest cohort of today s American workers. Raised by Baby Boomer parents who have lived throuh a tremendous expansion of economic opportunity and rowth since their own comin of ae, many have seen their parents bear the fruits of their own hard work and expandin work opportunities to enjoy a richer lifestyle than those lived by their own parents. Followin the implosion of the dot-com economy at the turn of the century - and with the sudden onset of the Great Recession in 2007-2008 have seen first hand how both boom and bust markets can affect the lifestyles lived by themselves and their families. These youn workers attitudes and behaviors have been indelibly shaped by havin lived throuh times of both reat prosperity as well as economic upheaval. While many have received unparalleled focus and support from their parents, many also came of ae and entered the workforce durin the Great Recession, which presented a unique set of challenes to ettin their lives off to a ood start. Employers who understand the attitudes of and obstacles faced by this lare roup of youn workers may be in a better position to help uide them on the road to retirement and potentially earn their loyalty and trust alon the way. 1 An independent market research firm (and not a member of the Voya Financial Family of Companies)
Study - Methodoloy and Demoraphics In response to interest about the financial needs and challenes of youner employees, the Voya Retirement Research Institute conducted an online survey amon 2000 youn adults aed 20 34 years old, workin full- or part-time with household income of at least $20,000 for those employed fulltime. This survey was conducted January 14 27, 2014 and survey samples were weihted to reflect U.S. census data for this ae roup. Gender Male 53% Female 47% Ae 20-24 30% 25-29 35% 30-34 35% Marital Status Married/Partnered 44% Divorced/Separated 3% Widowed <1% Never married 53% Children Children 21% No children 47% Ethnicity White/caucasian 59% Black/African-American 13% Asian 6% Hispanic 53% Other 1% Public vs. Private sector Public sector 26% Private sector 74% Education Hih school raduate/ged 7% Some collee 17% Trade/technical/vocational trainin 2% Associate s deree 9% Bachelor s deree 45% Post raduate work 4% Master s deree 13% Professional/Doctoral 4% Household income Less than $30k 29% $30k - $49k 33% $50k - $74k 24% $75k+ 13% Total household assets Less than $25k 45% $25k - $49k 33% $50k - $74k 24% Not sure 18% Workplace savins account None 21% Less than $25k 33% $25k - $49k 24% $50k 14% Not sure 9% Other retirement savins None 44% Less than $25k 34% $25k+ 13% Not sure 9% Work ae 16 to 18 24% 19 to 21 23% 22 to 24 43% 25+ 10% I 01
We cannot always build the future for our youth, but we can build our youth for the future. President Franklin D. Roosevelt, in a 1940 speech iven to students and faculty at the University of Pennsylvania 02 I Back to the future Many of today s younest American workers have faced and continue to face sinificant economic challenes the skyrocketin cost of collee education, hih unemployment and stanant wae rowth which have made it more difficult to et their lives off to a positive and productive start. Despite these challenes, these youn workers are optimistic about the future, and have developed a more acute focus on the need to plan for retirement. They are seekin both information and help in plannin for the future. Hihlihts from this Study: Nearly two in three believe it will be more difficult for their eneration to match the same lifestyle that their parents were able to achieve. Sixty-five percent (65%) believe their eneration has a harder time ettin a ood start in life compared to previous enerations. For nearly three in five (57%), payin off debt (particularly student loans) takes a reater priority in their financial lives over savin for retirement. Forty-one percent (41%) of have held off savin for retirement or delayed buyin their first home due to lack of available funds. The majority of have no idea how much they need to save for retirement. Two-thirds have no idea how much they will need to have saved by the time they retire (includin 64% of who are currently contributin to their workplace retirement plan.) Perhaps for this reason, the financial topic of reatest interest to is how to prepare for retirement. Eihty-five percent (85%) express interest in learnin more about plannin for retirement, and over half (51%) wish they had learned about this topic in hih school or collee. At least two in five are interested in receivin advice on retirement savin and investin topics from either their employer or workplace plan provider. Key areas of advice they seek include: where/how to invest and allocate savins, how to develop a retirement income stratey, how to create a monthly income stream in retirement, and how to keep savins on track as they ae and as market conditions chane. express a surprisinly stron preference for face-to-face interaction over other channels when communicatin or ettin financial advice. Fifty-seven percent report face to face as their most preferred channel, followed by e-mail (18%), online tools (12%) and phone (9%). Milennials also clearly feel it is a ood idea for their company to offer more ways to help employees prepare for retirement. Almost nine in ten felt it was a ood or reat idea for their employer to offer e-delivery of statements and investment information, help with takin full advantae of their workplace plan and information to keep their savins on track for retirement. who are contributin to a workplace retirement plan report hiher levels of bein financially comfortable and feelin confident about savin enouh for retirement. Thirty-seven percent (37%) of those contributin to a workplace retirement plan report bein financially comfortable (vs. only 22% who don t contribute to a plan.) Nearly three quarters (74%) of contributin to a workplace plan report feelin confident about bein able to save enouh for retirement vs. slihtly less than half of those who are not currently contributin to a plan.
Children of the Great Recession are a true barometer of today s economic environment; some are survivin, while others are strulin, and many are feelin stressed. While a third of report that they are financially comfortable and can afford most thins they want, more than half of report foreoin extras in their current financial situation or are strulin to et by and make ends meet. > 32% of all in the study report that money is not an issue, are financially comfortable and can afford most thins that they want. > Nearly half (43%) report they are doin well but are foreoin some extras in their lives. > One in four (25%) report they are strulin to et by and are unable to make ends meet to pay basic expenses. Which one of the followin statements best describes your current financial situation? Unable to make ends meet/pay basic expenses 3% Strulin but just able to et buy 22% Doin well but foreoin some extras 43% Financially comfortable and can afford most thins I want 29% Money not an issue, can afford anythin I want 3% I 03
Children of the Great Recession continued Just over three in five (62%) report lifestyles that are very or somewhat stressful. > Millennial roups who are most likely to report stressful lifestyles include those with children (70%), Women (60%) and those with fewer than $25K in investable assets (65%.) Current lifestyle - level of stress Not very/not at all stressed 38% Very/somewhat stressed 62% Financial challenes have forced many to delay certain personal milestones. > More than half (53%) have put off buyin a home and four in ten (41%) have put off savin for retirement. Have had to delay or put off any of the followin for financial reasons - % responded yes Buyin a home 53% Savin for retirement 41% Startin a family 33% Gettin married 23% 04 I
Sixty-nine percent (69%) of believe they will have a harder time ettin a ood start in life compared to the enerations that preceded them and nearly as many feel that it will be much more difficult for them to achieve the same lifestyle that their parents now live. Harder for my eneration to et a start in life compared to previous enerations Harder or easier to achieve the same lifestyle as your parents eneration 6% BD 20% BD LG 25% LG 25% 3% 12% GL LV SM LV 20% SM SM SM BD BD LV LV LG 45% 44% Stronly disaree Disaree Aree Stronly aree LG Much more difficult Somewhat more difficult About the same Somewhat easier Much easier I 05
Payin off student loan debt comes first - but ets in the way of savin Many report carryin the primary burden for payin off their student loans, which takes priority in their financial lives over savin for retirement. For nearly three in five (57%), payin off debt takes a reater priority over savin for retirement. > Nearly three quarters of (73%) who are not currently contributin to a workplace retirement plan are much more focused on payin off debt before startin to save for retirement. who are currently contributin to a workplace plan report lower levels of bein focused on payin off debt, but nearly half (48%) still report this as bein a priority. Payin off debt before savin for retirement vs. savin for retirement and delayin payin debt Focused on payin off debt before startin to save for retirement Focused on beinnin to save a little for retirement even if it means takin loner to pay off debt All millennials Contributin to workplace retirement savins plan Not contributin to workplace retirement savins plan 57% 43% 48% 52% 73% 27% 0 20 40 60 80 100 The majority of with student loans are payin most of those loans off themselves. > Four in five (83%) are responsible for the majority of their student loan debt, with 78% expectin to pay off more than 75-100% of their loans. Percent of student loan debt paid by self or others 76% - 100% Paid by me 3% 78% 51% - 75% 26% - 50% 25% or less paid by me 5% 6% 11% 06 I
Understandin the value of solid employment in a weak economy Followin the touher job market of the last few years, show a enuine appreciation for the benefits that havin a ood job with a ood company can offer. place hih importance on the fulfillment they receive from work over just receivin a paycheck. > Three in ten report enjoyin their job so much that they would be willin to stay for less pay. > While the media has portrayed them as entrepreneurial, only a third (31%) of believe they need to start their own business to be truly happy. Many report hih levels of trust in their employer at all levels, second only to trust in one s parents. > Over 60% of report trustin their employer and immediate supervisor at work, at more than double the levels they trust financial institutions, the overnment or the media. Trust of authority fiures Parents Immediate supervisor/manaer at work Co-workers Employer Lare financial institutions The overnment The media 9% 21% 30% 69% 66% 62% 93% 0 20 40 60 80 100 I 07
Retirement is far off and not yet in focus It may not be a surprise that many are not yet clear on how much they should be savin for retirement. But they are also keenly aware that some of the traditional sources of support in retirement that their parents and randparents have come to expect and rely on may not be available to them by the time they reach retirement. Two-thirds have no idea how much they will need to have saved by the time they retire. The vast majority (82%) believe that Social Security will pay them nothin or only a small amount by the time they retire and less than what they will have paid into the system. Expectations for social security in retirement 18% 38% LV LG LV LG BD SM BD 44% Don t expect Social Security will pay anythin or even be around when I retire Expect to receive a small amount, but not what I will have paid into the system Expect to receive a fairly adequate amount of Social Security when I retire 08 I
Confident and interested investors - but still lookin for more information Many are confident and interested in investin - and would welcome information and help from their employer or retirement plan provider to improve their savin, investin and plannin. Two in five (39%) of make investment decisions entirely on their own without consultin others. > Half (52%) consult with others (includin parents, investment professionals, friends) before makin investment decisions. > Only one in ten (9%) deleate financial and investment decisions to someone else. More than half (55%) of report that the best retirement savins advice they have received to date is the importance of startin early even if savin only a small amount. Half of all express stron interest in learnin how to better invest or manae their finances. > The financial topics of reatest interest to them include how to prepare for retirement (85%) followed by learnin about basic investin (78%). > Half (51%) wish they had learned about these financial topics in hih school or collee, and only 16% say that they actually did. Interest in learnin about financial topics - % responded yes How to prepare financially for retirement Basic investin (ABCs of investin in stocks, bonds, mutual funds) Basic household budetin Tax-advantaed investment strateies Basics of credit (sources for loans, how to obtain credit, understandin credit ratins) 3% 85% 51% 78% 49% 75% 41% 74% 49% 71% 49% 0 20 40 60 80 100 Level of Interest in learnin more about Wish you had taken a hih school/collee course in I 09
Seekin financial advice Many seem to be lookin for information on retirement savin and plannin from the place where they may already have the opportunity to start their retirement savins their workplace retirement plan. At least two in five express interest in havin their employer or DC plan provider offer advice on key financial savin and investin topics. > At least 40% expressed interest in topics includin: how much to be savin, how and where to invest and allocate savins, developin and creatin a retirement income stratey and findin ways to save more and keep their savins on track as they et older. Advice souht from employer or workplace retirement plan provider How much I should be savin Where/how to invest and allocate my savins How to develop a retirement income stratey How to create a monthly income stream in retirement How to stay on track as I et older/as market conditions chane Specific steps I should take to save more How to prioritize financial oals (not just retirement) How to plan for healthcare costs in retirement 42% 41% 41% 40% 40% 36% 32% 51% Almost nine in ten felt it was a ood/reat idea to have their employer or workplace retirement plan provider offer additional ways to help them improve their knowlede and plannin for retirement, includin: e-delivery of account statements and investment information, ideas for takin full advantae of their workplace plan and help with understandin how to invest and stay on track for retirement Ways to help employees prepare for retirement via workplace retirement plan - % responded ood/reat idea E-delivery of statements/investment information to more easily understand your DC plan Help in determinin if you are on track to retire comfortably Identify actions/areas to address to take full advantae Provide investment options desined to optimize risk and protection as you et older/closer to retirement 90% 90% 89% 87% 10 I
When it comes to communicatin or ettin financial advice, show a stron preference for face-to-face interactions over other methods of communications. > A surprisin majority prefer face-to-face interaction (57%) followed by e-mail (18%), online tools or calculators (12%) and phone (9%.) Most preferred method of communicatin or ettin financial advice Face-to-face 57% Email 18% Online tools/calculators Phone 12% 9% Reapin the benefits of contributin to a workplace retirement plan who are actively contributin to a workplace retirement plan report hiher levels of bein financial comfortable and secure in savin for retirement than those who do not. Thirty-four percent (34%) of those contributin to a workplace retirement plan report bein financially comfortable vs. only 21% of those who are not contributin to a plan. Which of the followin statements best describes your current financial situation? - Contributin/not contributin to workplace retirement plan I m financially comfortable and can afford most thins I want I m doin well but have to foreo some extras It s a strule but I m just able to et by 19% 21% 27% 34% 43% 46% Contributin Not contributin I 11
Reapin the benefits of contributin to a workplace retirement plan continued who are already contributin to a workplace retirement plan are sinificantly more confident in their ability to save enouh for retirement vs. those who aren t contributin to a plan. How confident you are in your ability to meet the followin responsibilities: Bein able to save enouh fo retirement - Contributin/not contributin to workplace retirement plan 80 70 60 50 40 30 20 10 0 48% 74% Confident (net) 52% 27% Not confident (net) Not contributin Contributin 12 I
Helpin et back on track and prepared for the future Today s are facin a much touher entry into adult life than did their Boomer parents. In the face of touher economic circumstances, includin a more challenin job market as well as startin off with hiher collee debt, are comin to appreciate the true value of havin a ood job and the benefits that come alon with it includin the opportunity to save in a workplace retirement plan. The results of this study indicate that savin for the future is already on the minds of today s Millennial workers and many are lookin for more information and help from their employer to start creatin a plan that will lead to a more confident future. who have started savin are already reapin the benefits of startin early, in terms of feelin more confident about their future. Employers have the opportunity to encourae and educate their youn workers on the benefits of savin now and keepin their savins on track as their careers proress. I 13
Additional copies of this report can be downloaded at the Voya Retirement Research Institute www.voyaretirementresearchinstitute.com. This paper has been prepared by the Voya Retirement Research Institute for informational purposes. Nothin contained herein should be construed as (i) an offer to sell or solicitation of an offer to buy any security or (ii) a recommendation as to the advisability of investin in purchasin or sellin any security. Any opinions expressed herein reflect our judment and are subject to chane. Certain of the statements contained herein are statements of future expectations and other forward-lookin statements that are based on manaement s current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. Actual results, performance or events may differ materially from those in such statements due to, without limitation, (1) eneral economic conditions, (2) performance of financial markets, (3) interest rate levels, (4) increasin levels of loan defaults, (5) chanes in laws and reulations and (6) chanes in the policies of overnments and/or reulatory authorities. The opinions, views and information expressed in this commentary are subject to chane without notice based on market conditions and other factors. The information provided is not a recommendation to buy or sell any security. Products and services offered throuh the Voya Financial family of companies. 171255 3035203.X.G-1 2015 Voya Services Company. All rihts reserved. CN0619-19260-0716 Voya.com