Bank of the West 2018 Millennial Study Results July 2018
Table of Contents Executive Summary 3 Key Findings 5 The Millennial Mindset The American Dream 6 Homeownership 9 Relationship with Debt 17 Investing for Retirement 21 Additional Data The Millennial Mindset: Gender Differences 27 The Millennial Mindset: California Millennials 31 Appendix Methodology 34 Additional Data 36 2
Bank of the West 2018 Millennial Study: Executive Summary
Executive Summary Six in ten Millennials believe that the American Dream is attainable today. Top ingredients to the American Dream are: owning a home, becoming debt-free, and retiring comfortably. Owning a home (56%) takes precedence over paying off debt or retiring comfortably for Millennials. In fact, nearly 1 in 3 Millennial homeowners have dipped into retirement funds for down payments. 68% of Millennial homeowners have regrets about buying a home, wishing they had been more prepared going into the purchase. They cited putting more money down and better inspecting the house as steps they wish they d taken. Millennials have a complicated relationship with debt: while 69% feel they ve made it when they are debt-free, they also say they re comfortable carrying debt. They also understand that they need to take on a mortgage to become homeowners and are comfortable with this kind of rite of passage debt. More Millennials feel confident in their understanding of financial products than Gen Xers and Boomers, but are mistrusting of the markets due to having come of age during the financial crisis. In fact, 66% say they feel safest keeping most of their savings out of the market. This may hinder them as they prepare for retirement. 5
Bank of the West 2018 Millennial Study: Key Findings
The Millennial Mindset: The American Dream
Nearly six in ten Millennials believe in the American Dream. Which best describes how you feel about The American Dream NET: I have already attained the American Dream/The American Dream is still attainable today 57% 58% 57% 62% The American Dream is still attainable today 46% 54% 53% 52% I once believed in the American Dream, but I no longer do 23% 25% 25% 28% I never believed in the American Dream The American Dream was never/will never be attainable I have already attained the American Dream 13% 9% 7% 11% 7% 9% 2% 7% 3% 4% 6% 16% Millennials Generation X Baby Boomers All Base: Total=1,014; Millennials=609; Generation X=204; Baby Boomers=201. Q13. Which best describes how you feel about the American Dream? 7
The most popular ingredients of Millennials American Dream are owning a home, being debt-free, retiring comfortably, and pursuing a passion. Top Ingredients in American Dream 56% Owning a home Being debt-free Retiring comfortably Pursuing my passion 29% 27% 39% 47% 50% 53% 59% 59% 51% 61% 49% 59% 56% 68% 73% Having children 36% 41% 41% 47% Getting married 35% 41% 38% 39% Making it on my own Owning a car 34% 41% 37% 39% 38% 43% 42% 40% Millennials Generation X Baby Boomers All I don't have an American Dream 4% 4% 4% 7% Base: Total=1,014; Millennials=609; Generation X=204; Baby Boomers=201. Q14. Please select the most important ingredients from the following list that describe your American Dream. 8
The Millennial Mindset: Homeownership
Four in ten Millennials are homeowners already. Top motivators include feeling stability, feeling homeownership makes financial sense, and being able to modify a home. Where Millennials Live Motivators to Buy a Home, Among Non-Homeowners Own, 42% Stay with parents/family, 11% Stay with friends, 1% Rent, 46% To feel a sense of stability It makes more financial sense to own my home versus renting So I can modify it and make it my own Wanted more space It s a good financial investment Having children Getting married Moving in with a significant other Tax breaks I wanted to invest in my community I have no interest in owning my own home Other 2% 4% 6% 25% 22% 21% 34% 31% 36% 49% 45% 47% 43% 47% 41% 19% 31% 44% 40% 25% 23% 40% 36% 13% 38% 31% 14% 30% 25% 20% 30% 17% 13% 19% 16% 11% 6% 2% 9% 8% 20% 13% 4% 8% 4% 4% 26% Millennials Generation X Baby Boomers All 46% Base: Total=1,014; Millennials=609; Generation X=204; Baby Boomers=201. Q4. Where do you currently live? Base: Non-homeowners=467; Millennials=355; Generation X=64; Baby Boomers=48. Q9: What reasons, if any, would motivate you to buy your own home? 10
Putting down roots: most Millennials see themselves staying in the same area for the next 10 years. I can see myself living in the same area for the next 10 years (% Completely/Somewhat Agree) 69% 76% 87% 74% Millennials Generation X Baby Boomers All Base: Total=1,014; Millennials=609; Generation X=204; Baby Boomers=201. Q2: To what extent do you agree or disagree with the following statements? 11
When picking a place to live, Millennials most commonly cite cost of living, proximity to family, and career opportunities as key factors. Cost of living Proximity to family Career opportunities Good schools Weather Real estate prices Earning potential Proximity to friends Access to cultural experiences Shared values Top Ten Factors When Considering a Place to Live (Respondents chose three) 7% 11% 16% 13% 13% 15% 18% 18% 18% 14% 11% 16% 15% 12% 10% 14% 14% 17% 18% 15% 21% 24% 23% 26% 30% 31% 32% 34% 33% 32% 42% 44% 42% 40% 42% 54% 54% 61% Millennials Generation X Baby Boomers All 71% 72% Base: Total=1,014; Millennials=609; Generation X=204; Baby Boomers=201. Q3: When picking a place to live, what are the top three factors most important to you? 12
Bigger houses, safer neighborhoods, and better school systems would motivate current Millennial homeowners to move to a new home. Factors That Would Make Homeowners Want to Move to a Different Home Need a bigger house Safety of neighborhood Quality of school systems Home increased in value I want to be closer to loved ones Property taxes I don t see myself living in this area long term My house is difficult to maintain Need a smaller house My home value declined None of the above Other 6% 2% 8% 4% 7% 3% 6% 7% 5% 12% 10% 13% 14% 13% 13% 11% 10% 29% 23% 22% 27% 21% 21% 27% 27% 18% 24% 24% 29% 25% 25% 19% 19% 17% 17% 21% 27% 20% 19% 23% 32% 31% 36% 35% Millennials Generation X Baby Boomers All 42% 46% 36% 33% Base: Homeowners at Q4; Millennials=254; Generation X=140; Baby Boomers=153. Q7: Which of the following factors, if any, would make you want to move to a different home? 13
Millennials view homeownership as a financial investment. Nearly half say it makes more financial sense to own versus to rent and over one-third believe it s a good investment, which is consistent across generations. Motivators for Homeownership 59% 58% 62% 51% 45% 44% 39% 39% 43% 35% 40% All Millennials Generation X Baby Boomers Makes more financial sense to own my home vs. renting It s a good financial investment Base: Total=1,014; Millennials=609; Generation X=204; Baby Boomers=201. Q9: What reasons, if any, would motivate you to buy your own home? 14
Two in ten Millennials who plan to buy a home expect to dip into retirement accounts to fund their purchase; three in ten who are currently homeowners have already done so. Plan to Buy a Home How was Home Purchase Financed Already Own a Home 19% 6% 8% 18% From IRA or 401(k) loan or withdrawal 11% 7% 17% 29% Millennials Generation X Baby Boomers All 64% 50% 37% 31% From my cash savings 50% 55% 46% 58% 48% 25% 38% 27% Apply for a loan prior to a mortgage 28% 28% 22% 44% 16% 12%8% 13% Profits from selling other assets 22% 14% 22% 13% 14% 8%4% 12% Inheriting money or receiving money as a gift 6% 7% 20% 15% 13% 12% 12% 20% 12% 12% 4% 11% From my brokerage account or investments Borrowing from a family member 17% 8% 5% 13% 16% 10% 3% 11% 22% 23% 9% 5% I'm not I plan to inherit a home 5% 11% 13% 9% Base: Interested in buying a home=405; Millennials=328; Generation X=51; Baby Boomers=26. Q10. How, if at all, are you planning to finance your down payment for a home purchase? Base: Already own a home=547; Millennials=254; Generation X=140; Baby Boomers=153. Q10. How, if at all, did you finance your down payment for a home purchase? 15
Over two-thirds of Millennials have regrets about how prepared they were for the home buying process a far higher proportion than their older counterparts. Millennials: 68% Generation X: 55% Percentage of Homeowners With Regrets Top regrets: Costly to maintain (23%) Stretched too thin financially (19%) Feel stuck in one place (18%) All: 55% Top regrets: Costly to maintain (20%) Realized there was damage after moving in (20%) Space doesn t work well (19%) Should have put down more money from the start (19%) Baby Boomers: 35% Top regrets: Costly to maintain (16%) Stretched too thin financially (10%) Base: Already own a home=547; Millennials=254; Generation X=140; Baby Boomers=153. Q8. Which of the following regrets, if any, do you have after buying your home? 16
The Millennial Mindset: Relationship with Debt
While Millennials feel strongly that being debt-free is a key ingredient to the American Dream, they are still willing to take on debt. You ve Only Really Made It When You re Debt-Free (% Completely/Somewhat Agree) I am Comfortable Carrying Debt (% Completely/Somewhat Agree) 69% 44% 66% 71% 69% 32% 40% 41% Millennials Generation X Baby Boomers All Millennials Generation X Baby Boomers All Base: Total=1,014; Millennials=609; Generation X=204; Baby Boomers=201. Q2: To what extent do you agree or disagree with the following statements? 18
Most Millennials (58%) pay their credit card bills in full each month. Monthly Handling of Credit Card Bills 58% 58% 56% 54% 44% 44% 34% Millennials Generation X Baby Boomers All 35% 36% 7% 10% 9% 8% 2% 1% 1% 1% I pay the balance in full each month I pay off as much as I can each month I pay only the minimum balance each month I have missed payments on my monthly bills Comfort with Revolving Credit (% Very/Somewhat comfortable) 59% 57% 56% 58% Millennials Generation X Baby Boomers All Base: Own a credit card at Q18=738; Millennials=433; Generation X=144; Baby Boomers=161. Q22: In a typical month, which of the following describes how you handle your credit card bill or bills? Base: Revolve credit card balances at Q22=336; Millennials=184; Generation X=81; Baby Boomers=71. Q23: How comfortable do you feel about revolving your credit when you do not pay off your credit card bills in full each month? 19
When paying for everyday purchases, Millennials are split between using debit cards and credit cards when paying in person, but favor using credit cards online. Paying for Everyday Purchases Online (Among credit and debit card holders) Paying for Everyday Purchases In Person (Among credit and debit card holders) Debit card 43% Debit card 38% Credit card Credit card with cash back or points rewards Mobile wallet credit card with cash back or points rewards 3% 13% 39% Total online credit card usage: 52% Credit card Cash Credit card with cash back or points rewards 14% 18% 24% Total inperson credit card usage: 38% Mobile wallet debit card 2% Check 3% Mobile wallet credit card 0% Direct transfer from checking or savings account 3% Millennials Millennials Base: Own a credit or debit card at Q18=895; Millennials=526; Generation X=181; Baby Boomers=188. Q24A: When making everyday purchases online, which payment type do you prefer? Q24B: When making everyday purchases in-person, which payment type do you prefer? 20
The Millennial Mindset: Investing for Retirement
Millennials feel confident in their understanding of financial products. Confident in Ability to Invest in the Following Real estate Stocks Mutual funds Government bonds Private equity Options and futures High-yield bonds Exchange-Traded Funds (ETFs) Corporate bonds Real Estate Investment Trusts (REITs) Commodities Foreign exchange Derivatives 11% 19% 21% 54% 55% 54% 56% 53% 50% 53% 52% 47% 38% 28% 42% 47% 39% 40% 47% 38% 38% 43% 46% 38% 30% 41% 45% 35% 38% 42% 45% 37% 34% 41% 44% 36% 27% 39% 43% 29% 36% 38% 26% 30% 68% 63% 67% 67% 65% 63% 63% 61% Millennials Generation X Baby Boomers All Base: Total=1,014; Millennials=609; Generation X=204; Baby Boomers=201. Q20: Consider the investment types listed below. How confident would you say you feel in your ability to invest in each of them? 22
At least in theory, Millennials agree that the more time they have until retirement, the more aggressive they can be with their investing strategy. The more time I have until retirement, the more aggressive I can be with my investment strategy (% Completely/Somewhat Agree) 66% 69% 50% 64% Millennials Generation X Baby Boomers All Base: Total=1,014; Millennials=609; Generation X=204; Baby Boomers=201. Q2: To what extent do you agree or disagree with the following statements? 23
However, they are reluctant to actually invest, saying they feel safest keeping most of their savings out of the market. I feel safest keeping most of my savings out of the market (not invested) (% Completely/Somewhat Agree) 66% 58% 56% 62% Millennials Generation X Baby Boomers All Base: Total=1,014; Millennials=609; Generation X=204; Baby Boomers=201. Q2: To what extent do you agree or disagree with the following statements? 24
Nearly two-thirds of Millennials say that living through the financial crisis made them more conservative investors. Living through the financial crisis has made me a more conservative investor (% Completely/Somewhat Agree) 65% 62% 71% 66% Millennials Generation X Baby Boomers All Base: Total=1,014; Millennials=609; Generation X=204; Baby Boomers=201. Q2: To what extent do you agree or disagree with the following statements? 25
This reluctance to invest is demonstrated by Millennials underutilization of investing accounts that could help them build wealth for retirement. Financial Products or Investment Vehicles Owned or Used 401 (k) or 403 (b) IRA or Roth IRA Brokerage account Managed Account Annuities Real estate CDs 529 College Savings Plan Bitcoin Commodities Ownership or equity in a private company None of these 15% 12% 15% 14% 14% 8% 10% 8% 7% 14% 11% 10% 14% 12% 9% 10% 13% 5% 6% 9% 3% 2% 5% 7% 2% 2% 5% 6% 2% 4% 3% 4% 3% 1% 19% 19% 19% 26% 23% 25% 23% 25% 30% 35% All Millennials Generation X Baby Boomers 41% 40% 38% 47% Base: Total=1,014; Millennials=609; Generation X=204; Baby Boomers=201. Q18: Which of the following financial products or investment vehicles do you own or use? 26
The Millennial Mindset: Gender Differences
Millennial women tend to choose more ingredients for their American Dream than Millennial men do. Ingredients in Millennials American Dream Owning a home Being debt-free Retiring comfortably Pursuing my passion Traveling the world Building a satisfying career Making a difference Building wealth Getting a good education Making it on my own Getting married Having children Falling in love Owning a car Owning pet/s Earning a big paycheck Being better off than the previous generation Working for myself/owning a business I don't have an American Dream 3% 4% 19% 22% 26% 28% 28% 25% 26% 31% 33% 33% 34% 33% 36% 36% 35% 37% 36% 38% 41% 41% 42% 39% 42% 41% 43% 43% 45% 47% 46% 49% 48% 51% 50% 58% 57% 60% Millennial Women Millennial Men Base: Millennials=609 Male=227; Female=382. Q14: Please select the most important ingredients from the following list that describe your American Dream. 28
Millennial men are significantly more confident than Millennial women in their ability to make financial investments. Confident in Ability to Invest in the Following Real estate 62% 78% Stocks 56% 81% Mutual funds 44% 73% Government bonds 42% 72% Private equity 34% 69% Options and futures 36% 64% High-yield bonds 34% 68% Exchange-Traded Funds (ETFs) 34% 67% Corporate bonds 33% 66% Real Estate Investment Trusts (REITs) 32% 67% Commodities 30% 67% Foreign exchange Derivatives 32% 28% 56% 62% Millennial Women Millennial Men Base: Total Millennials; Millennial men=227; Millennial women=382. Q20: Consider the investment types listed below. How confident would you say you feel in your ability to invest in each of them? 29
Millennial women are less likely to be homeowners, thus less likely to be taking the first step in their American Dream. Live in a Place they Own Think of Home as a Starter Home In addition, first-time Millennial men homeowners are more likely to say that their first home is a starter home. 51% 96% 75% 36% 25% 4% Men Women Men Women Base: Total Millennials; Millennial men=227; Millennial women=382. Q4. Where do you currently live? Base: First-time Millennial homeowners=208; Millennial men=94; Millennial women=114 Q6: Does the following statement describe your attitude toward your current home: I think of my home as a starter home I plan to upgrade when I can. 30
The Millennial Mindset: California Millennials
California Millennials are significantly more confident than those living outside California in their ability to make financial investments. Confident in Ability to Invest in the Following Real estate 66% 73% Stocks 62% 72% Mutual funds 52% 62% Government bonds 50% 60% Private equity 43% 56% Options and futures 42% 57% High-yield bonds 43% 54% Exchange-Traded Funds (ETFs) 42% 54% Corporate bonds 42% 52% Real Estate Investment Trusts (REITs) 42% 52% Commodities 41% 51% Foreign exchange Derivatives 34% 39% 47% 52% CA Millennials Non-CA Millennials Base: Total Millennials; CA Millennials=203; Non-CA Millennials=406. Q20: Consider the investment types listed below. How confident would you say you feel in your ability to invest in each of them? 32
Millennials living in California are more likely than those living elsewhere to be comfortable carrying debt. I am comfortable carrying debt (i.e., mortgage, student loans, credit cards, auto loan/lease) (% Completely/Somewhat Agree) 53% 45% 41% 41% 35% 40% 40% 32% California Non-California All Millennials Gen X Baby Boomers Base: Have an American Dream at Q14. Millennials=569; CA=189; Non-CA=380. Q2: To what extent do you agree or disagree with the following statements? 33
Appendix: Methodology
Survey Methodology This survey was conducted online within the United States by Maru Matchbox on behalf of Bank of the West between November 1 st November 10 th, 2017, among its proprietary Springboard America panel. 1,014 individuals aged 21-70 completed the survey, including 240 based in California. 609 Millennials (Ages 21-34) 305 Age 21-27 Younger Millennials 304 Age 28-34 Older Millennials 204 Generation X (Age 35-51) 201 Baby Boomers (Age 52-70 ) Gender, household income, and regional data is balanced to U.S. Census with a boost to the California market. 35
Appendix: Additional Data
Millennials American Dream begins with owning a home Ingredients of Millennials American Dream Owning a home 56% Being debt-free Retiring comfortably Pursuing my passion Traveling the world Building a satisfying career Making a difference Building wealth Getting a good education Making it on my own Getting married Having children Falling in love Owning a car 51% 49% 47% 45% 44% 42% 41% 41% 41% 41% 41% 39% 38% Owning pet/s 28% Earning a big paycheck 27% Being better off than the previous generation Working for myself/owning a business 22% 27% Millennials I don't have an American Dream 4% Base: Total=1,014; Millennials=609. Q14. Please select the most important ingredients from the following list that describe your American Dream. 37
Millennials are more likely than other generations to have regrets after buying a home. Regrets After Purchasing a Home I realized there was damage to the house after I moved in It is costly to maintain my home The space doesn t work well for my family I should have put down more money from the start I feel stuck in one place Homeownership is too much responsibility I am stretched too thin financially My home was not a good financial investment I don t like the neighborhood I didn t realize building an addition would be so expensive I have no regrets 20% 11% 6% 14% 20% 23% 16% 20% 19% 14% 8% 14% 19% 10% 3% 12% 18% 16% 7% 14% 14% 12% 3% 10% 13% 19% 10% 14% 13% 11% 2% 10% 11% 14% 7% 10% 8% 4% 2% 5% Millennials Generation X Baby Boomers All 32% 45% 45% 65% Base: Already own a home=547; Millennials=254; Generation X=140; Baby Boomers=153. Q8. Which of the following regrets, if any, do you have after buying your home? 38
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