Despite rent, student loans, and early
withdrawals from their retirement accounts, investors under 30 feel
confident they will enjoy the retirement they want
E*TRADE Financial Corporation (NASDAQ:ETFC) today announced
results from the most recent wave of StreetWise, E*TRADE’s
quarterly tracking study of experienced investors. Results show how
investors under 30 feel about, and plan for, retirement.
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- They believe they will retire
relatively young. Three out of four (76 percent) plan to retire
by the age of 64. And nearly nine out of ten (85 percent) are
confident they are saving enough to enjoy the retirement they
want.
- It’s a primary focus of their
savings. For almost half (45 percent), retirement is the top
priority for long-term saving—even more so than saving for a big
purchase or home.
- And it shows in their salary
contributions. Nearly nine out of ten (86 percent) allocate
more than 5 percent of their salary to a retirement account.
- But housing costs and student loans
get in the way. Roughly two-thirds feel that housing costs (69
percent), student loans (66 percent), and other educational
expenses (63 percent) are barriers to saving for retirement.
- They’re dipping in early.
Slightly more than half (54 percent) have already dipped into their
retirement accounts. Of those who’ve made an early withdrawal from
their retirement account, nearly three quarters (74 percent) later
regret doing so.
“It is great to see young investors focused on their retirement
goals and beginning to save early, as the power of compounding
returns is significant for this group,” commented Mike Loewengart,
VP of Investment Strategy at E*TRADE Financial. “Developing good
saving and investing habits earlier in life will only benefit their
long-term investing plans.”
Mr. Loewengart offered a few steps young investors may consider
to help reach their retirement savings goals:
- Follow a savings code. The
biggest factor to pursuing retirement goals—hands down—is being
disciplined about contributions. Younger investors should consider
increasing their contribution as their salary grows as it’s much
harder to scale back income after getting used to a bigger
paycheck.
- Work the match. If your employer
offers a contribution match to your 401(k), this is as close to
free money as one will ever come by in the investing world. It is
probably the easiest way to seriously kick start long-term
investing.
- Mix it up. Asset location—the
idea of strategically deploying investments across taxable and
nontaxable accounts—can go a long way towards ensuring your
portfolios are optimized for long-term tax efficiency. When you
maintain accounts with different tax profiles, such as taxable
brokerage accounts, tax-deferred 401(k)s, and Roth IRAs, you may
have more tax flexibility later in life.
- Keep your eyes on the prize.
Building and maintaining a well-diversified, risk-appropriate
portfolio for the long term is one of the best ways to stay on
track to achieving retirement goals. Try to avoid emotional
investing pitfalls—like timing the market—by focusing on the long
term and sticking to your plan.
E*TRADE aims to enhance the financial independence of traders
and investors through a powerful digital offering and professional
guidance. To learn more about E*TRADE’s trading and investing
platforms and tools, visit etrade.com.
For useful trading and investing insights from E*TRADE, follow
the company on Twitter, @ETRADE.
About the Survey
This wave of the survey was conducted from April 1 to April 10
of 2017 among an online U.S. sample of 958 self-directed active
investors who manage at least $10,000 in an online brokerage
account. The survey has a margin of error of ±3.18 percent at the
95 percent confidence level. It was fielded and administered by
Research Now. The panel is broken into thirds of active (trade more
than once a week), swing (trade less than once a week but more than
once a month), and passive (trade less than once a month). The
panel is 60 percent male and 40 percent female with an even
distribution across online brokerages, geographic regions, and age
bands.
“Young investor” is defined by surveyed investors between the
ages of 18–29. This group represents a sample size of 164
respondents within the total population.
Referenced Data
At what age do you plan to retire from the career you
have now?
TOTAL
Under 30
Before age 45 7% 45–54 18% 55–64 51% 65–74 22% 75+ 1% I will never
be able to retire 1%
How confident are you that you are currently saving
enough to enjoy the retirement that you want?
TOTAL
Under 30
TOP TWO BOX 85% Very confident 37% Somewhat confident
48% Somewhat unconfident 15% Very unconfident 0%
BOTTOM TWO
BOX 15%
What are the main reasons you are saving for the long term?
(Select top three choices)
TOTAL
Under 30
For retirement 45% For an unknown emergency 41% For a big purchase
such as a car or new home 30% To pay for an education 24% For
vacation or entertainment 24% Simply because it's the right thing
to do 23% To take care of a parent or other older relative 22% To
get rich 20% I am not saving for the long term, just playing the
stock market 3%
What percent of your salary are you currently allocating to a
retirement account?
TOTAL
Under 30
0% 1% 1–5% 13% 6–10% 42% 11–16% 27% 17–22% 9% >23%
8%
When it comes to saving
for retirement, how much of a barrier is each of the following?
[TOP TWO BOX of “Significant barrier/Somewhat of a barrier”]
TOTAL
Under 30
Rent or mortgage 69% Paying down student loans 66% Education costs
63% Health care costs 57% Day-to-day living expenses like food or
utilities 56% Wanting to live for today 51% Having a parent move in
with you 49% Childcare 45% Having an older child move back in with
you 42%
Have
you ever taken out money from an IRA or 401(k) before the age of
59.5 and, if so, for what?
TOTAL
Under 30
No, I have never taken out money from an IRA or 401(k) before
the age of 59.5 46%
Yes (Net) 54% Yes, for a medical
emergency 20% Yes, to pay for education 19% Yes, because I became
unemployed 18% Yes, to make a large purchase 16% Yes, to simply
spend on myself or my family 11% Yes, to spend on a vacation 2%
Yes, other 0%
Have you ever regretted your decision to take money from an IRA
or 401(k) before the age of 59.5?
TOTAL
Under 30
Top 2 Box 74% Very much regretted 24% Somewhat
regretted 50% Regretted a little bit 18% Did not regret at all 8%
Bottom 2 Box 26%
About E*TRADE Financial and Important Notices
E*TRADE Financial and its subsidiaries provide financial
services including online brokerage and banking products and
services to retail customers. Securities products and services are
offered by E*TRADE Securities LLC (Member FINRA/SIPC) and
OptionsHouse (Member FINRA/SIPC/NFA). Managed Account Solutions are
offered through E*TRADE Capital Management, LLC, a Registered
Investment Adviser. Bank products and services are offered by
E*TRADE Bank, a Federal savings bank, Member FDIC, or its
subsidiaries. More information is available at www.etrade.com.
The information provided herein is for general informational
purposes only and should not be considered investment advice. Past
performance does not guarantee future results.
E*TRADE Financial, E*TRADE, the E*TRADE logo, and OptionsHouse
are trademarks or registered trademarks of E*TRADE Financial
Corporation. ETFC-G
© 2017 E*TRADE Financial Corporation. All rights reserved.
E*TRADE Financial Corporation and Research Now are separate
companies that are not affiliated. E*TRADE Financial Corporation
engages Research Now to program, field, and tabulate the study.
About Research Now
Research Now Group, Inc. is a global leader in digital research
data for better insights and business decisions. The company
provides world-class research data solutions that enable better
decisions and better results for its 3,000 market research,
consulting, media, and corporate clients through access to over 11
million deeply-profiled business professionals and consumers in
more than 40 countries. Research Now operates globally with
locations in the Americas, Europe, the Middle East, and
Asia-Pacific, and is recognized as the quality, scale, and customer
satisfaction leader in the market research industry. For more
information, please go to www.researchnow.com.
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