TD Ameritrade survey illuminates the hottest
retirement trend
While the movement to achieve financial independence and retire
early (FIRE) has been gaining traction, misconceptions still
abound. New research conducted by The Harris Poll on behalf of TD
Ameritrade, which included a survey of 1,500 U.S. adults aged 45
and older with at least $250,000 in investable assets, debunks
common myths and shines a light on other realities surrounding the
growing retirement movement.
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the full release here:
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7 Habits of the Financially Independent
(Graphic: TD Ameritrade)
“In these uncertain times, many people are seeking a future of
freedom, especially when it comes to their finances, and some are
turning to FIRE as a solution,” said JJ Kinahan, chief market
strategist for TD Ameritrade. “But despite its buzz-worthiness and
recent media coverage, two-thirds of Americans surveyed (age 45+)
have never heard of FIRE. So, we think it’s important to help
consumers understand what it is, and more importantly, what it
isn’t.”
Myth #1: The purpose of FIRE is to quit your job and retire
earlyAccording to the research, the drive behind FIRE is
actually the desire for financial independence and control, not to
exit the workforce:
- Three-quarters of financially
independent respondents said the “FI” (financial independence) was
more important to them than the “RE” (retire early)
- More than 4 in 10 of both the
financially independent and their non-financially independent
counterparts plan to continue working in retirement because they
enjoy it
- Roughly a third of all respondents said
leaving a 40-hour-a-week job was the most appealing aspect of
financial independence
Myth #2: FIRE demands extreme frugality in all aspects of
lifeThe majority of financially independent survey respondents
said FIRE isn’t worth it if you have to live like you’re broke (67
percent) or limit traveling or going on vacations (40 percent). And
with the exception of housing, financially independent respondents
appear to have similar spending habits across multiple categories
(e.g., discretionary expenses, utilities, transportation, etc.) to
those who aren’t financially independent.
Myth #3: Going FIRE means living lean in
retirementPursuing FIRE doesn’t mean scrimping through
retirement; in fact, most would rather save up more for a “fat”
lifestyle:
- Nearly 7 in 10 financially independent
respondents would rather retire at a normal time and live more
comfortably ($2 million+) than retire early and live a leaner,
low-cost lifestyle in retirement
- 37 percent of financially independent
respondents are aiming at a retirement nest egg of more than $2
million, and more than half of all financially independent
respondents are looking for at least $500,000 to $2 million
“If you make sacrifices early on the material-side, you can
actually have a lot of material goods in the future because of the
power of compounding. So I don't think FIRE is just for
minimalists,” said J.P. Livingston, creator of The Money Habit,
speaking of the possible growth potential. “I think it’s for
everyone, as long as they understand the trade-off of building that
first tiny nest egg in order to afford to set themselves up for the
rest of time. It allows you to do so much more.” She explains that
investors could then end up with a bigger nest egg and perhaps even
be able to spend more freely and enjoy decades of retirement.1
Reality #1: FIREes think of themselves as investors
first
- More than 6 in 10 financially
independent respondents consider themselves to be investors,
compared to 27 percent of those who aren’t financially
independent
- Half of financially independent
respondents started investing in the stock market by age 30,
compared to one-third of those who aren’t financially
independent
Reality #2: Investing is a key difference between those who
are financially independent and those who aren’tWhen comparing
steps that survey respondents are taking and/or would take to
achieve FIRE, including financial decisions (e.g., “sticking to a
budget,” “avoiding high-interest debt,” etc.) and lifestyle/career
decisions (e.g., “pursuing a side career,” “buying only used cars,”
etc.), investing in the stock market is a key differentiator:
- More than half of financially
independent respondents are invested in the stock market as opposed
to just 26 percent of those surveyed who aren’t financially
independent
Reality #3: Investments have the potential to drive
wealthWhen breaking down the income of financially independent
respondents, investments are the second most valued source, falling
only after income from employment. Wealth sources or investments
that most contributed to overall financial well-being include:
- Income from employment (50 percent),
financial market investments (25 percent), inheritance (8 percent),
and real estate (7 percent)
Top wealth sources outside of traditional work, in rank
order:
- (1) dividends, (2) annuities, (3) real
estate, (4) inheritance, (5) owning a business, (6)
freelancing
“Discipline is at the core of the FIRE movement: self-discipline
and self-mastery. A lot of people in the community pride themselves
on their ability to do things themselves,” said Grant Sabatier,
creator of Millennial Money and author of “Financial Freedom.”
The Money Habit and Millennial Money are separate from and not
affiliated with TD Ameritrade, which is not responsible for their
services or policies.
1 Of course there is no guarantee that the growth described will
occur, and an individual’s risk tolerance and time horizon can
greatly influence financial results.
About TD Ameritrade Holding CorporationTD Ameritrade
provides investing services and education to more than 11 million
client accounts totaling approximately $1.3 trillion in assets, and
custodial services to more than 6,000 registered investment
advisors. We are a leader in U.S. retail trading, executing an
average of approximately 800,000 trades per day for our clients,
more than a quarter of which come from mobile devices. We have a
proud history of innovation, dating back to our start in 1975, and
today our team of nearly 10,000-strong is committed to carrying it
forward. Together, we are leveraging the latest in cutting edge
technologies and one-on-one client care to transform lives, and
investing, for the better. Learn more by visiting TD Ameritrade’s
newsroom at www.amtd.com, or read our stories at Fresh
Accounts.
Brokerage services provided by TD Ameritrade, Inc., member FINRA
(www.FINRA.org)/SIPC (www.SIPC.org).
About The Harris PollThe Harris Poll is one of the
longest-running surveys in the U.S., tracking public opinion,
motivations and social sentiment since 1963. It is now part of
Harris Insights & Analytics, a global consulting and market
research firm that strives to reveal the authentic values of modern
society to inspire leaders to create a better tomorrow. We work
with clients in three primary areas; building twenty-first-century
corporate reputation, crafting brand strategy and performance
tracking, and earning organic media through public relations
research. Our mission is to provide insights and advisory to help
leaders make the best decisions possible.
Survey MethodologyThis survey was conducted online within
the United States by The Harris Poll on behalf of TD Ameritrade
from September 28 to October 6, 2018, among 1,503 U.S. adults aged
45 and older with over $250,000 in investable assets, including 750
who are financially independent or on the path to be. “Financial
independence” is defined as a state in which an individual or
household has sufficient wealth to live on without having to depend
on income from some form of employment. Eleven in-depth interviews
were also conducted with pioneers in the FIRE movement.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20181213005026/en/
For Media:Becky Niiya, 402-574-6652Director, Corporate
Communicationsrebecca.niiya@tdameritrade.com@TDAmeritradePR
For Investors:Jeff Goeser, 402-597-8464Director, Investor
Relationsjeffrey.goeser@tdameritrade.com
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