U.S. investors squeezed for $10,000 a year by family
According to the Wells Fargo/Gallup Investor and Retirement
Optimism Index survey, roughly half of U.S. investors, 53%, report
they have provided financial assistance, personal assistance or
both to adult children or extended family members — not including
school tuition. These demands curb investor’s ability to save for
retirement at times.
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Mary Sumners, regional president of Wells Fargo Advisors’
Northern Region, said, “It seems to me that today’s landscape is
far different than that of a generation ago. I think that with many
retirees living decades into retirement and adult children
accumulating hundreds of thousands of dollars in debt, investors in
the middle are feeling the pinch for support in every direction.
The poll suggests that adults who seek family financial support are
no longer the exception but the rule.”
Specifically, 45% of investors say they have provided financial
assistance to one or more of the relatives listed in the graph
below, 21% have provided personal assistance, and 13% have provided
both. For this survey, personal assistance was defined as providing
personal care, making medical decisions, hiring professional
caregivers, handling financial matters, shopping, cooking, driving
to appointments, or similar tasks.
Support provided by U.S.
investors to family
Financial assistance
Personal
assistance/Care
Adult child
31%
n/a
Parent or parent in-law
15%
11%
Adult sibling
9%
3%
Grandchild
8%
4%
Other relative (grandparent, aunt, uncle,
etc.)
6%
7%
Yes to any
45%
21%
Yes to both
13%
NET YES TO EITHER
53%
The poll was conducted Aug. 5–11, with a representative sample
of 2,091 U.S. adults who have $10,000 or more invested in stocks,
bonds or mutual funds.
The poll did not measure every type of family expense investors
might have – but of the types measured, the most common, current or
past, is non-college related living expenses for an adult child.
Thirty percent of investors say they have incurred such costs. A
distant second (13%) is living expenses for a parent or
parent-in-law. This is followed by significant medical expenses for
an adult child (9%), caregiver expenses for a parent or in-law (7%)
and medical expenses for a parent or in-law (6%).
Additionally, 29% of investors report they paid college or other
school tuition for an adult child, but this was not factored into
the financial support statistics reported above.
Helping family averages $10,000 per year
Expenses investors incurred add up to a considerable sum. When
asked how much they spent in total in the past year financially
supporting adult family members — not including college expenses
for an adult child — investors estimate spending $10,000 on
average.
Most investors report that family-related expenses have taken a
negative, although minor, toll on their finances. Only 7% say the
impact has been very negative; 19% say it has been somewhat
negative, 39% say a little negative and 36% say not negative at
all. Last year, however, the 2018 Q3 Wells Fargo/Gallup survey
showed that nearly half of investors do not feel well prepared to
handle an unexpected expense of $5,000, suggesting a possible
disconnect for the majority of investors who may be undervaluing
just how negative their support to adult family members has
been.
Retired (44%) and non-retired (39%) investors are about equally
likely to report providing significant financial help to extended
family. Non-retired investors, however, are 11 percentage-points
more likely than retired investors to say that providing this
monetary help has harmed their finances (31% vs. 20%).
“It is extraordinarily generous for investors to step in and
help adult family members with this level of support, but there is
risk if they are not doing so from a position of strength,” Sumners
said. “Working with an advisor to build and maintain a
comprehensive plan may help investors avoid sabotaging their own
goals as they help close relatives.”
The gift of time also has downstream impacts
The time investors contribute to helping family members is
significant. Investors who report providing personal assistance to
adult family members say they spend 13 hours per week on average on
such activities.
Helping family has the potential to enhance family bonds and
life satisfaction. In particular, more than a quarter (28%) of
investors who provide assistance to a family member say that doing
so has had a positive impact on their emotional health. But the
poll suggests that the downside outweighs the upside for many
investors. Investors who spend time helping family are most likely
to say it has had a negative effect on the time they have for
themselves (56%) as well as on their emotional health (52%), their
ability to take time away from home (47%) and their time for
friends (40%).
Thirty-eight percent of investors who provide personal
assistance to family also report that the time they have spent has
negatively affected their ability to focus on their job or career,
and 37% say it has negatively affected the time they have for their
immediate family.
When examining factors related to time and money, nearly one in
four say the time commitment has negatively affected their ability
to save for retirement (23%) or their finances more generally
(22%).
Effect that providing personal
assistance to others has had on different aspects of
investor-caregivers lives
Total negative
Neutral
Total positive
%
%
%
Finances/standard of living
22
70
8
Ability to save for retirement
23
67
10
Time for your immediate family
37
48
15
Ability to focus on your job or career
38
59
2
Time for friends
40
49
11
Ability to take vacations or time away
from home
47
41
12
Emotional health
52
21
28
Time for yourself
56
30
14
“It is hard for people to imagine that the time and money they
spend today could have an impact 20 or 30 years from now, but it is
only then when you may see the true costs,” Sumners said. “It’s not
that people won’t make the same decisions to support their family
members, but seeing an illustration of the possible impact may
influence their decision to supplement their own savings or earning
potential right away.”
Women feel the squeeze of family time-commitments more than
men
The poll shows that women investors are more likely than men to
spend time helping a parent or in-law (14% of women versus 8% of
men). Women who provide this care are also much more likely than
their male counterparts to be the sole caregiver (40% versus
13%).
This may partly explain why among all investors who provide care
to any family member, women are much more likely than men to say
the care negatively affects the time they have away from home (56%
of women versus 30% of men) as well as time for friends (46% versus
27%). Women are also more likely than men to say that family
caregiving has a negative effect on their emotional health (57%
versus 40%).
Men
Women
Gap
%
%
%
Your ability to take vacations or time
away from home
30
56
26
Having time for friends
27
46
19
Your emotional health
40
57
17
Having time for your immediate family
32
39
7
Having time for yourself
53
59
6
Your ability to focus on your job or
career
37
40
3
Your finances/standard of living
22
22
0
Your ability to save for retirement
26
21
-5
Silver lining of time commitments may be more realistic
planning for retirement
Six in 10 investors who provide personal assistance to a parent
or other adult family member (61%) say the experience has changed
how they want to be cared for when they are older. The effect is
particularly strong on non-retirees, 70% of whom say it has changed
how they want to be cared for down the road. The figure is 49%
among retirees, possibly reflecting the shorter window this age
group has to adjust their lifestyle plans.
The most common change that investors say they are making as a
result of the experience of caregiving is saving more for
medical/personal care than they originally planned (59%). About
half (49%) say they are more likely to move to an assisted-living
community in their later years. Fewer show greater interest in
purchasing long-term care insurance (38%) or moving into a
multi-generational home in their later years (28%) as a result.
One area investors may still be unrealistic about in retirement
is estimating what they will need to pay for healthcare and
long-term care, not including what Medicare pays for. When asked to
estimate costs, over half, 53% say it will be less than $200,000,
well under the more than $300,000 estimated costs that retirees are
likely to need for healthcare ($193,822) and long-term care
($138,000) combined.1 Another 16% say it will be between $200,000
and $299,999, and 31% say it will be $300,000 or more.
Compounding the possibility that investors won’t have saved
enough for their healthcare in retirement, relatively few report
owning financial products that could help them pay these bills down
the road. About a quarter of investors report having a Health
Savings Account (24%), 20% say they have long-term care insurance
and just 6% have longevity insurance.
Non-retirees (32%) are significantly more likely than retirees
(12%) to have a Health Savings Account (HSA), reflecting the
relatively recent emergence of HSAs as a healthcare financing
option. There is no difference, however, in the two groups’ use of
long-term care or longevity insurance.
“Many people understand the need to save for retirement, but it
appears they have compartmentalized healthcare costs and are not
planning the way they need to. Without planning, these expenses
need to be funded outside the budget which can bring stress and the
feeling of being out of control,” Sumners said. “More importantly,
underfunding healthcare costs later in life could deplete
retirement savings and make investors vulnerable. By sufficiently
planning for retirement as well as other future needs, investors
can potentially take back control and interrupt the cycle of
familial support.”
1Individual healthcare cost: HealthView Services as cited in
“Retiring this year? How much you’ll need for health-care costs,”
CNBC, 7/18/19. Long-term care cost: Bipartisan Policy Center report
as cited in “Retirement planning should include long-term care
costs,” USA Today, 11/17/17.
About the Wells Fargo/Gallup Investor and Retirement Optimism
Index
The results of this Wells Fargo/Gallup Investor and Retirement
Optimism Index survey are based on a Gallup Panel web study
completed by 2,091 U.S. investors, aged 18 and older, from August
5-11, 2019. The Gallup Panel is a probability-based longitudinal
panel of U.S. adults who Gallup selects using random-digit-dial
phone interviews that cover landline and cellphones. Gallup also
uses address-based sampling methods to recruit Panel members. The
Gallup Panel is not an opt-in panel. The sample for this study was
weighted to be demographically representative of the U.S. adult
population, using the most recent Current Population Survey
figures. For results based on this sample, one can say that the
maximum margin of sampling error is ±5 percentage points at the 95%
confidence level. Margins of error are higher for subsamples. In
addition to sampling error, question wording and practical
difficulties in conducting surveys can introduce error and bias
into the findings of public opinion polls.
For this study, the American investor is defined as an adult in
a household with stocks, bonds or mutual funds of $10,000 or more,
either in an investment account or in a self-directed IRA or 401(k)
retirement account. About two in five U.S. households have at least
$10,000 in such investments. The sample consists of 61%
non-retirees and 39% retirees. Of total respondents, 41% reported
annual incomes of less than $90,000; 59% reported $90,000 or
more.
About Wells Fargo Advisors
With $1.7 trillion in client assets as of June 30, 2019, Wells
Fargo Advisors provides investment advice and guidance to clients
through 13,799 full-service financial advisors and referrals from
5,390 licensed bankers. This vast network of advisors, one of the
nation’s largest, serves investors through locations in all 50
states and the District of Columbia. Wells Fargo Advisors is the
trade name used by Wells Fargo Clearing Services, LLC and Wells
Fargo Advisors Financial Network, LLC, Members SIPC, separate
registered broker-dealers and non-bank affiliates of Wells Fargo
& Company. All data includes Wells Fargo Clearing Services, LLC
and Wells Fargo Advisors Financial Network, LLC, as of June 30,
2019. www.wellsfargoadvisors.com. Investment professionals
referenced in the article are registered representatives of Wells
Fargo Clearing Services, LLC.
About Wells Fargo
Wells Fargo & Company (NYSE: WFC) is a diversified,
community-based financial services company with $1.9 trillion in
assets. Wells Fargo’s vision is to satisfy our customers’ financial
needs and help them succeed financially. Founded in 1852 and
headquartered in San Francisco, Wells Fargo provides banking,
investment and mortgage products and services, as well as consumer
and commercial finance, through 7,600 locations, more than 13,000
ATMs, the internet (wellsfargo.com) and mobile banking, and has
offices in 32 countries and territories to support customers who
conduct business in the global economy. With approximately 263,000
team members, Wells Fargo serves one in three households in the
United States. Wells Fargo & Company was ranked No. 29 on
Fortune’s 2019 rankings of America’s largest corporations. News,
insights and perspectives from Wells Fargo are also available at
Wells Fargo Stories.
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2018, available on its website at www.sec.gov.
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Media Desari Mueller, 314-875-4047
Desari.Mueller@wellsfargoadvisors.com
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