Amid Virus Outbreak, E*TRADE Study Reveals Spike in Early Retirement Withdrawals Among Young Investors
June 09 2020 - 8:05AM
Business Wire
Young investors nearly 2x as likely than the
total population to take an early retirement withdrawal
E*TRADE Financial Corporation (NASDAQ: ETFC) today announced
results from the most recent wave of StreetWise, the E*TRADE
quarterly tracking study of experienced investors. Results show
retirement trends among Gen Z and Millennial investors amid the
COVID-19 crisis:
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- They’re significantly more likely to take an early
withdrawal. Nearly three out of five young investors (59%) said
they have withdrawn early from their retirement accounts, compared
to just one-third of the total population (33%). Since last
quarter, early retirement withdrawals among young investors shot up
nine percentage points.
- And they’re worried retirement funds may run dry. More
than half of investors under 34 (51%) are worried about their lack
of retirement savings, compared to almost one third of the total
population (32%). In fact, not having enough saved for retirement
became young investors’ #1 worry this quarter, outpacing concern
over loss of a loved one.
- Barriers to retirement loom large. Among young
investors, the top barrier to saving for retirement is housing
costs (67%), followed by education (64%) and health care costs
(62%), compared to 44%, 34%, and 47% of the total population,
respectively.
“Young investors have a barrage of financial obligations—whether
it’s paying down student debt or a mortgage, saving for retirement,
or helping care for their parents,” said Mike Loewengart, Managing
Director of Investment Strategy at E*TRADE Financial. “The recent
health crisis has only magnified these issues, forcing some
Millennial and Gen Z investors to tap their retirement funds for
relief. It’s important for young investors to remember that they
have a significant benefit their older counterparts do not—time.
Making consistent contributions today, no matter how small, can
make an impact over the long term.”
Mr. Loewengart offered additional retirement planning and
long-term investing tips for young investors:
- Kickstart retirement contributions. Consider enrolling
in your company’s retirement plan and taking advantage of matching
contributions, if they are offered. If an employer-sponsored plan
is not available, explore other tax-advantaged accounts like IRAs.
Young investors have a long financial future ahead of them—by
saving early, they can reap the potential benefits of compounding
interest and grow their nest egg.
- Consider automatic investing. One way to build good
financial habits is to set up automatic deposits into a retirement
account. While you cannot control the market or your investing
returns, you can control how much you add to your account. By
enabling automatic investing, you can also reduce risk in your
portfolio through dollar-cost averaging—potentially benefiting from
the inevitable ups and downs of the market.
- Volatility is normal—don’t lose sight of your goals. As
frightening as downturns can be, history has shown the market
bounces back. Consumers who remain invested in the market and
committed to their portfolio are best positioned to benefit in the
long run. On the other hand, those who move to the sidelines and
turn to cash could lose out on potential returns and lock in
current losses.
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.
Automatic Investing and dollar-cost averaging do not ensure a
profit or protect against loss in declining markets. Investors
should consider their financial ability to continue their purchases
through periods of low price levels.
About the Survey This wave of the survey was conducted
from April 1 to April 8 of 2020 among an online US sample of 940
self-directed active investors who manage at least $10,000 in an
online brokerage account. The survey has a margin of error of ±3.20
percent at the 95 percent confidence level. It was fielded and
administered by Dynata. 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% male and 40% female, with an even
distribution across online brokerages, geographic regions, and age
bands. The <34 data set is comprised of 255 investors between
the ages of 18 and 34.
About E*TRADE Financial and Important Notices E*TRADE
Financial and its subsidiaries provide financial services including
brokerage and banking products and services to retail customers.
Securities products and services, including mutual funds and ETFs,
are offered by E*TRADE Securities LLC (Member FINRA/SIPC).
Commodity futures and options on futures products and services are
offered by E*TRADE Futures LLC (Member 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, and RIA custody solutions are offered by
E*TRADE Savings Bank, both of which are national federal savings
banks (Members FDIC). 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, and the E*TRADE logo are trademarks
or registered trademarks of E*TRADE Financial Corporation.
ETFC-G
© 2020 E*TRADE Financial Corporation. All rights reserved.
E*TRADE Financial Corporation engages Dynata to program, field,
and tabulate the study. Dynata provides digital research data and
has locations in the Americas, Europe, the Middle East and
Asia-Pacific. For more information, please go to
www.dynata.com.
Referenced Data
Have you ever taken out money from an
IRA or 401(k) before the age of 59.5?
Q1 Total
Q1 Age <34
Q2 Total
Q2 Age <34
Yes
33%
50%
33%
59%
How often, if at all, do you worry
about each of the following?
Q2 Total
Q1 Age <34
Q2 Age <34
Not having enough saved for retirement
32%
38%
51%
Loss of a loved one
33%
40%
47%
Loss of a job
24%
35%
43%
Personal relationship issues
24%
37%
42%
Not understanding how to invest
smartly
23%
37%
42%
Physical injury
22%
33%
38%
When it comes to your personal ability
to save for retirement, how much of a barrier is each of the
following?
Q2 Total
Q2 Age <34
Rent or mortgage
44%
67%
Education costs or paying down student
loans
34%
64%
Health care costs
47%
62%
Living expenses like food or utilities
41%
60%
Retail shopping and/or eating at
restaurants
33%
58%
Wanting to live for today
37%
55%
Having an older child live with you
27%
53%
Childcare
25%
50%
Having a parent live with you
27%
49%
Gen Z and Millennials (young investors) are
defined as age 18–34 years old
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200609005402/en/
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