Parents are ~1.4x more likely than the total
population to withdraw early from retirement accounts
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 indicate
the pandemic may have a significant impact on parents’ retirement
savings:
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the full release here:
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Parents are ~1.4x more likely than the
total population to withdraw early from retirement accounts
(Graphic: Business Wire)
- Childcare is a major barrier to retirement. Nearly half
of parents (46%) said childcare is a barrier to retirement—a 6
percentage point increase since Q1, before the pandemic, and 20
percentage points higher than the total population.
- Retirement preparedness dropped among parents. The
percentage of parents who feel prepared to retire in the event of
an unforeseen circumstance dropped 8 percentage points from the
first quarter to 65%.
- And nearly half have made early retirement withdrawals.
Almost half of parents (45%) have dipped into their retirement
accounts early, compared to just 32% of the total population.
- Amid back to school, education is cited as the top reason to
withdraw early. Nearly one in five parents (17%) who have taken
early withdrawals from their retirement accounts note education
costs as the top reason, compared to just 10% of the total
population.
“It’s human nature for a parent to prioritize children over
their own financial wellbeing, but in practice they can best help
their children’s financial futures when they create a solid
financial foundation for themselves,” said Deniz Ozgenc, Executive
Director of Financial Product Management at E*TRADE Financial. “As
we settle into the new normal, many families face new financial
challenges, a lot of unknowns, and plenty to juggle. But retirement
planning doesn’t need to take a backseat amid the chaos. Savings
may seem like a monumental task but setting a little aside now on a
consistent basis can set up a solid financial future for the whole
family.”
Ms. Ozgenc offered additional guidance for parents planning for
their financial futures:
- Surprise expenses abound—plan ahead. The pandemic may
have caused a bump in the road when it comes to budgeting, and
children can certainly add to unexpected expenses. Saving a little
each week in an emergency fund can help—three to six months of
living expenses is a good goal.
- 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.
- Start saving for education now. The cost of education
has skyrocketed in the last few decades, and though the future may
be in limbo, history tells us that tuition will likely remain high.
Funding a dedicated education account like a Coverdell Education
Savings Account for children at a young age can help lessen the
burden when the time comes and can potentially provide some tax
advantages. And the power of compounding can be a tremendous asset
for those with a long-term goal in mind.
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 July 1 to July 9 of
2020 among an online US sample of 873 self-directed active
investors who manage at least $10,000 in an online brokerage
account. The women with children population is made up of 135
respondents this quarter. 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.
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 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.
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.
E*TRADE Financial Corporation and its affiliates do not provide
legal, accounting, or tax advice. Always consult your own legal,
accounting, and tax advisors.
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
When it comes to your personal ability
to save for retirement, how much of a barrier is each of the
following?
TOTAL
Parents
Q1’20
Q3’20
Q1’20
Q3’20
Healthcare costs
50%
44%
62%
59%
Rent or mortgage
43%
40%
53%
56%
Education costs or paying down student
loans
34%
33%
54%
54%
Living expenses like food or
utilities
40%
37%
49%
53%
Childcare
23%
26%
40%
46%
Retail shopping and/or eating at
restaurants
33%
31%
45%
46%
Wanting to live for today
36%
32%
47%
49%
Having an older child live with
you
23%
26%
38%
40%
Having a parent live with you
26%
25%
39%
41%
If you were forced to retire early for
an unforeseen circumstance, how prepared do you feel
financially?
TOTAL
Parents
Q1’20
Q3’20
Q1’20
Q3’20
Prepared
75%
73%
73%
65%
Very prepared
32%
33%
24%
22%
Somewhat prepared
43%
40%
49%
43%
Neither prepared nor unprepared
13%
13%
15%
17%
Somewhat unprepared
8%
10%
8%
11%
Very unprepared
4%
4%
4%
7%
Unprepared
12%
14%
12%
18%
Have you ever taken out money from an
IRA or 401(k) before the age of 59.5 and, if so, for what?
TOTAL
Parents
Q3’20
Q3’20
Yes
32%
45%
No, I have never taken out money from an
IRA or 401(k) before the age of 59.5
68%
55%
Yes, to pay for education
10%
17%
Yes, to make a large purchase
12%
15%
Yes, for a medical emergency
8%
14%
Yes, because I became unemployed
9%
12%
Yes, to simply spend on myself or my
family
7%
11%
Yes, to spend on a vacation
4%
7%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200923005477/en/
E*TRADE Media Relations 646-521-4418 mediainq@etrade.com
E*TRADE Investor Relations 646-521-4406 IR@etrade.com
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