Sixty one percent say they take a different approach to finances to
avoid making the same mistakes their parents made
NEW YORK–(BUSINESS WIRE)–A new survey from TIAA finds Americans who lack confidence in their
parents’ financial security in retirement (27 percent) are twice as
likely to lack confidence in their own retirement as those who are
confident in their parents’ (72 percent versus 36 percent).
More than half of respondents (57 percent) also indicate that their
parents’ financial planning for retirement has impacted their own, with
almost half (44 percent) avoiding taking on significant debt, and nearly
four in ten (38 percent) saying they have adopted a more conservative
approach to everyday spending by consciously limiting their spending on
non-essentials.
“We’ve seen firsthand what the data shows: people who are concerned
about their parents’ financial well-being in retirement may be
sacrificing their quality of life today out of concern for their own
financial future,” said Dan Keady, chief financial planning strategist
at TIAA. “A good financial plan that includes education, advice and
lifetime income options for retirement can help build confidence that
allows people to enjoy life today, without forfeiting their future
retirement security.”
With age comes pessimism about parents’ financial security in
retirement
The TIAA survey shows that Generation X and baby boomers are
significantly less optimistic than millennials about their parents’
financial outlook. Just over one-third of Gen X adults (35 percent) and
only one in four baby boomers (26 percent) describe their parents’
financial outlook as very good or excellent, compared to more than half
(52 percent) of millennials.
The same applies when it comes to confidence in their parents’ current
or future financial security in retirement. Only 47 percent of Gen X and
34 percent of baby boomers say they are confident in their parents’
current or future financial security, compared to nearly double the
number of millennials (60 percent).
These confidence levels mirror how these generations view their parents’
approach to saving and investing. Nearly four in ten Gen X and baby
boomers (39 percent and 35 percent) disagree that their parents’
approach to saving and investing is admirable and one to emulate,
compared to just a quarter of millennials.
Even among adults who say they are confident in their retired parents’
long-term financial security (20 percent), one in five (21 percent)
indicate that they have some or a lot of concern about their parents
running out of money in retirement.
“This concern highlights the possibility that running out of money in
retirement might mean having to assume the financial burden of
supporting their parents. That is why it’s so important to include
guaranteed lifetime income sources as part of a comprehensive retirement
plan,” said Shelly-Ann Eweka, a director of financial planning for TIAA.
“As the realities of financial planning change through life, parents and
their children need to discuss their financial plans and concerns
together to ensure they are on the same page about the future they’re
envisioning.”
Millennials’ optimism may be misguided, highlighting need for dialogue
The survey also found that the perceptions people have about their
parents’ financial plans may not always match reality. Seven in ten
millennials rate their parents’ financial outlook as good to excellent
(72 percent), yet just over half of Gen X and boomers – those likely to
represent their parents – rate their own financial outlook the same (57
and 58 percent respectively).
“It is evident that people’s financial habits and retirement planning
are shaped by the experiences of their parents,” said Keady. “The
confidence that millennials have about their parents’ finances may
actually create a false sense of security, especially when individuals
mistakenly believe they will receive an inheritance (and plan their
finances around it) when their parents don’t have the same plans or
intention.”
Individuals can take the first step by initiating
a financial discussion with their families to better understand how
each other’s financial needs compare. If people are overwhelmed by the
thought of putting together a financial plan, they can turn to a
financial advisor for help. Advisors can help individuals create a
retirement plan that seeks to minimize uncertainty and boost financial
confidence by building lifetime income.
“Open dialogues and a well-planned retirement can help alleviate family
stress and may give you permission to live your life without the worry
of outliving your savings or becoming a financial burden to others,”
said Keady.
Methodology
This research was conducted by KRC Research from February 19-21, 2019
via an online survey of n=1,003 adults, ages 18 and older, living in the
United States. Results have been weighted to be demographically
representative of the U.S. population based on age, sex, geographic
region, race and education.
About TIAA
With an award-winning1 track record for consistent investment
performance, TIAA (TIAA.org) is the leading provider of financial
services in the academic, research, medical, cultural and government
fields. TIAA has $1 trillion in assets under management (as of 3/31/20192)
and offers a wide range of financial solutions, including investing,
banking, advice and education, and retirement services.
1 The Lipper Mixed-Assets Large Fund Award is given
to the group with the lowest average decile ranking of three years’
Consistent Return for eligible funds over the three-year period ended
11/30/15 (against 39 fund families), 11/30/16 (36), 11/30/17 (35) and
11/30/18 (35). Note this award pertains to mixed-assets mutual funds
within the TIAA-CREF group of mutual funds; other funds distributed by
Nuveen Securities were not included. From Thomson Reuters Lipper Awards,
© 2019 Thomson Reuters. All rights reserved. Used by permission and
protected by the Copyright Laws of the United States. The printing,
copying, redistribution, or retransmission of this Content without
express written permission is prohibited. Certain funds have fee waivers
in effect. Without such waivers ratings could be lower. Past performance
does not guarantee future results. For current performance, rankings and
prospectuses, please visit the Research and Performance section on
TIAA.org. The investment advisory services, strategies and expertise of
TIAA Investments, a division of Nuveen, are provided by Teachers
Advisors, LLC and TIAA-CREF Investment Management, LLC. TIAA-CREF
Individual & Institutional Services, LLC, Teachers Personal Investors
Services, Inc., and Nuveen Securities, LLC, Members FINRA and SIPC,
distribute securities products.
2 Based on $1.026 trillion of assets under
management across Nuveen Investments affiliates and TIAA investment
management teams as of 3/31/19.
Guarantees are subject to the claims-paying ability of the issuing
company.
Investment, insurance and annuity products are not FDIC insured, are
not bank guaranteed, are not deposits, are not insured by any federal
government agency, are not a condition to any banking service or
activity, and may lose value.
TIAA-CREF Individual & Institutional Services, LLC, Member FINRA and
SIPC, distributes securities products. Annuity contracts and
certificates are issued by Teachers Insurance and Annuity Association of
America (TIAA) and College Retirement Equities Fund (CREF), New York,
NY. Each is solely responsible for its own financial condition and
contractual obligations.
©2019 Teachers Insurance and Annuity Association of America-College
Retirement Equities Fund, New York, NY 10017
831499
Contacts
Press
Elizabeth Anderson
888-200-4062
[email protected]
Like
us on Facebook
Follow
us on Twitter
Connect
on LinkedIn
