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2015 FAMILY FINANCIAL TRADE-OFFS SURVEY
T. Rowe Price
2
Contents
T. Rowe Price Family Financial Trade-offs Survey
Savingfor
retirementSaving for kids’
education
Perceptions About Saving for Retirement & College EducationRespondent College ExperienceFamily Financial ProfileSaving for CollegePaying for CollegeSaving for RetirementFindings on Millennials vs. Gen XersGender Data CutsRespondent ProfileObjectives & Methodology
PERCEPTIONS ABOUT SAVING FOR RETIREMENT & COLLEGE EDUCATION
4
Agree Statements – College Perceptions
T. Rowe Price Family Financial Trade-offs SurveyN=2,000 (Total respondents)
Saving for kids’
education
How much do you agree or disagree with each of the following statements?(Four-point scale – displaying percent that agree)
91%
85%
62%
54%
40%
37%
My kids believe they will go to college
I think my kids are smarter than their peers
Investing in my kids’ college education is actually an investment in my own retirement
If my kids don’t have a college education, they won’t get a job and will live with me
I don’t care if my children go to college at all. It is their choice
College isn’t worth the expense
5
Agree Statements – Paying for College
T. Rowe Price Family Financial Trade-offs SurveyN=2,000 (Total respondents)
Saving for kids’
education
How much do you agree or disagree with each of the following statements?(Four-point scale – displaying percent that agree)
85%
79%
74%
63%
56%
54%
51%
49%
43%
Kids who contribute toward paying for college care more and work harder atgetting good grades
I want my kids to worry about money less than I did while I was in college
After experiencing the burden of student loans, I would not want my kids toexperience the same thing*
I feel guilty that I won’t be able to pay more for their college
If a family member is saving for my kids’ college education, I’m comfortable asking how much they are planning on saving
I regularly talk to my children about how their college will be paid for
I’d be willing to get a second or part-time job to pay for my kids’ college education
I’d be willing to delay my retirement to pay for my kids’ college education
I’ve raised my kids for 18 years; they’re on their own financially after that
* Only asked to those who had student loans (N=837)
60% saying either
6
Agree Statements – Retirement Perceptions
T. Rowe Price Family Financial Trade-offs SurveyN=2,000 (Total respondents)
Saving for kids’
education
58%
51%
49%
47%
43%
34%
I sometimes feel like a failure because I’m not providing enough for my family and our future
I am trying not to think about retirement and will worry about it later
I don’t think I will ever retire
Instead of retiring, I plan on starting a new career
I lose sleep worrying about how I’m going to pay for retirement
I don’t worry about retirement because I will have a large inheritance
How much do you agree or disagree with each of the following statements?(Four-point scale – displaying percent that agree)
7
Agree Statements – Saving for Retirement
T. Rowe Price Family Financial Trade-offs SurveyN=2,000 (Total respondents)
Saving for kids’
education
How much do you agree or disagree with each of the following statements?(Four-point scale – displaying percent that agree)
80%
70%
61%
58%
56%
55%
It’s important for me that my savings are easily accessible so that I can easily get to my money if I need it
How my parents have managed saving for retirement has impactedhow I save for retirement
Compared to my peers, I feel ahead of the curve in terms of savingfor retirement
Seeing what happened to my parents' retirement savings during therecession has really had an impact on how much I save and where I
put my money
I’m more likely to win the lottery than receive any money from Social Security
Because my parents are struggling with retirement (or will be), I started saving early for my retirement so I don’t end up like them
8
Agree Statements – Balancing
T. Rowe Price Family Financial Trade-offs SurveyN=2,000 (Total respondents)
Saving for kids’
education
How much do you agree or disagree with each of the following statements?(Four-point scale – displaying percent that agree)
63%
63%
60%
59%
53%
46%
I would rather pay any college loans (mine or my kids’) later than divert money now away from retirement saving to college savings
I feel overwhelmed by financial pressures
Conversations about saving for retirement or college usually fill mewith a lot of anxiety
Because my kids will go to college before I retire, I feel like I shouldput money towards that first and save for retirement after
I would rather dip into my retirement savings to pay for my kids’ college education than have them take on student loans
You shouldn’t put any money in savings until you’ve paid off all your debt
RESPONDENT COLLEGE EXPERIENCE
10
Education Level
1%
10%
17%
14%
42%
18%
Did not graduate HS
HS graduate
Some college
Associate degree
Bachelor's degree
Graduate degree
T. Rowe Price Family Financial Trade-offs SurveyN=2,000 (Total respondents)
Q9. What is the highest level of education you’ve completed?
• The majority of respondents attended college (89%*), with 60% having a Bachelor’s degree or higher
Note: Rounding may cause percentages not to add to 100%
* Because of rounding, combined percentage may differ than sum of bars in chart
11
Who Paid for Respondents’ College Education
76%
48%
39%
4%
Myself
Parents
Grants or scholarships
Other relatives
T. Rowe Price Family Financial Trade-offs SurveyN=1,799 (Attended college)
Q10. Thinking about all of your undergraduate college expenses, who helped pay for the cost?(Check all that apply)
• For respondents who attended college, three-quarters paid at least some of the expense themselves, while just under half relied on their parents to help pay
12
Paying for Undergraduate Expenses
74%
61%
52%
Regular income from working
Student loans
Savings
T. Rowe Price Family Financial Trade-offs SurveyN=1,368 (Helped pay for their own college expense); N=837 (Took student loan)
Q11. Which of the following have you used to payfor the portion of your undergraduate college
expenses that you covered yourself?(Check all that apply)
• For respondents who helped pay for their own college expense, three-quarters have used regular income, and 61% took college loans
• Two-thirds of respondents who took out a student loan are still paying it off
Q12. Are you still paying off student loans?
66%
34%
Yes
No
13
The Impact of Student Loans
T. Rowe Price Family Financial Trade-offs SurveyN=837 (Took student loan)
• The majority of respondents who took out a student loan say they took on too much debt to pay for college, and three-quarters say that paying off student loans has impacted their ability to pay for other things
Q13. Looking back, do you think that you took on too much debt to pay for your college education?
63%
37%
Yes
No
45%
44%
44%
37%
33%
23%
17%
25%
Take better vacations
Save for retirement
Save for my kids' college
Buy a house
Buy a car
Pay for my kids' preschool or primary ed.
Get married
None of the above
Q14. Has paying off student loans impactedyour ability to do any of the following?
(Check all that apply)
14
How Parents Paid for Respondents’ College Education
55%
41%
27%
22%
22%
20%
16%
13%
12%
Regular income from working
Regular savings accounts
College savings accounts
Student loan in my name
Credit cards
Personal loan in their name
Money given to them by my grandparents
Retirement savings accounts
Home equity loan
T. Rowe Price Family Financial Trade-offs SurveyN=854 (Parents helped pay for their college education)
Q15. Which of the following did your parents use to pay for theportion of your undergraduate college expenses that they paid for?
(Check all that apply)
• Parents who contributed to respondents’ college education did so primarily through regular income and regular savings accounts
• Parents were equally likely to take out a loan themselves or pay off a student loan that was in the respondent’s name
FAMILY FINANCIAL PROFILE
16
Saver vs. Spender
T. Rowe Price Family Financial Trade-offs SurveyN=2,000 (Total respondents); N=1,726 (Married)
• Respondents are split relatively evenly between savers (48%) and spenders (52%)• 59% of married respondents say their spouse/partner is a “spender”
Q16. Would you consider yourself tobe more of a saver or a spender?
18%
34%
38%
10%
Definitely a spender More of a spenderMore of a saver Definitely a saver
Q17. Would you consider your spouse/partnerto be more of a saver or spender?
23%
36%
31%
10%
Definitely a spender More of a spenderMore of a saver Definitely a saver
17
Financial Advisors
T. Rowe Price Family Financial Trade-offs SurveyN=2,000 (Total respondents)
Q18. Do you have a financial advisor (who is paid for their service)?
39%
61%
Yes
No
• Slightly more than one-third of respondents have a paid financial advisor
18
67%
33%
Kids’ Monetary Gifts
Q62. Do your kids receive monetary gifts from grandparents, friends, and/or family members each year?
Yes
No
• Two-thirds of respondents say their kids regularly receive monetary gifts
T. Rowe Price Family Financial Trade-offs SurveyN=2,000 (Total respondents); N=1,338 (Kids receive monetary gifts)
Q63. On average, how much in total doeseach child receive as gifts each year?
24%
43%
24%
9%
Less than $100
$100 to $499
$500 to $999
$1,000 or more
19
What Happens to Monetary Gifts
T. Rowe Price Family Financial Trade-offs SurveyN=1,338 (Kids receive monetary gifts)
• Respondents are most likely to let kids spend the monetary gifts they receive, or they put the money in a regular savings account
Savingfor
retirementSaving for kids’
education
Q64. What usually happens to the money your kids receive as gifts?(Check all that apply)
43%
41%
28%
26%
23%
We let our kids spend it on an item they want
We put it in a regular savings account
We put it in a college savings account
We place it in our kids’ piggy bank
I spend it on things they need such as clothes and school supplies
20
Windfall
T. Rowe Price Family Financial Trade-offs SurveyN=2,000 (Total respondents)
• With a windfall, respondents are equally likely to use it for college savings, retirement savings or reducing debt
Savingfor
retirementSaving for kids’
education
Q60. If you suddenly had a windfall of money like an inheritanceor bonus, which of the following would you do with the money?
(Choose up to three)
44%
44%
44%
29%
21%
17%
14%
12%
Put it toward college savings
Put it toward retirement savings
Use it to reduce my debt
Add it to my emergency fund
Put it toward a major purchase
Put it toward a vacation or trip
Give to charity
Spend on everyday purchases
21
Marital Arguments
8%
11%
23%
24%
25%
31%
30%
31%
41%
35%
28%
25%
26%
23%
19%
20%
Money in general
How to raise our kids
Saving for retirement
Saving for kids' education
Never Rarely Occasionally Frequently
T. Rowe Price Family Financial Trade-offs SurveyN=1,726 (Married)
Q20. How often do you and your spouse/partner disagree about each of the following?
• Married respondents argue with their spouse/partner most frequently about money in general, followed by how to raise their kids
• Spenders are more likely than savers to argue about saving for retirement (58% vs. 36%) and saving for kids’ education (56% vs. 34%)
Top 2 Box
67%
58%
47%
45%
54% top 2 box for either
22
Planning for Kids’ Education With an Ex
T. Rowe Price Family Financial Trade-offs SurveyN=94 (Divorced/separated)
• Just under half of separated/divorced respondents argue with their ex-spouse/partner about saving for kids’ education at least occasionally
Q21. How often do you and your ex-spouse/partner disagreeor argue about the best way to save for your kid’s education?
32%
22%
30%
16%
Never
Rarely
Occasionally
Frequently
23
Parental Concerns
64%
63%
60%
60%
60%
59%
50%
48%
48%
45%
40%
The cost of health care when I'm retired
My kids having the financial resources to go to college
Balancing the need to save for retirement and my kids' education
Running out of money in retirement
My kids being able to support themselves after college
Being able to retire young enough to enjoy myself
My kids acting irresponsibly in college or as a young adult
My parents being able to support themselves through retirement
My kids being a target of bullying
Having enough money to take regular vacations
Giving my kids all the presents I want to this holiday season
T. Rowe Price Family Financial Trade-offs SurveyN=2,000 (Total respondents)
Q19. How concerned are you with each of the following?(Five-point scale – displaying top 2 box)
• Respondents are most concerned with the rising cost of health care and being able to pay for kids’ college education
24
Family Saving Priorities
T. Rowe Price Family Financial Trade-offs SurveyN=2,000 (Total respondents)
• Respondents are more focused on saving for kids’ college than saving for retirement
43%
57%
Saving for retirement
Saving for kids' education
Q22. Which of the following is the higher priority for you and your family?
SAVING FOR COLLEGE
26
Saving for College – Frequency
T. Rowe Price Family Financial Trade-offs SurveyN=2,000 (Total respondents)
• Currently, 79% of respondents put away money for their kids’ college education at least sometimes, and an additional 5% are not currently saving, but have some money put aside
Q23. Currently, how often do you put money aside for your kids’ college education?
Savingfor
retirementSaving for kids’
education
10%
25%
24%
30%
5%
5%
1%
Never
Sometimes, but not as often as I should
I frequently put money aside
I save automatically each month from my bank account
I'm not currently saving, but I already have money setaside for my kids' college education
I am not saving yet but plan to
I'm not sure
27
Saving for College – Starting
T. Rowe Price Family Financial Trade-offs SurveyN=1,683 (Have college savings)
• Respondents are most likely to begin saving for kids’ college education once their first child is born
Savingfor
retirementSaving for kids’
education
Q24. When did you first start saving for your kids’ education?
41%
24%
11%
9%
8%
6%
Once my first child was born
When my first child started school
When my kids started thinking about which college to go to
When we were planning to have children
When my second child was born
When I heard my friends were saving
28
Saving for College – Types of Accounts
T. Rowe Price Family Financial Trade-offs SurveyN=1,683 (Have college savings)
• Regular savings accounts are the most common account used for college savings
• An almost equal number of respondents use a 529 account and a 401(k)
Savingfor
retirementSaving for kids’
education
Q25. What types of accounts do you use for college savings?(Check all that apply)
45%31%
30%26%
24%18%
15%13%
12%9%
8%2%
Regular savings account529 account
401(k) accountChecking account
Savings bondCertificate of deposit (CD)
Traditional IRARoth IRA
Individual securitiesAnnuity
UGMA or UTMA accountI'm not sure
Average numberof accounts = 2.3
29
Why Not a 529?
T. Rowe Price Family Financial Trade-offs SurveyN=1,167 (Have college savings, but not a 529)
• Lack of awareness is the primary reason respondents don’t use a 529• One-quarter of respondents believe there is limited access to money in a 529
Savingfor
retirementSaving for kids’
education
Q26. Why aren’t you using a 529 account to save for college?(Check all that apply)
28%25%
19%18%
15%13%
12%9%9%
I don't know what that isI want to be able to access the money I save at any time for any reason
I want to, but haven't had the time to open an accountI don't know in which state my kid(s) will go to college
Because then I won't be able to get financial aidI've heard negative things about them
I can't afford the minimum requirements and feesI don't know how to open an account
I don't like the plan that is offered by my state
30
Negative Things About 529 Accounts
T. Rowe Price Family Financial Trade-offs SurveyN=155 (Have college savings, but not a 529; have heard bad things about 529s)
• There are several misperceptions about 529 accounts
Savingfor
retirementSaving for kids’
education
Q27. What negative things have you heard about 529 accounts?(Check all that apply)
47%
43%
43%
41%
23%
There are high fees
The money you don't use for college is lost
You can lose money in them
There are better accounts for college savings
Our state doesn't have a good plan
31
Current College Savings
T. Rowe Price Family Financial Trade-offs SurveyN=1,683 (Have college savings)
• 43% of respondents have less than $10,000 saved for their kids’ college education• One-third of respondents are very/extremely comfortable with their current college
savings
Q28. How much money do you havesaved for your kids’ college education?
8%
23%
34%
23%
12%
Not at all comfortable
Not very comfortable
Somewhat comfortable
Very comfortable
Extremely comfortable
Q29. How comfortable are you with where you are,in terms of saving for your kids’ college education?
9%
17%
17%
22%
19%
10%
6%
Less than $1,000
$1,000 to $4,999
$5,000 to $9,999
$10,000 to $19,999
$20,000 to $49,999
$50,000 to $99,999
$100,000 or more
32
Reducing College Saving
T. Rowe Price Family Financial Trade-offs SurveyN=1,584 (Currently saving for college)
• Job loss would be the primary reason respondents would reduce the amount they save for college
Savingfor
retirementSaving for kids’
education
Q30. Which of the following would cause you to reduce theamount you regularly save for your kids’ college education?
(Check all that apply)
54%22%21%20%19%18%18%17%17%
14%8%
Loss of a jobNeed a new car
Support your parents or other relativesRealize the need to catch up on retirement savings
Need to pay for home improvement projectBirth or adoption of a new child
Need to relocateHoliday shopping
Feel it will be impossible to meet increased cost of collegeExpensive family vacation
Discouraged by the low college graduation rates
33
Saving Differently for Different Kids
Q44. Do you save differently for your kids’college education depending on which kid?
36%
64%
Yes
No
• More than one-third of respondents who have more than one kid say they save differently, depending on which kid they are saving for
T. Rowe Price Family Financial Trade-offs SurveyN=1,221 (Have more than one kid); N=437 (Save differently)
Q45. Which of the following are true?
49%
41%
40%
37%
32%
I save more for my older kid(s)because they will go first
The amount I save for my kids’ college is based on how well I think
they’ll do
I base how much I save for each kidbased on where they want to go
I base college savings for each kidbased on how much they will receive
in grants and scholarships
I base how much I save on how wellthey do in school before college
PAYING FOR COLLEGE
35
Paying for Kids’ College
T. Rowe Price Family Financial Trade-offs SurveyN=2,000 (Total respondents); N=1,678 (Will not be able to cover all college costs)
• All but 16% of respondents will need help paying for their kids’ college education• Parents plan to rely on grants/scholarships and their kids (through loans and
working) to help cover the cost of their college education
Q31. Which of the following best describes how youfeel about saving for your kids’ college education?
53%
52%
46%
34%
20%
16%
15%
11%
8%
7%
Grants and/or scholarships
Student loans (kids responsible)
Kids will work
Through regular income
Personal loan (I am responsible)
Credit cards
Money from retirement accounts
Home equity loan or 2nd mortgage
Other family members
Sale of real estate
Q32. How do you think you will coverthe remaining cost for your kids’ college?
(Check all that apply)
4%
50%
30%
16%
I don’t plan to save anything for college
I will be able to save enough to pay forsome of the cost of college
I will be able to save enough to pay formost of the cost of college
I will be able to save enough to pay forthe entire cost of college
36
Taking on Debt to Pay for College
T. Rowe Price Family Financial Trade-offs SurveyN=1,678 (Will not be able to cover all college costs)
• Just over half of respondents are willing to take on $25K or more of debt to pay for their kids’ college education
• Respondents are consistent in the amount of debt they think is acceptable for themselves and their kids
Q33. How much debt are you willing to take onpersonally to provide your kids with a college education?
Q34. How much debt are you willing to letyour kids take on to get a college education?
11%
18%
20%
17%
12%
9%
5%
9%
None
Less than $10,000
$10,000 to $24,999
$25,000 to $49,999
$50,000 to $74,999
$75,000 to $99,999
$100,000 to $150,000
Whatever it takes
9%
18%
23%
17%
10%
7%
4%
12%
None
Less than $10,000
$10,000 to $24,999
$25,000 to $49,999
$50,000 to $74,999
$75,000 to $99,999
$100,000 to $150,000
Whatever it takes
37
Paying Off Student Loans
T. Rowe Price Family Financial Trade-offs SurveyN=1,678 (Will not be able to cover all college costs); N=316 (Not likely to help pay off student loans)
• 44% of respondents say they are very/extremely likely to help their kids pay off student loans
Q35. How likely are you to help your kidspay off their student loans after they graduate?
57%
52%
39%
14%
If they are working, then they canafford to pay off loans
It’s not my responsibility to pay off their loans
I’ll need to be saving for retirement
I’d prefer my kids live at home after college so they can have money to pay
their own loans
Q36. Why aren’t you more likely to help your kidspay off their student loans after they graduate?
(Check all that apply)
6%
13%
33%
28%
16%
4%
Not at all likely
Not very likely
Somewhat likely
Very likely
Extremely likley
I'm not sure
38
Payback
T. Rowe Price Family Financial Trade-offs SurveyN=2,000 (Total respondents)
• Nearly half (43%) of respondents expect their kids to pay them back (at least partially) for college expenses
Saving for kids’
education
Q37. Do you expect your kids to pay you back for any of their college expenses that you cover?
30%
13%
57%
Yes, partially
Yes, in full
No
39
Acceptable Monthly Loan Payments
T. Rowe Price Family Financial Trade-offs SurveyN=2,000 (Total respondents)
• Nearly half of respondents (47%) are willing to let their kids take on monthly debt payments of $300 or more
Saving for kids’
education
Q38. Assuming they will have 10-year student loans, how much of a monthly payment areyou willing to let your kids take on after college to pay off their student loan debt?
7%9%
20%17%
8%7%7%
4%5%
3%3%
10%
NoneLess than $100
$100 to $199$200 to $299$300 to $399$400 to $499$500 to $599$600 to $699$700 to $799$800 to $899$900 to $999
Whatever it takes
40
Asking for Help With College Expenses
T. Rowe Price Family Financial Trade-offs SurveyN=2,000 (Total respondents)
• Respondents are more likely to ask for help from their spouse’s/partners’ parents than their own
Saving for kids’
education
Q39. Have you asked any of the following people to help pay for your kids’ college education?
16%
14%
26%
35%
10%
14%
13%
12%
0% 10% 20% 30% 40% 50%
Friends
Other Family
Parents
In-Laws
Yes
Plan on Asking
41
Reasons for Not Asking for Help
T. Rowe Price Family Financial Trade-offs SurveyN=949 (Have not asked anyone for help)
• The majority of respondents who have not asked anyone for help believe that it is not others’ responsibility to pay for their kids’ college education
Saving for kids’
education
Q40. Why haven’t you asked family or friends for help paying for your kids’ college education?(Check all that apply)
68%
37%
30%
18%
9%
7%
6%
It's not their responsibility
I never ask others for money
I would feel uncomfortable asking
I don't need any help
We don't talk about money in our family
I'm too embarrassed
I wouldn't want to reveal anything about my finances
42
Does Having a Plan Facilitate Asking for Help?
Q41. Would you be more likely to ask others to help pay for yourkids’ college if you had a specific plan in place for collegesavings and knew exactly how much help you needed?
20%
80%
Yes
No
• For one in five respondents, having a college savings plan would make them more likely to ask others for help
T. Rowe Price Family Financial Trade-offs SurveyN=949 (Have not asked anyone for help)
43
Expectations About Who Will Help
T. Rowe Price Family Financial Trade-offs SurveyN=2,000 (Total respondents)
• Over half (57%) of respondents are expecting help from family/friends in paying for their kids’ college education
Saving for kids’
education
Q42. Whether or not you’ve asked, who of the following doyou expect to help pay for your kids’ college education?
(Check all that apply)
38%
33%
13%
7%
43%
Your spouse's/partner's parents
Your parents
Friends
Other family members
None of the above
44
Expectations About Who Will Help
T. Rowe Price Family Financial Trade-offs SurveyN=Varies by category (based on positive responses to Q42)
• Respondents are more likely to be aware of how much friends and in-laws will contribute than how much their parents will
Saving for kids’
education
Q43. Are you aware of how much each of the following isplanning on contributing to your kids’ college education?
77%
69%
59%
41%
Friends
Your spouse's/partner's parents
Your parents
Other family members
SAVING FOR RETIREMENT
46
Saving for Retirement – Frequency
T. Rowe Price Family Financial Trade-offs SurveyN=2,000 (Total respondents)
• Currently, 89% of respondents put away money for their retirement at least sometimes, and an additional 4% are not currently saving, but have some money put aside
Q47. Currently, how often do you put money aside for your retirement?
Savingfor
retirementSaving for kids’
education
5%
19%
22%
48%
4%
2%
1%
Never
Sometimes, but not as often as I should
I frequently put money aside
I save automatically each month from my bank account
I'm not currently saving, but I already have money setaside for my retirement
I am not saving yet but plan to
I'm not sure
47
Saving for Retirement – Types of Accounts
T. Rowe Price Family Financial Trade-offs SurveyN=2,000 (Total respondents)
• 401(k) accounts are the most common account used for retirement savings
Savingfor
retirementSaving for kids’
education
Q48. What types of accounts do you have for your retirement savings?(Check all that apply)
69%
33%
25%
24%
20%
16%
15%
401(k) account
Regular savings account
Traditional IRA
Roth IRA
Regular investment account
Certificate of deposit (CD)
Annuity
48
Why Not a Roth IRA?
T. Rowe Price Family Financial Trade-offs SurveyN=1,512 (Do not have a Roth IRA)
• Lack of awareness is one of the primary reasons respondents do not have a Roth IRA
Savingfor
retirementSaving for kids’
education
Q49. Why don’t you have a Roth IRA account to save for retirement?(Check all that apply)
20%
20%
17%
16%
16%
15%
9%
8%
6%
I’m already contributing the maximum to my workplace plan
I don't know what that is
I’m already saving in a Roth 401(k) at work
I want to but haven’t had time to open an account
I’m saving enough in my workplace plan and don’t need to save more
I want to be able to take out my contributions at any time without penalty
I don’t know how to open an account
I’ve heard negative things about Roth IRAs
I do not meet the eligibility requirements to contribute to a Roth IRA
49
IRA Savings – Frequency
T. Rowe Price Family Financial Trade-offs SurveyN=815 (Have an IRA)
Q50. How often do you put money aside in your IRA?
Savingfor
retirementSaving for kids’
education
20%
31%
34%
13%
2%
Sometimes, but not as often as I should
I frequently put money aside
I save automatically each month from my bank account
I haven't put money in my IRA for awhile
I'm not sure
• Two-thirds of those who have an IRA put money in frequently or automatically each month
50
Current Retirement Savings
T. Rowe Price Family Financial Trade-offs SurveyN=2,000 (Total respondents)
• Retirement savings amounts vary consistently from low to high, with 31% saying they are very/extremely comfortable with where they are in terms of saving for retirement
Q51. How much money do youhave saved for your retirement?
15%
21%
33%
20%
11%
Not at all comfortable
Not very comfortable
Somewhat comfortable
Very comfortable
Extremely comfortable
Q52. How comfortable are you with whereyou are, in terms of saving for your retirement?
17%
12%
15%
14%
15%
13%
14%
Less than $10,000
$10,000 to $24,999
$25,000 to $49,999
$50,000 to $74,999
$75,000 to $99,999
$100,000 to $149,999
$150,000 or more
51
Old Job Retirement Plans
T. Rowe Price Family Financial Trade-offs SurveyN=2,000 (Total respondents)
• Of those who have had a retirement plan with a previous employer, the majority roll it over into an IRA or workplace retirement plan
Savingfor
retirementSaving for kids’
education
Q53. Thinking back on old retirement plans you had atprevious jobs, what have you done with those accounts?
(Check all that apply)
31%
28%
27%
20%
21%
Rolled it over into IRA
Rolled it into new employer’s workplace retirement plan
Cashed it out
Left it in my former employer’s workplace retirement plan
I’ve never had a retirement plan with a previous job
52
Why Cash Out Retirement Accounts
T. Rowe Price Family Financial Trade-offs SurveyN=531 (Cashed out a retirement account)
• Day-to-day expenses is the primary reason given by those who cashed out a retirement plan
Savingfor
retirementSaving for kids’
education
Q54. Why did you cash out a retirement account held with a former employer?(Check all that apply)
37%
29%
28%
25%
21%
21%
19%
19%
12%
Needed it for day-to-day living
I was young and didn’t know any better
It was a really small amount and wouldn’t have made much of a difference
Put it toward paying off credit card debt
Put it toward student loans or college costs
Put it toward a medical expense
Put it toward a major purchase (e.g., house, car, etc.)
I have plenty of time to save for retirement and needed the money more…
I didn’t know what else to do with it
53
Converting to a Roth IRA
Q55. Have you ever converted assets held ina Traditional IRA or tax-deferred workplace
retirement plan into a Roth IRA?
21%
79%
Yes
No
• One in five respondents have converted a traditional IRA or workplace plan to a Roth IRA
T. Rowe Price Family Financial Trade-offs SurveyN=2,000 (Total respondents); N=424 (Converted account to Roth IRA)
Q56. Why did you convert assets into a Roth IRA?(Check all that apply)
58%
44%
36%
For the tax-free savings that RothIRAs offer
Someone advised me to do so
I’m young, and it’s not a big deal to pay taxes now
54
Reducing Retirement Saving
T. Rowe Price Family Financial Trade-offs SurveyN=1,780 (Currently saving for retirement)
• Job loss would be the primary reason respondents would reduce the amount they save for retirement
Savingfor
retirementSaving for kids’
education
Q57. Which of the following would cause you to reducethe amount you regularly save for your retirement?
(Check all that apply)
58%18%17%16%16%16%16%
14%13%
11%9%
Loss of a jobNeed a new car
Support your parents or other relativesNeed to pay for home improvement project
Birth or adoption of a new childSaving for future health care costs
Need to relocateHoliday shopping
Reading about the cost of collegeExpensive family vacation
Reading about the cost of retirement
55
Paying for Things With Retirement Money
T. Rowe Price Family Financial Trade-offs SurveyN=2,000 (Total respondents)
• 58% of respondents have taken money out of a retirement account to pay for something else, with the top response being pay off debt
Savingfor
retirementSaving for kids’
education
Q58. Which of the following things have you paid for with money taken from a retirement account?(Check all that apply)
20%13%
12%12%
11%11%11%
10%10%
9%9%
8%42%
Pay off debtDay-to-day expenses
Kids' educationTo cover expenses while unemployed
Car purchase or repairVacation
To pay taxesHealth care costs
Downpayment on a homeHome repair/renovation
Replenish emergency fundWedding
I have never taken money out of retirement savings to pay for something
FINDINGS ON MILLENNIALS VS. GEN XERS
57
Age Differences (21-34 vs. 35-50)
T. Rowe Price Family Financial Trade-offs Survey* A complete list of significant findings by gender is available in the appendix
Savingfor
retirementSaving for kids’
education
Younger respondents are more likely than older respondents to still be paying off student loans (74% vs. 56%), feel that they took on too much debt to pay for college (70% vs. 55%), and say that paying off student loans has impacted their ability to save for their kids’ college education (48% vs. 38%).
In prioritizing saving for kids’ college and saving for retirement, younger respondents are more likely to say kids’ education is the higher priority (62% vs. 53%), and they are more likely to put aside money for college frequently (28% vs. 20%).
Younger respondents are less likely to be using a 529 for college savings (22% vs. 39%), and for those who aren’t using a 529, younger respondents are more likely to say they are unaware of what a 529 is (29% vs. 26%).
While younger respondents appear to have more financial concerns, they are more likely than older respondents to say they feel comfortable with where they are for college savings (45% vs. 26%) and retirement savings (38% vs. 24%), and they are more likely to say they will be able to pay for most or all of their kids’ college education (52% vs. 39%).
58
Age Differences (21-34 vs. 35-50) (Cont.)
T. Rowe Price Family Financial Trade-offs Survey* A complete list of significant findings by gender is available in the appendix
Savingfor
retirementSaving for kids’
education
Younger respondents appear to have lower expectations about their kids’ level of responsibility, as they are more likely to say they will help pay off student loans (48% vs. 39%) and less likely to say they expect kids to pay them back for the college expenses they cover (49% vs. 65%).
Younger respondents are more likely than older respondents to have a Roth IRA (19% vs. 29%), and of those who do not have a Roth account, younger respondents are more likely to say they don’t know what it is (23% vs. 17%).
59
Agree Statements – Findings by Age
T. Rowe Price Family Financial Trade-offs SurveyN=2,000 (Total respondents)
Saving for kids’
education
How much do you agree or disagree with each of the following statements?(Four-point scale – displaying percent that agree)
68%
62%
64%
49%
58%
44%
49%
37%
I feel overwhelmed by financial pressures
I would rather dip into my retirement savings to pay for my kids’ college education than have them take on student loans
I’m more likely to win the lottery than receive any money from Social Security
I lose sleep worrying about how I’m going to pay for retirement Millennials
Gen X
60
The Impact of Student Loans
T. Rowe Price Family Financial Trade-offs SurveyN=837 (Took student loan)
Q13. Looking back, do you think that you took on too much debt to pay for your college education?
70%
30%
Yes
No
55%
45%
YesNo
Millennials Gen X
61
How Parents Paid for Respondents’ College Education
18%
9%
Retirement savings accounts
Millennials
Gen X
T. Rowe Price Family Financial Trade-offs SurveyN=854 (Parents helped pay for their college education)
Q15. Which of the following did your parents use to pay for theportion of your undergraduate college expenses that they paid for?
(Check all that apply)
62
Saving for College – Types of Accounts
T. Rowe Price Family Financial Trade-offs SurveyN=1,683 (Have college savings)
Savingfor
retirementSaving for kids’
education
Q25. What types of accounts do you use for college savings?(Check all that apply)
34%
25%
401(k) account
MillennialsGen X
63
Paying for Things With Retirement Money
T. Rowe Price Family Financial Trade-offs SurveyN=2,000 (Total respondents)
Savingfor
retirementSaving for kids’
education
Q58. Which of the following things have you paid for with money taken from a retirement account?(Check all that apply)
35%
49%
I have never taken money out of retirementsavings to pay for something
Millennials
Gen X
64
24%
76%
Converting to a Roth IRA
Q55. Have you ever converted assets held in a Traditional IRAor tax-deferred workplace retirement plan into a Roth IRA?
Yes
No
T. Rowe Price Family Financial Trade-offs SurveyN=2,000 (Total respondents); N=424 (Converted account to Roth IRA)
Millennials Gen X
19%
81%
Yes
No
GENDER DATA CUTS
66
Gender Differences
T. Rowe Price Family Financial Trade-offs Survey* A complete list of significant findings by gender is available in the appendix
Savingfor
retirementSaving for kids’
education
In terms of paying for their own college expenses, women are more likely than men to rely on grants and scholarships (43% vs. 35%) and have used student loans (64% vs. 58%). Men are more likely to have parents who used home equity loans (14% vs. 8%) and retirement savings (17% vs. 9%) to pay for their college education.
Similarly, women are more likely than men to say they will use grants and scholarships (60% vs. 46%) and student loans (56% vs. 49%) to cover the cost of their kids’ college education.
Women are more likely than men to expect their kids to work to help pay for college (49% vs. 43%) and to pay them (parents) back for the expenses they incur paying for college (64% vs. 50%).
In general, women are willing to take on less debt (for themselves or their kids) than men are, and men are more willing to ask others to help pay for their kids’ education.
Women are more likely than men to be concerned about running out of money in retirement (63% vs. 57%) and the cost of health care when they are retired (66% vs. 61%), while men are more concerned about their ability to buy presents during the holiday season (43% vs. 36%).
67
Gender Differences (Cont.)
Savingfor
retirementSaving for kids’
education
Men are more likely than women to save regularly/frequently for retirement (61% vs. 47%), have more money saved for kids’ education (45% vs. 32% - $10K or more), and have more money saved for retirement (80% vs. 62% - $25K or more).
Women are more likely than men to be unaware of what a 529 is (32% vs. 23%) and what a Roth IRA is (25% vs. 15%).
Women are more likely than men to say they have never taken money out of retirement to pay for something else (47% vs. 38%).
Women are more likely than men to say they feel overwhelmed by financial pressures (68% vs. 58%).
T. Rowe Price Family Financial Trade-offs Survey* A complete list of significant findings by gender is available in the appendix
RESPONDENT PROFILE
69
50%50%
Respondent Profile
T. Rowe Price Family Financial Trade-offs SurveyN=2,000 (Total respondents)
27%
25%
24%
23%
South
Northeast
West
Midwest
Q2. RegionQ1. Age
50%50% 35-5021-34
Q3. Gender
MenWomen
39%
43%
13%
4%
1
2
3
4+
Q4. # Kids in HH (<16)
28%
72%
Q5. Expecting
Yes
No
86%
9%
5%
0%
Married
Single
Separated/Divorced
Widow/Widower
Q8. Marital Status
Note: Rounding may cause percentages not to add to 100%
70
Respondent Profile
T. Rowe Price Family Financial Trade-offs SurveyN=2,000 (Total respondents)
Q66. What is your annualhousehold income before taxes?
73%11%9%
4%2%1%0%0%
Employed full timeStay-at-home parentEmployed part time
Self-employedNot currently employed
StudentRetired
Prefer not to answer
Q67. What is your current employment status?
3%3%3%4%6%
22%23%
14%7%
4%3%2%1%2%2%
Less than $25,000$25,000 to less than $30,000$30,000 to less than $35,000$35,000 to less than $40,000$40,000 to less than $50,000$50,000 to less than $75,000
$75,000 to less than $100,000$100,000 to less than $125,000$125,000 to less than $150,000$150,000 to less than $175,000$175,000 to less than $200,000$200,000 to less than $225,000$225,000 to less than $250,000
$250,000 or morePrefer not to answer
OBJECTIVES & METHODOLOGY
72
Objective & Methodology
T. Rowe Price Family Financial Trade-offs Survey
Savingfor
retirementSaving for kids’
education
Objective
Primary Objective: After T. Rowe Price's 2014 Parents, Kids & Money Survey found that 52% of parents said it was more important to save for their kids' college rather than their own retirement, the firm endeavored to further understand how families balance the competing priorities of saving for retirement and college.
Methodology
• T. Rowe Price commissioned an online survey of parents of children age 15 and younger who have a retirement savings account
• The survey was fielded from December 18-29, 2014, with 50/50 quotas for gender and age group
• A total of 2,000 parents in the U.S. participated; the sampling error for a sample of 2,000 is +/-2.2% at the 95% confidence interval
• The survey was fielded through MarketTools, Inc.