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Amid Graduation Season, Young Investors Cite Education Expenses as a Top Reason for Early Retirement Withdrawals

Data also suggest early withdrawals for education have doubled since 2016

New research from E-Trade reveal trends in education costs and saving for retirement

May 28, 2019 — NEW YORK–(BUSINESS WIRE)–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 reveal concerning trends regarding education costs and saving for retirement:

Education is a top retirement saving roadblock
Tied with rent or mortgage, education expenses, including student loans, are one of the biggest barriers when it comes to saving, with six out of 10 young investors choosing it first or second. In fact, concern about these costs has increased nearly 20 percentage points over the past four years.

They’re making early withdrawals to pay for school
Three out of five young investors have made an early withdrawal from their retirement account, with education as the most oft-cited reason.

Yet they think they’re financially savvy
Nearly two-thirds of young investors feel extremely or very capable when it comes to managing their finances, and 80% say they’ve had moderate to heavy exposure to personal finance and investing.

“It’s no secret that education expenses can get in the way of saving for retirement, but clearly tapping into a retirement fund early is a serious issue that needs to be addressed,” said Mike Loewengart, Vice President of Investment Strategy at E*TRADE Financial. “Fortunately, there are a number of tools and vehicles designed to help make saving for retirement easier, and the reality is younger investors have time on their side. When one factors in compounding interest, a little can in fact go a long way.”

Mr. Loewengart offered some tips on how recent grads can start off on the right foot when it comes to saving and investing:

  • Don’t miss out on your employer’s 401(k) plan
    Many employers offer a retirement plan, which is a great place to kick-start investing, especially if it offers a matching contribution, which is as close to free money as one will ever come in the investing world.
  • When it comes to contributions, you can set it and forget it
    Automatic investing plans allow investors to deposit a fixed amount at regularly scheduled intervals. It takes the emotion out of the equation and helps reduce risk through dollar-cost averaging by taking advantage of the natural ups and downs of the market.
  • You don’t need to pay a lot for a diversified portfolio
    Fortunately, today there are myriad ETFs with expense ratios that have never been lower, hundreds of which are offered commission-free, and deliver broad exposure to the market.

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

About the Survey

This wave of the survey was conducted from April 1 to April 11 of 2019 among an online US sample of 917 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 Research Now. 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.


When it comes to saving what you want for retirement, how much of a barrier is each of the following? (Top 2 box)
TotalAGE: <34
Healthcare costs52%60%
Rent or mortgage43%61%
Day-to-day living expenses like food or utilities39%60%
Wanting to live for today35%55%
Education costs38%61%
Paying down student loans34%61%
Having a parent move in with you30%52%
Having an older child move back in with you25%45%
When it comes to saving what you want for retirement, how much of a barrier is each of the following? (investors under 34)
Education CostsStudent Loans
Q2 201644%44%
Q2 201756%58%
Q2 201865%69%
Q2 201961%61%
Have you ever taken out money from an IRA or 401(k) before the age of 59.5, and, if so, for what?
TotalAGE: <34
No, I have never taken out money from an IRA or 401(k) before the age of 59.565%40%
Yes (Net)35%60%
Yes, to make a large purchase12%18%
Yes, for a medical emergency11%22%
Yes, because I became unemployed10%22%
Yes, to pay for education10%24%
Yes, to simply spend on myself or my family8%17%
Yes, to spend on a vacation3%5%
Yes, for holiday expenses2%3%
Yes, Other2%1%
Have you ever taken out money from an IRA or 401(k) before the age of 59.5 and, if so, for what? (Investors under 34)
YesFor Education
Q2 201632%12%
Q2 201748%18%
Q2 201860%24%
Q2 201960%24%
How capable do you feel you are when it comes to managing your finances?
TotalAGE: <34
Extremely capable20%20%
Very capable45%43%
Somewhat capable31%32%
A little capable3%4%
Not capable0%1%
How much exposure do you feel you had to personal finance, investing, or markets topics during your educational career?
TotalAGE: <34
Heavy exposure15%23%
Moderate exposure47%57%
Minimal exposure29%16%
No exposure10%4%
“Young investors” defined as age 18–34

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 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
The information provided herein is for general informational purposes only and should not be considered investment advice. Past performance does not guarantee future results.
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E*TRADE Financial Corporation and Research Now are separate companies that are not affiliated. E*TRADE Financial Corporation engages Research Now to program, field, and tabulate the study. Research Now Group, Inc. provides digital research data and has locations in the Americas, Europe, the Middle East and Asia-Pacific. For more information, please go to