…at the Expense of Long-Term Financial PlanningMillennial parents are more focused on the near-term than other generations, but also most aware of the need to plan ahead
NEW YORK, January 24, 2019 – Amid rising consumer debt, American parents continue to be focused on reducing the amounts they owe in the New Year. A new survey from New York Life found that 72 percent of parents identify debt reduction as a top financial priority for 2019. That number is even higher for Millennial parents (ages 18-34), with 80 percent planning to focus on debt reduction this year. Although most parents, 67 percent, say they plan to save more, when asked what they’d do with a $5 million lottery jackpot, 58 percent rank paying off debt as one of the top three uses for their winnings. In comparison, only 33 percent say they would use hypothetical lottery winnings to save for retirement.
“While reducing debt can be a worthwhile endeavor, a singular focus on it at the expense of other planning can be dangerous to a family’s overall financial well-being,” said Brian Madgett, vice president, New York Life. “Adopting a protection-first financial planning approach is crucial, as even the best laid plans can get derailed without a strong long-term foundation.”
Although many families carry debt that might prevent them from achieving financial stability, parents are optimistic about their finances in the year ahead. Fifty-eight percent of parents expect their finances to improve this year, and 61 percent believe they will be better prepared for the unexpected. Younger parents have a particularly sunny outlook, tying their ability to pay down debts to a brighter financial future: 65 percent say their finances will improve this year, and 77 percent say their families will be better prepared for the unexpected.
Only 28% see the importance of financial planning
Optimism may not lead to action, however. Just 28 percent of parents believe it is important to have a financial plan in place to care for their children in case something happens to them. Further, fewer parents than last year (30 percent versus 38 percent) are planning to seek expert advice in 2019. However, younger parents – despite their focus on debt – are more likely to recognize the importance of long-term planning, with 44 percent saying they will seek professional financial planning advice this year.
According to Madgett, the findings illustrate a disconnect between expectations and reality when it comes to financial planning. “It’s encouraging to see a more positive outlook for 2019, especially among younger parents who have the benefit of time, but optimism can only carry us so far,” said Madgett. “Finding a qualified financial professional who can help identify your family’s needs and financial goals and work with you to create a plan is an important step toward ensuring parents’ optimism can be sustained no matter what life might bring.”
These findings are from a poll conducted between November 15 – 19, 2018 by Ipsos on behalf of New York Life. A sample of 1,102 adults ages 18 and over from the continental U.S., Alaska and Hawaii was interviewed online, in English. In order to qualify for the survey, respondents had to have at least one child under the age of 18 living at home.
About New York Life
New York Life Insurance Company (www.newyorklife.com), a Fortune 100 company founded in 1845, is the largest mutual life insurance company in the United States* and one of the largest life insurers in the world. Headquartered in New York City, New York Life’s family of companies offers life insurance, retirement income, investments and long-term care insurance. New York Life has the highest financial strength ratings currently awarded to any U.S. life insurer from all four of the major credit rating agencies**.
*Based on revenue as reported by “Fortune 500 ranked within Industries, Insurance: Life, Health (Mutual),” Fortune magazine, 6/1/18. For methodology, please see http://fortune.com/fortune500/
**Individual independent rating agency commentary as of 7/30/2018: A.M. Best (A++), Fitch (AAA), Moody’s Investors Service (Aaa), Standard & Poor’s (AA+)