Parents and Grandparents Forgo Frills to Save for Retirement and Raise Kids
OMAHA, Neb., February 24, 2016 /BUSINESS WIRE/ — The results are in. Moms and dads really can’t have it all – or at least they can’t without some form of compromise.
So say the 2,000 parents who took part in the TD Ameritrade Parents and Grandparents Retirement Survey, which examines the financial habits and attitudes of millennial parents and boomer grandparents.
While their parenting philosophies may be worlds apart, on this much the generations agree: parents of all ages are willing to make significant personal trade-offs in order to support their growing families without losing sight of their long-term financial goals.
However, parents of both generations agree that such trade-offs should not come at the expense of loved ones. While 54 percent of grandparents find the combination of saving for retirement and supporting adult children “very stressful,” they and their millennial parent counterparts agree that family still comes first.
Trade-offs that are non-starters include:
Spending less on children: just 20 percent of grandparents and 12 percent of millennial parents would be willing to spend less money on their children
Having fewer kids: 15 percent of millennials would be willing to have fewer children
15 percent of millennials would be willing to have fewer children
Supporting aging parents: 5 percent of millennial parents and 2 percent of grandparents would cut back on financial support to aging parents
More preferable trade-offs include lifestyle changes, like:
- Simpler living: half of millennial parents (49 percent) and boomer grandparents (54 percent) would be willing to live a simpler lifestyle to help retirement savings last longer
- Less “going out”: nearly half would cut back on eating out and entertainment (46 percent millennial parents and 49 percent grandparents)
- Buy second-hand: 39 percent of millennial parents and 45 percent of grandparents would buy a used car
- Delay retirement: about a third would retire at a later age (36 percent of millennial parents and 32 percent grandparents)
- Travel less: nearly a third (29 percent) of both generations would cut back on vacations
- Downsize: about a quarter would live in a smaller home (27 percent millennial parents and 25 percent grandparents)
“It’s encouraging to see that both generations of parents recognize there are trade-offs and are willing to make them in order to keep their retirement plan on track,” said Matthew Sadowsky, director of retirement at TD Ameritrade. “But it can be easier said than done and to put this into practice, parents should take a hard look at what they’re truly comfortable scaling back on, if need be.”
These trade-offs appear to be working. Most parents and grandparents have never had to withdraw money from their retirement accounts to support their families (60 percent of millennial parents, 52 percent of grandparents). However, there is still a sizable segment of the population (40 percent of millennial parents, 48 percent of grandparents) that has – proof that even the best laid plans can go awry.
Expenditures in these cases included:
- Emergencies (20 percent millennial parents, 24 percent grandparents)
- Household bills (16 percent, 17 percent)
- Medical expenses (13 percent, 11 percent)
- Vacations (10 percent, 4 percent)
“Tapping into retirement accounts early can put your retirement at risk, and for those parents serving as the ‘family bank,’ this could negatively impact the whole family,” Sadowsky said. “Retirement savers are able to stay the course and stay disciplined by taking a few fundamental steps, including: setting aside an emergency fund so they don’t need to tap into their retirement nest egg to cover unexpected expenses, and developing a clear financial plan that can help protect and potentially grow their nest egg. People with a financial plan are three times as likely to be confident they will reach their retirement goals.”
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Survey conducted by Head Solutions Group
Head Solutions Group (U.S.) Inc., is a leading market research partner for Financial Services companies in North America. With offices in New York, Toronto and Montreal, Head delivers the deep customer insights that increase institutional knowledge and propel business action. TD Ameritrade and Head Solutions Group are separate and unaffiliated firms and are not responsible for each other’s services or policies.
About the 2016 Parents and Grandparents Retirement Survey
A 18-minute online survey was conducted with 2,018 American adults (half millennial parents age 19-37, half grandparents age 50-70 with adult children) by Head Solutions Group, between Oct. 20 and Oct. 26, 2016, on behalf of TD Ameritrade Holding Corporation. The statistical margin of error for the total sample of N=2,018 American adults within the target group is +/- 2.1 percent. This means that in 19 out of 20 cases, survey results will differ by no more than 2.1 percentage points in either direction from what would have been obtained by the opinions of all target group members in the United States. Sample was drawn from major regions in proportion to the U.S. Census.