Allianz Study: Older parents raising young children struggle to balance college and retirement savings, plan to retire late
October 30, 2015 –MINNEAPOLIS–(BUSINESS WIRE)–Parents who wait to have their first child may do so to be financially established before starting a family, but many still worry about the future dilemma of paying for their child’s college costs while also funding their own retirement, according to the Allianz LoveFamilyMoney® Study* of 4,500 Americans.
The survey identified seven different family types, one of them the older parent with first child under five years old.**
These parents (one parent is 40 years or older) were particularly worried about preparing for retirement and paying for their child’s college tuition at the same time – nearly eight in 10 (79%) said they had a great deal or some worry or stress about achieving both goals.
They are more focused on saving for their children’s education than younger parents (53% versus 39% traditional families). They were also significantly more likely to say they would wait to retire until after age 70 (27% versus 13% of traditional families).
Gen-X facing a number of setbacks
“Juggling work and family goals is challenging no matter when you do it, and many people are choosing to get settled in their careers before starting a family,” said Katie Libbe, Allianz Life Insurance Company of North America (Allianz Life®) vice president of Consumer Insights. “The older parents in our study are largely members of Generation X, which has had a number of financial setbacks, most notably the Great Recession of 2008. It’s not surprising that people in their 30s during the recession, possibly facing layoffs and underwater mortgages, would choose to wait to start a family.”
Government data confirms that the number of older parents is growing. There’s been a continual rise in the number of first-time mothers in their 40s over the past decade, rising 35% between 2000 and 2012, according to an analysis of Census Bureau data by the Centers for Disease Control and Prevention. The trend is even more striking over the long term – in 2012 there were nine times more first-time births to women over 35 compared with 40 years before.
Attitudes about financial planning
Perhaps because they are more advanced in their careers and savings goals, the older parent family type was likely to have invested their money (58%), and most (73%) said they were proud of what they had accomplished financially. About half (48%) assess themselves as having an excellent or above-average knowledge about financial planning.
At the same time, they also are stressed in figuring out how to invest their money (59% listed that as a top worry). Most (69%) describe themselves as being a “saver,” and most (60%) said their spouse is also a saver.[pullquotw]
In addition, parents in their 40s were not likely to say they’d seek out advice from a financial professional in the future. A quarter of older parents said they would not consider using a financial professional, and fewer had used one in the past (45%, compared with 53% of traditional families). Of those who currently use or had used a financial professional in the past, 64% said it was to manage an investment portfolio. Some older parents (16%, more than twice as many as traditional families) said they don’t have time to spend on creating a long-term financial plan.
“We found mixed messages in the data from our older parent group,” said Libbe. “They seem to be relatively experienced investors who recognize the need to be careful savers. And yet, with small children in the house, they may not have a lot of time right now to seek out help from a financial professional. However, they can’t let personal financial planning wait too long – pretty soon they’ll be juggling the competing demands of their own retirement and their children’s education.”
These older parents said financial planning for themselves and their children’s education is important to them. More than half of older parents (53%) said they would be motivated to create a long-term financial plan in order to save for their children’s education, and 45% in order to create a comfortable retirement.
*Love Family Money
The LoveFamilyMoney Study was conducted by The Futures Company via an online panel in January 2014 with more than 4,500 panel respondents ages 35-65 with a household income of $50K+ and was commissioned by Allianz.
- Multi-Generational Families – Three or more generations living in the same household
- Single-Parent Families – One unmarried adult with at least one child under 18
- Same-Sex Couple Families – Married or unmarried couples living together with a member of the same gender – with and without children
- Same-Sex Couple Families with Kids – 35% of the same-sex couple family cohort (543 families). Married or unmarried couples living together with a member of the same gender – with at least one child in the household
The sample size for same-sex couples with children is 188 compared to those without children, which is 355
- Blended Families – Parents who are married or living together with a stepchild and/or child from a previous relationship
- Older Parent with Young Children Families – Parents age 40+ with at least one child under five in the household
- **Older Parent Families with First Child Under 5 – 28% of older parent families had one parent over 40 years old and their first child under age 5 (530 families)
The sample size for older parent families cohort is 146 compared to those with children over age five, which is 384
- Boomerang Families – Parents with an adult child (21-35) who left and later returned to rejoin the family
Traditional families are defined as those in which the spouse is married to someone of the opposite sex with at least one child under 21 living in the household; no stepchildren, no adult child who returned home, and no one else besides spouse/children living in the household.
Allianz has been providing financial services through its affiliates in the United States since 1896. We offer world-class expertise across a wide range of financial services, from active asset management to innovative solutions to help grow and protect income in retirement. As a leading global financial services company with more than 147,000 employees in 70 countries, we’re proud to make a difference in the lives of our more than 83 million clients worldwide each day. To learn more about Allianz, visit us online at http://www.allianzusa.com.