Data & Research July 8, 2015

Gen X Too Comfortable With Credit Card Debt

Both Boomers and Gen X use their credit cards liberally, but Gen X is carrying substantially higher balances.
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Baby Boomers, those between the ages of 49 and 67, and Generation X, ages of 35 to 48, do not appear to view carrying debt as a stigma, according to Allianz Life Insurance Company of North America’s “Generations Apart” survey. The large balances that they are carrying could put their retirement in jeopardy, Allianz says.

Nearly half (48%) of both generations view credit cards as a survival tool and 43% agree with the statement, “Lots of smart, hardworking people who are careful with spending also have a lot of credit card debt.”

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Gen Xers are carrying more debt than Boomers, the survey found, with members of Gen X having an average mortgage of $144,000, compared with $90,000 for Boomers; $12,000 in student loans, compared with $5,000 for Boomers; and an $8,000 credit card balance, versus $6,000 for Boomers.

Allianz figures that one reason Gen X may have a higher credit card balance than Boomers is that 76% of Gen Xers got their first credit card between the ages of 18 and 24, compared to 68% of Baby Boomers who did. Additionally, 46% of Gen Xers say they pay only a portion of their credit card balance each month, allowing their credit card balances to revolve, in contrast to 32% of Boomers who do so.

Allianz says this is probably why 27% of Gen Xers say they are unsure about when they plan to retire or don’t plan to retire at all, compared to 11% of Boomers who share this insecurity. Additionally, nearly one-quarter of Gen Xers (23%) agree with the statement, “You can’t save for retirement until you pay off credit cards,” compared to 19% of Boomers.

“Over the last three decades, there has been a collective shift in how people view debt,” says Katie Libbe, Allianz Life vice president of consumer insights. “It’s now perceived as a normal part of one’s financial experience, and that has fundamentally altered the way people spend and save. If Gen Xers continue to delay saving for retirement until they are completely out of debt, their nest egg is clearly going to suffer.”

Allianz’s “Generations Apart” study echoes earlier findings the company released on Baby Boomers’ and Gen Xers’ views towards retirement. Eighty-four percent of people in these age groups feel that retirement is unrealistic. Sixty-eight percent of Gen Xers believe they will never have enough money to stop working, compared to 43% of Boomers.

Given these findings, it is incumbent on employers to consider financial wellness programs that teach their employees about budgeting, setting financial goals, paying down credit card debt, establishing an emergency fund and saving for retirement.

Products July 8, 2015

FSI Tool Connects Advisers to Congress

The Financial Services Institute wants to help advisers contact the legislators most likely to respond to their appeals. 
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It’s often observed that members of the U.S. House and Senate only care about the opinions of those voters residing in their respective districts.

According to the Financial Services Institute (FSI), this also largely holds true for members of the business community. To help financial advisers identify and contact the appropriate national legislators, FSI unveiled a new “fiduciary microsite,” at www.MySavingsMyChoice.org.

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The website asks advisers to fill in their basic business and contact information, including address, in order to identify the appropriate Senators and Representatives to contact. The site also directs advisers’ comment letters to the appropriate Department of Labor (DOL) address.

Once their information is entered, advisers are directed to an automatically populated letter template that takes a pretty harsh stance against the pending fiduciary rulemaking from the Department of Labor (DOL). Like other advisory industry groups, FSI says the rule will interfere with financial advisory clients’ ability to work with the adviser of their choosing. Advisers in favor of the rule can also use the site, as FSI gives advisers the capability of clearing the pre-populated letter text to insert their own commentary.

FSI says it is “working directly with its 37,000 financial adviser members and 100+ firm members to reach their current clients asking them to weigh in on the rule. FSI will next provide an extensive comment letter to the DOL on the rule on July 21.”

The pending fiduciary rule language is currently still open for comments. The comment period on the proposals closes on July 21, to be followed by an extended public hearing on the subject. 

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