Data & Research October 3, 2018

Millennials Struggling to Establish Themselves Financially

Gen Xers are in a much better financial place, with many having paid down their student loans. This is enabling them to focus on retirement savings.

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The Society of Actuaries (SOA) released a series of reports on the financial challenges and retirement perspectives affecting all generations, namely Millennials, Gen Xers, Late Baby Boomers, Early Baby Boomers and members of the Silent Generation.

The first report, “Financial Priorities, Behaviors and Influence on Retirement,” reveals that Millennials are struggling to establish themselves financially, particularly with regards to establishing an emergency fund, saving for a home and paying off their credit card debt and student loans. These obstacles may impact their ability to establish a financially secure retirement, according to SOA.

Gen Xers are in a much better financial place, with many having paid down their student loans. This is enabling them to focus on retirement savings. Eighty percent of this group have access to an employer-sponsored retirement plan.

Late Baby Boomers are the most focused on financial planning, with the majority gearing up for retirement. Fifty-one percent have a financial planning horizon of three years or more. They are targeting their investments to grow their money and produce income now and in retirement.

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The most financially stable group is Early Baby Boomers. They are the most likely to be working with a financial adviser, and 60% say they could afford a sudden expense of $10,000. Additionally, approximately three-quarters are retired.

The Silent Generation has fewer savings priorities. Like Millennials, they lack financial stability.

“This research demonstrates that consumers face unique financial priorities throughout all stages of life, and that even the oldest group we studied, the Silent Generation, is not free from vulnerability,” says Anna Rappaport, chair of the SOA Aging and Retirement Strategic Insight Program. “Millennials in particular should pay off student loans and other debt, so that they can take steps to focus on longer-term issues, such as retirement security. This is especially important knowing the challenges their predecessors still face and that they may face even tougher financial challenges due to the large student loan balances many have when they enter the workforce.”

A second SOA report is focused specifically on Millennials, “Difficulties in Gaining Financial Security for Millennials.” Thirty-four percent say that debt is complicating their finances. Thirty-three percent have student loans, the largest amount of any generation.

Millennials are also worried about the value of their investments keeping up with inflation, that they may not be able to maintain a reasonable standard of living in retirement or that they could outlive their savings.

Forty percent of Millennials feel overwhelmed by their financial situation, compared to 22% of all other generations.

Fifty-six percent of Millennials say their generation has a harder time achieving financial security than their parents. Forty-four percent of Baby Boomers and the Silent Generation say that the younger generations have it harder than they did in terms of achieving financial security.

Greenwald & Associates conducted the survey for the Society of Actuaries.

Client Service October 3, 2018

Long-Term Care Planning Neglected by Many Older Americans

When individuals plan ahead for long-term care, they can better secure their own future while reducing financial burdens on their friends and family.

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A recent survey conducted online by The Harris Poll on behalf of OneAmerica asked more than 2,000 adults whether they have had any conversations about long-term care—with a family member, spouse or partner, friend, health care professional, financial planner, insurance agent, attorney, clergy member, accountant or anyone else about preparing for their possible need of long-term care.

Despite the survey asking about such wide networks, still nearly four in 10 Americans age 65 and over say they haven’t had conversations with anyone about preparing for their possible need of long-term care. According to Harris Poll and OneAmerica, this low proportion was similar to American adults overall, 38% of whom said they hadn’t had such conversations.

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On the flip side, survey results show 62% of Americans say they have had these conversations, with adults age 65 and older more likely than younger adults (18 to 64) to have talked to their spouse/partner (38% vs. 27%) and/or a financial planner (17% vs. 7%).

OneAmerica researchers call these findings troubling, given the fact that as many as 70% of Americans can expect to have a long-term care need at some point in their lifetimes, according to the U.S. Department of Health and Human Services.

“For about 20% of Americans, long-term will be needed for longer than five years, due to conditions such as Alzheimer’s disease and other dementias, Parkinson’s disease, and other chronic conditions,” they explain. “Planning ahead for the possibility of long-term can ensure assets are best positioned for any need that arises, and can reduce the burden on family members and loved ones when the time comes.”

Unsurprisingly, the wealthier segments of the population are more likely to say they have engaged in any long-term care planning conversations, with 70% of those making $100,000 or more reporting so. This compares with only 56% of those whose annual household income is less than $75,000.

Even though they are more likely to speak about the topic with friends or family, still only 15% of those with annual household incomes of $100,000 or more say they’ve had such conversations with a professional financial planner, and just 10% report speaking with an insurance agent.

“For individuals and financial professionals, it’s important to start those conversations,” says Tracey Edgar, vice president of sales for care solutions at OneAmerica. “Regardless of income, it’s important to have conversations about the possibility of long-term care. Asset-based protection is a solution that may be more within reach than people realize, especially if they’re nearing retirement and have assets to position. And everyone can benefit from understanding each other’s wishes and expectations for care.”

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