- A third of investors with adult children or living parents provide financial support
- Women more likely than men to use professional advice for their 401(k) plan
- Most investors on top of their bills, less so their credit score
CHARLOTTE - According to the Wells Fargo/Gallup Investor and Retirement Optimism Index, 47% of investors have children and at least one living parent, placing them in what is commonly called the “sandwich generation.” Thirty-two percent of investors report providing financial help to a child age 18 or older, a parent, or both. Thirty-five percent of non-retired investors and 25% of retired investors give such financial support to these close family members.
The survey was conducted by telephone with 1,007 U.S. investors Feb. 10-19. It finds that more than half of investors who aid an adult family member financially believe it is hindering their ability to save for their own retirement. This works out to be 20% of all investors and 22% of non-retired investors.
Specifically, among all investors:
- More than half of investors (57%) report they have one or more children aged 18 and older and, of these, 46% provide financial support to at least one of them.
- About two-thirds of investors (62%) have at least one living parent and, of these, 14% say they provide either or both parents with some degree of financial help.
At the same time, the poll offers the good news that many investors are engaging in important conversations with family members about money. Specifically:
- Seventy percent of investors who have a child under age 18 say they have spoken to them about the importance of saving.
- Sixty-five percent of investors who have at least one living parent say they have discussed their parents’ financial security with them.
“These conversations can be essential to ensuring that adults are positioned for a lifetime of financial independence, and thus not a burden on either their parents or children,” said Jon Graff, Director of Participant Services at Wells Fargo Institutional Retirement and Trust. “Children need to develop strong financial awareness before they turn 18 so they establish good savings habits, while avoiding debt in adulthood. Many seniors can benefit from family conversations that help them better understand and manage finances and other resources available to them.”
Most Investors On Top of Their Bills, Less So Their Credit Score
The poll finds that while the majority of investors already follow a number of basic steps that contribute to overall financial health, this ranges from more than nine in 10 paying all of their bills on time to barely half tracking their spending by category. The full range is as follows:
- 92% pay all of their bills on time every month
- 77% are making progress paying down high-interest debt
- 68% review their insurance needs once a year
- 61% check their credit score once a year
- 57% contribute to an emergency fund to cover three to six months of expenses
- 52% track all of their spending by category
Two of the steps tested apply only to investors currently in the workforce:
- 71% of non-retirees make contributions to savings through automatic payroll deductions
- 67% of non-retirees save at least 10% of their income for retirement
Most investors who are not already taking each step say it would be easy for them to start. However, two practices prove more challenging for investors: contributing to an emergency fund and saving at least 10% for retirement. Overall, 57% of investors say they contribute to an emergency fund and another 23% are not contributing but say it would be easy for them to start. However, 19% do not have such a fund and say starting would not be easy. Similarly, while 67% of non-retired investors say they already save at least 10% of their income for retirement and another 14% say they don’t but it would be easy, 19% don’t save this much, and say doing so would not be easy.
“Focusing on any one of these individual steps is important, but considering all of them holistically as part of your plan will drive a better outcome,” said Graff. “The survey showed that investors practice financially healthy habits in a number of areas, but at the same time, half are not taking the basic step of understanding their spending by category. That’s an important first step in identifying opportunities to save more and achieve their financial goals.”
Investors Value Expert Advice for Their 401(k) Plan
The importance of 401(k)-type plans as a vehicle for helping to achieve retirement security is clear in the finding that 69% of investors, including 76% of non-retirees and 50% of retirees, have a 401(k) or 403(b) plan.
The majority of investors – 58% – say they get professional advice when making investment decisions for their 401(k)-type plan. While there is no significant difference by asset level, women are more likely than men to say they use professional advice: 66% vs. 51%.
At the same time, 40% of investors say they make their own decisions about what to include in their 401(k)-type plan. Most of these say they like it that way, but a quarter of those who make their own decisions would prefer to have professional advice.
“From the first day on the job all the way through the retirement years, there are a number of key decisions and levers that can impact your retirement outcome,” said Graff. “Although some investors prefer to do it alone, almost 7 in 10 (those who already get professional advice plus those who don’t but would like to) would rather get some help for these key decisions. There are many ways to get that advice, depending on where you are in your journey.”
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About the Wells Fargo/Gallup Investor and Retirement Optimism Index
These findings are part of the Wells Fargo/Gallup Investor and Retirement Optimism Index, which was conducted Feb. 10-19, 2017, by telephone. The Index includes 1,007 investors randomly selected from across the country with a margin of sampling error of +/- four percentage points. For this study, the American investor is defined as an adult in a household with total savings and investments of $10,000 or more. About two in five American households have at least $10,000 in savings and investments. The sample size is comprised of 71% non-retirees and 29% retirees. Of total respondents, 44% reported annual income of less than $90,000; 56% reported $90,000 or more. The Wells Fargo/Gallup Investor and Retirement Index is an enhanced version of Gallup’s Index of Investor Optimism that provides its historical data. The median age of the non-retired investor is 46 and the retiree is 69.
The Index had a baseline score of 124 when it was established in October 1996. It peaked at 178 in January 2000, at the height of the dot-com boom, and hit a low of negative 64 in February 2009.
About Wells Fargo
Wells Fargo & Company (NYSE: WFC) is a diversified, community-based financial services company with $2.0 trillion in assets. Founded in 1852 and headquartered in San Francisco, Wells Fargo provides banking, insurance, investments, mortgage, and consumer and commercial finance through more than 8,500 locations, 13,000 ATMs, the internet (wellsfargo.com) and mobile banking, and has offices in 42 countries and territories to support customers who conduct business in the global economy. With approximately 273,000 team members, Wells Fargo serves one in three households in the United States. Wells Fargo & Company was ranked No. 27 on Fortune’s 2016 rankings of America’s largest corporations. Wells Fargo’s vision is to satisfy our customers’ financial needs and help them succeed financially. News, insights and perspectives from Wells Fargo are also available at Wells Fargo Stories.
How Wells Fargo Supports Financial Health
Wells Fargo seeks to provide its customers the personalized guidance and encouragement they need to take action to improve their financial health. The company is providing a growing set of services to help customers know where they stand, practice financially healthy habits and make meaningful financial change in their lives – including a FICO® Credit Score tool, which has provided free credit score access to over 4 million eligible customers; a Financial Health Conversations program that has helped more than 15,000 customers since the start of 2015; and Daily Change, a new mobile app designed to help make saving money easy and fun for our customers. For Wells Fargo’s easy-to-follow financial health guidelines, see our online financial health resource.
About Gallup
Gallup delivers analytics and advice to help leaders and organizations solve their most pressing problems. Combining more than 80 years of experience with its global reach, Gallup knows more about the attitudes and behaviors of employees, customers, students and citizens than any other organization in the world.
Wells Fargo Institutional Retirement & Trust is a business unit of Wells Fargo Bank, N.A., a bank affiliate of Wells Fargo & Company.
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Leslie Ingberg
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Leslie.Ingberg@wellsfargo.com