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Financial Planning > College Planning

Here's What's Disrupting Americans' Financial Plans Most

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Education spending — largely on student loan debt — has become the chief financial disruptor among Americans, even more so than loss of employment or having to take a lower-paying job, according to a new Harris Poll survey conducted on behalf of TD Ameritrade.

Education spending is the only financial disruptor that experienced growth in the past five years, the survey showed.

“The cost of education has risen proportionally as a source of disruption, as low unemployment and strong market performance seem to have blunted what were the greatest concerns five years ago,” Tom Butch, managing director of retail distribution at TD Ameritrade, said in a statement.

The Harris Poll conducted an online survey in August among 1,015 U.S. adults aged 23 and older with at least $10,000 in investable assets.

Here’s how financial disruption causes stacked up in the new survey:

  • Education for self and/or other dependent family members: 16%
  • Loss of employment/lower paid job: 15%
  • Supporting others financially: 13%
  • Poor investment/business performance: 10%
  • Accident/illness/disability/unable to work: 10%
  • Divorce/separation/widowed: 10%
  • Planned family: 9%
  • Planned home: 8%

According to the survey, millennials are the most financially disrupted generation, the ones likeliest to experience financial disruptions across nearly every category (divorce/separation/widowed excepted).

“Today, many young Americans are struggling to save for the future while paying off their past,” Butch said. “Between paying down student loans, contributing to retirement and saving for their children’s college, they are striking a delicate balance to set themselves on a path to long-term financial security.”

The survey also found that supporting others financially is by far the most financially impactful disruption, resulting in 80% lower median monthly savings/investments.

Financial Disruption: 2014 vs. 2019

The survey turned up one bright spot for financially disrupted Americans. Those who said in 2019 that they had experienced a financial shock were better prepared than those who had said so five years earlier.

And in all categories except education spending, a markedly smaller share of respondents reported a disruption in the 2019 survey. For example, 15% of respondents in 2019 said they had lost a job or taken a pay cut, down from 43% in 2014.

Forty-eight percent of respondents in the new survey had steady, reliable income, compared with 40% in 2014, and 45% had money/savings put aside for emergencies, up from 33%.

In 2019, only a quarter of Americans had to stop saving or investing for long-term retirement, versus 38% in 2014, while 20% had to withdraw money from their retirement savings, down from 26% five years ago.

At the same time, 56% of respondents reported that they were still behind on their long-term financial goals.

The survey found that the financial consequences of disruptions were lasting 33% longer in 2019 than five years ago, on average. In the new survey, respondents said disruptions lasted six years and three months, which compared with four years and eight months in 2014.

Threats Ahead

Looking to the future, Americans in the 2019 survey said their financial security and long-term investment was most threatened by increased cost of living, cited by 47% of respondents; increased cost of health care, cited by 44%; and an economic slowdown/recession, noted by 34%.

Millennials in the survey were concerned that increased cost of living, more by far than any other potential disruptor, would imperil their financial security and long-term investing.

For Gen Xers and baby boomers, increased cost of health care slightly trumped higher cost of living as their main worry about the future.

Other red flags for boomers that were less worrisome for younger respondents: economic slowdown/recession, longevity, and natural disaster that might result in property damage.

Millennials expressed the most concern among generations about job loss owing to automation.

— Check out Income Gap in K-12 Financial Education Remains Despite Progress: Study on ThinkAdvisor.


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