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%.