Ninety-three percent of survey respondents* say they make
trade-offs in order to save more, but Millennials are struggling to find
a balance
MINNEAPOLIS--(BUSINESS WIRE)--
More than half of Americans surveyed say they are saving up to an
average of $185 per month by consciously cutting back on eating out,
entertainment and clothing, according to the Financial Trade-Offs
study released today by Ameriprise Financial (NYSE:AMP). The survey
found encouraging insights that indicate people are making a conscious
effort to spend less discretionary income in order to save more.
However, it also uncovered that many Americans haven’t cut back on areas
that can make the biggest impact on their savings. The
multi-generational study surveyed Americans ages 25 to 67 with at least
$25,000 in investable assets and access to an employer-sponsored
retirement plan.*
The survey found that while many Americans are spending less on smaller
items, fewer respondents said they are scaling back on big expense areas
such as mortgage payments/rent (24% of those with this expense have cut
back), college education for their family (25%) and vacations (49%).
However, cutting back on these types of expenses is likely to generate
the most savings – up to an average of $475 per month according to these
respondents.
“It can be difficult to make adjustments to your expenses in order to
save more, but the extra cash can really add up over time to make a big
impact,” said Suzanna de Baca, vice president of wealth strategies at
Ameriprise Financial. “Whether you’re saving for retirement, building an
emergency fund or earmarking a stash for future healthcare costs,
cutting back today in order to save more for tomorrow can be rewarding
both financially and emotionally.”
Millennials rein in spending but fail to save diligently
The study found that Millennials (born after 1980) are more likely than
both Boomers and Gen Xers to be consciously cutting back on all 18
discretionary expense categories listed in the survey. This includes
things like electronics (69% of Millennials say they’ve cut back on this
compared to 57% of Gen Xers and 45% of Boomers) and car payments (32% of
Millennials have scaled these back – more than any other generation
surveyed).
Despite making prudent trade-off choices, the study reveals that younger
Americans are still likely to take on a large amount of debt while
trying to balance other financial goals. Of those who own a car, 76%
feel that their car payments have been a stretch (significantly more
than older Americans who are making payments on an auto loan). A similar
proportion (78%) says their credit card or other miscellaneous bills has
made them feel stretched financially.
Even more concerning is that far fewer Millennials (59%) than Boomers
(75%) admit they have a monthly savings plan and an underwhelming 57%
with access to an employer-sponsored retirement plan are contributing
enough to take full advantage of their employer’s match. Additionally,
it’s possible that younger Americans are anticipating financial hurdles
down the road; more than two-thirds (69%) say they have either reduced
their contributions to their employer-sponsored plan or would consider
doing so in the future. Surprisingly, despite these financial hardships,
one in four (27%) Millennials hopes to buy a vacation home someday and
two in five (40%) would like to fund private K-12 education for their
children.
Boomers and Generation X commit to saving
The Financial Trade-Offs study demonstrates that as Americans
age, their attitude toward saving may improve; four in five (81%)
Boomers and 75% of Gen Xers consider themselves to be more of a saver
than a spender compared to 65% of Millennials. This perspective is
supported by the fact that 45% of Boomers and 38% of Gen Xers are maxing
out their 401(k) contributions and more than two-thirds of respondents
from these generations say they have a monthly savings plan.
However, older Americans can pad their savings even more by cutting down
on discretionary spending. Boomers and Gen Xers were less likely than
Millennials to be scaling back their purchases in every expense category
indicated in the survey. For example, 79% of Millennials have cut back
on eating out – the most popular (and arguably the easiest) expense that
Americans can spend less on. However, significantly fewer Boomers (51%)
and Gen Xers (70%) admit they’ve consciously made an effort to spend
less in this area.
Mortgages still stretch younger Americans’ wallets
Despite tighter lending limits, it appears that many young homeowners
have still borrowed beyond their means to afford their homes. Three in
five (60%) Gen Xers and 77% of Millennial homeowners admit that their
mortgage payments have been a stretch. This becomes even more concerning
considering that for those respondents who say their mortgage has been a
stretch, a significant portion describes it as a big financial stretch
(32% of Millennials and 21% of Gen Xers).
“The good news is that some Americans have taken action to reduce their
housing expenses,” said Pat O’Connell, executive vice president of the
Ameriprise Advisor Group. “Still, 60 percent of all survey respondents
say they have not – and don’t plan to – adjust the amount they’re
spending on housing in order to save more. Spending less on a mortgage
or rent isn’t easy, but it’s important that Americans looking to move to
a new home keep in mind their savings goals and set a realistic budget.”
For more information about the study, see our Financial
Trade-Offs research page. To hear additional insights
from Suzanna de Baca, visit YouTube.com.
* About the survey
The Financial Trade-Offs study was created by Ameriprise
Financial utilizing survey responses from 3,002 employed Americans with
access to an employer sponsored retirement plan (or with a spouse that
has access to an employer sponsored plan) ages 25-67 who are primary
financial decision makers or share in financial decisions in their
household. All respondents ages 25 – 49 have investable assets of at
least $25,000 while those over 50 have at least $250,000 (including
employer retirement plans, but not real estate). The survey was
commissioned by Ameriprise Financial, Inc. and conducted via online
interviews by Koski Research from November 25 – December 16, 2013.
About Koski Research
Koski
Research is focused on having better conversations with key
stakeholders – customers and clients, influencers, business peers and
the general public. The firm combines high level proprietary custom
research with research conducted for public release. All of this
research relies on asking engaging questions, applying research acumen
to create solid study designs and using marketing smarts to produce
executive-ready reports that lead to action.
About Ameriprise Financial
At Ameriprise Financial, we have been helping people feel confident
about their financial future for 120 years. With outstanding asset
management, advisory and insurance capabilities and a nationwide network
of approximately 10,000 financial advisors, we have the strength and
expertise to serve the full range of individual and institutional
investors' financial needs. For more information, or to find an
Ameriprise financial advisor, visit ameriprise.com.
The Financial Trade-Offs study was created by Ameriprise
Financial utilizing survey responses from 3,002 employed Americans with
access to an employer sponsored retirement plan (or Americans with an
employed spouse with access to an employer sponsored retirement plan)
ages 25-67 who are primary financial decision makers or share in
financial decisions in their household. All respondents ages 25 – 49
have investable assets of at least $25,000 while those over 50 have at
least $250,000 (including employer retirement plans, but not real
estate). The survey was commissioned by Ameriprise Financial, Inc. and
conducted via online interviews by Koski Research from November 25 –
December 16, 2013.
For further information and detail about the Financial Trade-Offs study
including verification of data that may not be published as part of this
report, please contact Ameriprise Financial.
Brokerage, investment and financial advisory services are made available
through Ameriprise Financial Services, Inc. Member FINRA and SIPC.
© 2014 Ameriprise Financial, Inc. All rights reserved.
Ameriprise Financial
Meghan Graham, 612-671-0823
Media
Relations
Meghan.L.Graham@ampf.com
Source: Ameriprise Financial