Understanding The Impact of Life Events on Long-Term/Retirement Savings

FINANCIAL DISRUPTIONS SURVEY IMPACT OF LIFE EVENTS 2015

2 | Financial Disruptions Survey

Two-thirds of Americans have seen their long-term saving and retirement plans disrupted

Q100: Which of the following events or situations have happened to you and had a negative effect on your financial plans for the long-term/retirement? By a negative effect, we mean that these events or situations may have: Caused you to reduce, pause, delay or completely stop saving and investing for the long-term/retirement; Reduced the amount of money that would be available to you for the long-term/retirement; Required you to save or invest more in order to reach your goals for the long-term/retirement. Multiple responses allowed

Base: All answering Q100 (includes N=2,019 completed interviews and n=1,043 who did not experience an event and ,therefore, did not complete the rest of the survey)

%

2/3 (66%) of American adults

have experienced an event or situation that has had a negative effect on their

financial plans for the long-term/retirement

75 69 72 74

66

52

Under 25 25-34 35-44 45-54 55-64 65 or Over

3 | Financial Disruptions Survey

A loss of employment or having to take a lower-paid job is the most common disruption for these “Disrupted Americans”

Q100: Which of the following events or situations have happened to you and had a negative effect on your financial plans for the long-term/retirement (Select all that apply)

Base: All; N=2,019

Loss Of Employment/Lower Paid Job

Planned Family/Home

Poor Investment /Business Performance

SupportingOthers

Accident/Illness/Disability/Unable to

work

Divorce/Separation/ Widowed

Education

43%

36%

28% 24%

19% 18% 15%

+7%=Others

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84% of “Disrupted Americans” were saving for the long-term/retirement prior to the disruption. On average, more than $500 was being saved per month

Q210: And at the time prior to this event or situation, approximately how much money were you saving or investing for the long-term/retirement?; Q212: How old were you when you first started saving/investing for the long-term/retirement?

Base: All; N=2,019; All who were saving prior to event; n=1,692; All, excluding outliers (>$5,000 p.m); n=2,004.

84 16

AVERAGE AGE WHEN STARTED SAVING

28 YEAR

S O

LD

Saving for the long-term/retirement Not saving for the long-term/retirement

Median: $220

$530 PER MONTH

$ Saved per month prior to event (Average) Prior to the disruption

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On average, “Disrupted Americans” reduced their monthly long-term/retirement savings by almost $300 during the disruption. The disruptions last nearly 5 years, resulting in $16,000 less being saved than would have been saved without the disruption

Q210; Q315; Q311: (At the time prior to this event or situation/During this time of temporary or transitional financial consequences), approximately how much money were/are you saving or investing for the long-term/retirement? Data rounded to nearest $5. Average values include those not saving for the long-term/retirement (i.e. saving $0); Approximately how long did the temporary, or transitional, financial consequences last for?

Base: All, excluding outliers (>$5,000 p.m); n=2,004; All who are on track to reach their long-term/retirement goals; n=835. Assumes 66% of US adults are disrupted and US 18+ population of 240m http://quickfacts.census.gov/qfd/states/00000.html

$530 PER MONTH Median: $220

$240 PER MONTH Median: $45

During the disruption

$ Saved for the long-term/retirement (Average)

Average length of disruption

4 YEARS 8 MONTHS

$16,240 lost savings/investment value per person

$2.5 tn lost savings/investment value for the US economy as a whole

Prior to the disruption

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40

17

21

25

26

56

29

38

41

49

79

79% of “Disrupted Americans” had to reduce their savings and/or expenditures during their disruption

Q300: Which of the following, if any, were temporary, or transitional, financial consequences of this event or situation? Base: All; N=2,019. Multiple responses allowed. Only responses above 10% reported

My ability to save/invest money was reduced

I had to reduce my non-essential expenditures

My income was reduced

I had to stop saving/investing for the long-term/retirement

I had to reduce (but not to zero) the amount of money I was saving/investing for the long-term/retirement

I had to withdraw money from non-retirement savings

I had to use/carry a balance on my credit card(s) more often/to a greater extent

I had to withdraw money from my retirement savings (401(k), 403(b), IRA, etc.)

I had to accept/borrow money from family/friends

(%)

Reduced Savings/Expenditures, Including (in italics):

Withdrew from savings/Borrowed money, Including (in italics)

7 | Financial Disruptions Survey

12

13

14

33

40

21% of “Disrupted Americans” do not expect to recover financially from the consequences of the disruption and 49% may need to delay retirement, or forego it completely. 40% felt having a steady income meant that they were prepared for disruptions

Whether Back on Track or Not

41

38

21 On track to reach long-term/retirement goals (even if those goals have changed)

Still experiencing consequences of disruption but expect to recover financially

Do not expect to recover financially from consequences of disruption

Q310; Q410; Q222: Are you currently still experiencing the temporary, or transitional, financial consequences of this event or situation, or are you now on track to reach your long-term/retirement goals (even if those goals have changed)?; As a result of this event or situation, in which of the following ways, if any, have your financial goals for the long-term/retirement changed?; In what ways, if any, do you feel that you were financially prepared for this event or situation? Q410/Q222 Multiple responses allowed. Only top 3/top 5 responses reported

Base: All N=2,019;

(%)

20

34

43

49% will either need to fully retire later than planned, or not at all

I expect to have less money available when I retire than I expected before

event or situation happened

I expect to fully retire later than I had planned to before this event

or situation happened

I expect that I will never be able to fully retire

Ways retirement plans have changed

Ways in which felt prepared for disruption

I had money/savings put aside 'for a rainy day'

I knew I could obtain financial support from others if I needed it

I had discussed my financial plans for the long-

term/retirement with my spouse/partner

I had insurance (income protection, critical illness, mortgage payment, etc.)

I had a steady, reliable income

8 | Financial Disruptions Survey

Prior to this disruption “Disrupted Americans” were most likely to discuss their financial plans with a spouse/partner

Q230: Prior to this event or situation, had you discussed your financial plans for the long-term/retirement with any of the following people (select all that apply)? Base: All; N=2,019

A Spouseor Partner

Financial Planneror Advisor

Parents/Guardians

Friends orColleagues

Other FamilyMembers

A Lawyer or Accoutant None ofthe Above

44

20 18 17

12

5

27

(%)

9 | Financial Disruptions Survey

Decreasing expenditures, using less credit and repaying debt are the most likely changes made by “Disrupted Americans” in order to recover financially

Q350: Which of the following changes have you made, or do you expect to need to make, in order to recover financially from this event or situation? Multiple responses allowed

Base: All; N=2,019

48

24

34

21

33 33 29

21 21 19

Decreasing my expenditures

Using less credit Repaying debt Saving more money for 'a

rainy day'

Lowering expectations of financial comfort when

retired

Lowering expectations of financial comfort prior to retirement

Finding a better-paid job

Being more involved with my

finances

Discussing my finances with my spouse or

partner (more often)

Learning more about saving and

investing

(%) Top 10 responses

10 | Financial Disruptions Survey

26% of “Disrupted Americans” now check the performance of their investments more frequently

23

22

7

8

10

10

15

17

18

26

I do not have any investments for the long-term/retirement

I have not changed the way I manage my investments for the long-term/retirement

I am more likely to sell investments if the value drops

I have changed my investment portfolio to have higher risk/higher potential rewards

I manage a greater proportion of my investments by myself, using an online investment platform

I check the performance of my investments when on the go

I have changed my investment portfolio to have lower risk/lower potential rewards

I am more likely to hold investments for longer, even if the value fluctuates

I discuss my investments with a financial planner or advisor more frequently

I check the performance of my investments more frequently

Q450: As a result of this event or situation, in which of the following ways, if any, have you changed the way you manage your investments for the long-term/retirement? Multiple responses were allowed

Base: All; N=2,019

(%)

11 | Financial Disruptions Survey

10

11

11

11

14

15

19

26

36

44

With the benefit of hindsight, saving rates would have been higher and started earlier

Q600: Which one of the following do you think would most help people like you to 'prepare for the unexpected', and prevent unexpected events or situations from negatively affecting their financial plans for the long-term/retirement?. Multiple responses were allowed

Base: All; N=2,019; All experiencing each situation/event; n varies between 126 (Education) and 535 (Loss of Employment/Lower Paid Job)

…saved a greater proportion of my income

…started saving or investing for the long-term/retirement earlier

…educated myself/learned more about long-term and retirement saving/investing

…consulted a financial planner or advisor (more)

…paid closer attention to my investment portfolio

…held more of my long-term/retirement money as savings, rather than investments

…discussed my financial plans for the long-term/retirement with my spouse/partner (more frequently)

(%) I would have…

…purchased (more) insurance (income protection, critical illness, mortgage payment, etc.)

…not been so reliant on my spouse/partner for financial support

…held more of my long-term/retirement money as investments, rather than savings

APPENDIX: RESEARCH METHOD

13 | Financial Disruptions Survey

RESEARCH METHOD

This survey was conducted by Head Solutions Group on behalf of TD Ameritrade Holding Corporation1.

The statistical margin of error for the total sample of N=2,019 U.S. based adults within the target group is +/- 2.2 %2. This means that, in 19 out of 20 cases, survey results will differ by no more than 2.2 percentage points in either direction from what would have been obtained by the opinions of all target group members in the U.S. Sample was drawn from major regions in proportion to the U.S. Census. 1 Head Solutions Group (U.S.) Inc. and TD Ameritrade Holding Corporation are separate, unaffiliated companies and are not responsible for each other’s products and services 2 Assumes responders are the same as non-responders Note: Percentages may not add up to 100 due to rounding.

New England

6%

Mid-Atlantic

17%

South

24%

Southwest

10%

West

20%

WHO 2,019 American adults.

All experienced an event or situation that had a negative effect on their financial plans

for the long –term /retirement

WHAT Online Survey

WHEN November 21

to 29, 2014

Average time to complete survey:

15 minutes

CONDUCTED BY Head Solutions Group

on behalf of TD Ameritrade Holding

Corporation1

50% Male

50% Female

Midwest

22%

14 | Financial Disruptions Survey

About TD Ameritrade Holding Corporation Millions of investors and independent registered investment advisors (RIAs) have turned to TD Ameritrade’s (NYSE: AMTD) technology, people and education to help make investing and trading easier to understand and do. Online or over the phone. In a branch or with an independent RIA. First-timer or sophisticated trader. Our clients want to take control, and we help them decide how – bringing Wall Street to Main Street for more than 39 years. An official sponsor of the 2016 U.S. Olympic and Paralympic Teams, as well as an official sponsor of the National Football League for the 2014, 2015 and 2016 seasons, TD Ameritrade has time and again been recognized as a leader in investment services. Please visit TD Ameritrade's newsroom or www.amtd.com for more information. Brokerage services provided by TD Ameritrade, Inc., member FINRA (www.FINRA.org)/SIPC (www.SIPC.org) Source: TD Ameritrade Holding Corporation About Head Research Head Research is a division of Head Solutions Group (U.S.) Inc., a leading market research partner for Financial Services companies in North America. With offices in New York, Toronto and Montreal, Head delivers the deep customer insights that increase institutional knowledge and propel business action. TD Ameritrade and Head Research are separate and unaffiliated firms and are not responsible for each other’s services or policies. Methodology $2.5 trillion loss estimated as follows: On average, a survey respondent experiencing a disruptive event will save almost $300 less per month for a period of almost five years, meaning their savings pot will be $16,000 less than it otherwise would have been. Two-thirds (66%) of survey respondents (or 158 million Disrupted Americans out of a possible 240 million US adults2) experienced these sorts of disruptions over the course of their lives, translating to a National loss of $2.5 trillion.