Understanding Tomorrow’s Investors -...

Generation Z and Money Survey

Understanding Tomorrow’s Investors June 20, 2012

Table of Contents Research Method 3

Meet Gen Z 4

Financial Product Usage and Financial Situation 9

Attitudes and Behaviors Toward Saving and Money Management 19

Attitudes, Planning and Saving for Education 29

Attitudes, Planning and Saving for Retirement 41

Appendix: Study Sample Characteristics 48

TD Ameritrade, Inc., member FINRA/SIPC/NFA, is a subsidiary of TD Ameritrade Holding Corporation. TD Ameritrade is a trademark jointly owned by TD Ameritrade IP Company, Inc. and The Toronto-Dominion Bank. © 2012 TD Ameritrade IP Company, Inc. All rights reserved. Used with permission.

2

Research Method •  An online survey was conducted with N = 2,001

U.S. residents from April 27 to May 1, 2012, by Head Research on behalf of TD Ameritrade, Inc.:1

–  Sample was drawn from major regions in proportion to the U.S. Census:

•  New England (5%), Mid-Atlantic (16%), South (25%), Midwest (22%), Southwest (12%), West (20%)

•  In each region, approximately half of the respondents were male and half were female

–  Two primary groups were included:

•  Generation Z 13- to 22-year-olds (born 1990 to 1999): n = 1,001 (“Gen Z”)

•  Parent(s) of a 13- to 22-year-old Generation Z child: n = 1,000 (“Parents”) Note: The words “Parent(s)/Guardian(s)” were used throughout the survey questionnaire; however, to simplify reporting, the words “Parent(s)/guardian(s)” have sometimes been replaced with “Parent(s)”

–  The survey took each participant 12 minutes to complete, on average

–  The statistical margin of error for results from major groups in this study (i.e., Generation Z and Parents) is +/- 3.1%.2 This means that, in 19 out of 20 cases, survey results for each group will differ by no more than 3.1% in either direction from what would have been obtained by the opinions of all target group members born in the U.S.

1 Head Solutions Group (U.S.) Inc. and TD Ameritrade, Inc. are separate, unaf!liated companies and are not responsible for each other’s products and services

2 Assumes responders are the same as non-responders and that panelists are the same as non-panelists

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 36 years. An of!cial sponsor of the 2012 U.S. Olympic Team, TD Ameritrade has time and again been recognized as a leader in investment services. Please visit the TD Ameritrade newsroom or www.amtd.com for more information. " Brokerage services provided by TD Ameritrade, Inc., member FINRA (www.FINRA.org) /SIPC (www.SIPC.org ) /NFA (www.nfa.futures.org) 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 of!ces in New York, Toronto, and Montreal, Head delivers the deep customer insights that increase institutional knowledge and propel business action.

3

Meet Gen Z

4

52 57

48

46 37 39

27

23

30

68

66

62

60 46

45

35

34 28

0

20

40

60

80

It's more important to be accurate than fast

I'm accepting of different ideas/opinions

I'm #exible/easy going

I'm ambitious

Prefer doing things myself My parents worry/worried about money a lot

I'm impatient

My parents talk/talked about having too much

debt

I prefer electronic vs. in person communication

with friends

Gen Z Parents

To what extent do you agree or disagree with each of the following statements?

Chart shows % of respondents who agree with each

statement (i.e., selected 7, 8, 9 or 10 on an 11-point agreement scale)

•  The following chart shows how Gen Z and Parents of Gen Z children feel about a variety of issues: –  It is clear that Gen Z and Parents

differ signi!cantly in a number of fundamental ways – these data may explain some of the differences with respect to money and saving covered in this report

–  Gen Z rate themselves as being accurate, accepting of other ideas/ opinions, #exible/easygoing and ambitious, collaborative (i.e., more prefer group activities) and patient. Gen Z also claim their parents talked and worried about money/debt less than Parents say their parents did

–  Interestingly, one area Gen Z and Parents did not differ on is that of electronic communications. Gen Z are no more likely to prefer electronic communications for interpersonal relationships than Parents

Personal Style of Gen Z vs. their Parents

Base: Gen Z (n = 1,001), Parents (n = 1,000)

5

•  Gen Z and Parents of Gen Z children were asked to indicate their biggest concerns about the economy: –  Without any prompting, Gen Z and Parents are generally worried about the same things: Their No.1

concern is jobs and unemployment, mentioned spontaneously by one out of every four survey respondents

–  Double the number of Gen Z respondents (20%) than Parents (11%) indicate they have no particular worries

Concerns about Today’s Economy


GEN Z PARENTS

Jobs/unemployment

Nothing in particular/no worries

Gas/oil prices

Not having enough money

Inflation/rising cost of living

Market failing/crash

Economy getting worse

National debt

26%

20%

8%

8%

6%

5%

5%

5%

Jobs/unemployment 25%

Nothing in particular/no worries

Gas/oil prices

Not having enough money

Inflation/rising cost of living

Market failing/crash

Economy getting worse

National debt

11%

11%

10%

9%

8%

8%

6%

Note: responses given at a frequency of less than 5% are not shown. Respondents were allowed to give multiple responses.

6

16 17

28 31 32 33 33 35

39 39 40

0 10 20 30 40 50

Not concerned about anything Credit card debt

Making poor !nancial choices Counting on social security

Saving for retirement Affording healthcare

Financially support parents Ability to buy a home

Large student loan balance Affording college

Having identity stolen

% of Respondents

25 28 28

31 32 33 34 34 36 37

42

0 10 20 30 40 50

Having identity stolen Credit card debt

Financially support parents Making poor !nancial choices

Affording healthcare Saving for retirement Ability to buy a home

Counting on social security Large student loan balance

Not concerned about anything Affording college

% of Respondents

How concerned are you about each of the following?

•  Gen Z were asked how concerned they were about a series of topics using an 11-point scale. Parents were asked to indicate how concerned they were about these same topics when they were their Gen Z child’s age. The following graphs show the percent of respondents who selected the top three scale points for each issue, meaning they were very concerned about these issues: –  It is interesting to note that while Gen Z and Parents are/were both most concerned about affording college and

having a large student loan balance when they !nish(ed) school, Gen Z are equally worried about having their identity stolen. Saving for retirement preoccupies 1/3 of Gen Z (as it did Parents when they were the same age).

–  It is also worth noting that when Parents were their child’s age, 37% weren’t concerned about any of these issues, whereas only 16% of Gen Z aren’t concerned by them.

Top Concerns of Gen Z and Parents

GEN Z PARENTS

How concerned were you about each of the following?


7

•  Gen Z answered the open-ended question: “If you were given $500 today, what would you do with it?” –  It is interesting that more said they would save (55%) than spend (32%) it – not surprisingly, “good

budgeters” were more likely to say they’d save it than “poor budgeters” (59% vs. 52%) and “poor budgeters”1 were more likely to say they’d spend it than savers (37% vs. 26%)

–  One out of every 10 Gen Z (11%) spontaneously indicated they would use this money to pay for college

How Gen Z Would Spend $500

Base: Gen Z (n = 1,001) A "good budgeter," as de!ned in this study, is a person who said they have a budget and follow it carefully. A “poor budgeter" is a person who says they do not know how to budget, does not have a budget or has a budget, but doesn’t follow it carefully.

Would save it (no specific vehicle)

Would spend it

College savings

Living necessities (e.g., rent, utilities, food)

Give it to my parent(s)/guardian(s)/family

Use it to pay bills/debt

55%

32%

11%

9%

8%

5%

8

Financial Product Usage and Financial Situation

9

Financial Product Usage: Current Usage

Base: Gen Z (n = 1,001)

“Which of the following !nancial products, if any, do you have?”

27

0

3

3

3

3

4

6

16

26

40

56

0 10 20 30 40 50 60 70 80

None of the above

I don't know

Other

IRA (Traditional or ROTH)

Custodial IRA (for a minor)

Other vehicles like Money Market, etc.

401(k) or 403(b)

529 College Savings Plan

Student loan(s)

Credit card

Checking account

Savings account

% of Respondents

•  Gen Z were asked which !nancial products they currently have: –  Most Gen Z have a savings (56%) or

checking (40%) account – 32% have both

–  One in four Gen Z have a credit card and 16% have a student loan

–  19% of Gen Z have an investment/savings product (i.e., 529 College Savings Plan, 401(k)/403(b), Other vehicles like Money Market, etc., Custodial IRA/IRA/ROTH)

–  More than one-quarter (27%) of Gen Z have none of the !nancial products listed

10

“Which of the following !nancial products, if any, do you have?”

Financial Product Usage: Gen Z Child

Base: 13- to 15-year-olds (n = 235), 16- to 18-year-olds (n = 333), 19- to 22-year-olds (n = 433)

13

2

4

4

5

6

6

29

41

62

66

32

3

1

2

1

1

6

7

17

28

54

45

3

2

2

3

4

6

6

10

16

41

0 20 40 60 80

None of the above

Other

IRA (Traditional or ROTH)

Custodial IRA (for a minor)

Other vehicles like money market, etc.

401(k) or 403(b)

529 College Savings Plan

Student loan(s)

Credit card

Checking account

Savings account

% of Respondents

13- to 15-year-olds 16- to 18-year-olds 19- to 22-year-olds •  The following chart shows

!nancial products used by various Gen Z age groups: –  Not surprisingly, older age groups

are significantly more likely to have financial products than younger age groups

•  Although not shown on this chart, it is interesting to note that: –  23% of 19- to 22-year-olds claim not

to have either a checking or savings account – this number rises signi!cantly to 41% for 16- to 18-year- olds and 55% for 13-to 15-year-olds

–  Good budgeters (i.e., those who have a budget and follow it closely) are significantly more likely to use all financial products than those who are poor budgeters or those who don’t budget at all

11

36

50

14

0

10

20

30

40

50

60

Yes I know what a credit score is but don't know mine

I don't know what a credit score is

% o

f Res

pond

ents

Credit Cards: Credit Scores •  Gen Z who indicated they had a credit card (26% of the cohort) were asked if they

know what their credit score is – half indicated they know what one is but don’t know their own score (50%), while one-third said they actually know it:

–  14% of Gen Z who have a credit card do not know what a credit score is

Base: Gen Z who indicated they have a credit card (n = 260)

You indicated you have a credit card. Do you know what your credit score is?

12

3 5

12

7

10 11

8

5 3 3

6

3

23

0

10

20

30

0 1 2 3 4 5 6 7 8 9 10 11 12

% o

f Res

pond

ents

Credit Cards: Cyclical Debt •  The majority of Gen Z with credit cards carry a balance on their credit cards for six

months of the year, on average (mean)

•  Only 23% pay their credit card balance in full every month:

–  Although not shown on this chart, “good budgeters”1 and those who are !nancially most independent are also most likely to pay off their credit cards every month – 28% of them indicated they pay off their cards every month

Base: Gen Z who indicate they have a credit card (n = 260) A "good budgeter," as de!ned in this study, is a person who said they have a budget and follow it carefully. A “poor budgeter" is a person who says they do not know how to budget, does not have a budget or has a budget but doesn’t follow it carefully.

How many months of the year do you pay your credit card off in full when you receive your statement?

56% carry a balance for six months of the year or more

23% pay their credit card off

every month

13

2,000

500 1,034

8,000

0

2,000

4,000

6,000

8,000

Gen Z 13- to 15-year-olds

16- to 18-year-olds

19- to 22-year-olds

Ave

rage

Inco

me

(Med

ian)

in $

Income: Amount and Source •  Overall, the average (median) income for Gen Z is $2,000 per year; however, this

varies significantly by age – 19- to 22-year-olds have a higher average income due to the fact that more than half of them work: –  Not surprisingly, the primary source of income varies signi!cantly as a function of age

Base: Gen Z (n = 1,001), 13- to 15-year-olds (n = 235), 16- to 18-year-olds (n = 333), 19- to 22-year-olds (n = 433)

Approximately how much income did you have from all sources in 2011, before taxes?

PRIMARY SOURCES OF INCOME BY AGE GROUP 19- to 22-year-olds 53% - income from working 18% - allowance from parent(s)/guardian(s)/grandparent(s) 9% - grants, teaching assistant, fellowships, scholarships 7% - loans from !nancial institutions

16- to 18-year-olds 46% - allowance from parent(s)/guardian(s)/grandparent(s) 30% - income from working 8% - loans from family members 6% - trust fund or inheritance

13- to 15-year-olds 52% - allowance from parent(s)/guardian(s)/grandparent(s) 23% - income from working 10% - loans from family members 5% - trust fund or inheritance

14

15

30

55

4 15

81

9

28

63

26

39 35

0

25

50

75

100

Child Pays (Independent)

Child Shares (Semi-Independent)

Someone Else Pays (Dependent)

% o

f Res

pond

ents

Gen Z 13- to 15-year-olds 16- to 18-year-olds 19- to 22-year-olds

Financial Responsibility: Basic Living Expenses •  Overall, 55% of Gen Z are dependent on someone else paying their basic living

expenses – fewer are independent (15%) or semi-independent (30%), meaning they either pay all basic living expenses themselves (independent) or share them with someone else (semi-independent): –  Those who are most often independent or semi-independent are between 19 and 22 years

old – 26% of this age group claim they are paying for basic living expenses themselves, 39% say they share them with someone else and 35% say someone else pays these expenses

–  Some 13- to 15- year- olds indicate they pay all basic living expenses (4%) or share them (15%) with someone else

Who pays for your basic living expenses like rent, food, clothing, transportation, etc.?


15

Financial Responsibility: Education Expenses •  When Gen Z were asked who pays for school, tuition and books, the results were very

similar to those for basic living expenses, with half of the generation depending on someone else to pay:

–  As with basic living expenses, there is a positive correlation between the age of the child and the amount of “!nancial independence” expressed; speci!cally, the older the child, the more likely he/she is to be paying for his/her own education expenses

18 22

51

9 6 10

75

9 12

24

56

8

30 26 34

10

0

10

20

30

40

50

60

70

80

90




Not applicable / does not have education expenses

% o

f Res

pond

ents


Who pays for your school tuition, books and other supplies?


16

35

28

37

14

23

63

30 29

41

51

29

20

0

10

20

30

40

50

60

70




% o

f Res

pond

ents


Financial Responsibility: Discretionary Expenses •  As with other expenses Gen Z have, “financial independence” increases

with age; however, surprisingly, only 51% of Gen Z are paying for their own entertainment and other discretionary expenses even when they are 19 to 22 years old

Who pays for your discretionary and entertainment expenses like movie/concert tickets, cell phone, etc.?


17

•  When basic living expenses are being shared with someone else, Gen Z are most commonly sharing them with parents; however, others are also contributing – the same people are involved in sharing education and discretionary expenses as well:

Financial Responsibility: Who is Paying for Gen Z?

•  When basic living expenses are being paid by someone else, they are most commonly being paid by parents; however, others are also paying – the same people are involved in paying education and discretionary expenses as well:

Shared with parent(s)/guardian(s)

Shared with spouse

Shared with roommate(s)

26%

6%

4%

Shared with grandparent(s)

Shared with another relative(s)

3%

3%

Parent(s)/guardian(s) pays most/all

Don’t know who pays

Grandparent(s) pays most or all

Spouse pays most or all

44%

6%

3%

2%

Another relative(s) pays most or all 2%

Someone else pays most or all 2%

Roommate(s) pays most or all 1%

Base: Gen Z (n = 1,001)

18

Attitudes and Behaviors Toward Saving and Money Management

19

18 6

76

0

20

40

60

80

Unimportant Neutral Important % o

f Res

pond

ents

Importance of Saving Money •  Overall, the strong majority of Gen Z believe it’s

important to save money

•  Although not shown on this chart:

–  Importance does not vary signi!cantly by age groups within Gen Z

–  Those whose parents spoke extensively with them about saving money (80%) are signi!cantly more likely to think saving is important than others (69%)

–  Those who feel saving is important are signi!cantly more likely to be good budgeters (82%) than poor or non-budgeters (71%)

–  Females (83%) tend to place more importance on saving than males (67%)

Base: Gen Z (n = 1,001)

At the present stage of your life, how important or unimportant is saving money to you?

20

47

35

10 8

40 35

16

9

46

37

11 6

52

34

7 7

53

39

6 2

0

10

20

30

40

50

60

Yes, extensively Yes, somewhat Yes, not very much No

% o

f Res

pond

ents

Gen Z 13- to 15-year-olds 16- to 18-year-olds 19- to 22-year-olds Parents

Talking About Saving Money •  Most (82%) Gen Z indicate their parents have talked to them about saving money either

extensively (47%) or somewhat (35%) – Parents’ reports of how extensively they have discussed savings with their Gen Z children are in alignment with these !ndings:

–  19- to 22-year-olds (52%) are signi!cantly more likely to have spoken extensively to their parents about this subject than younger Gen Z children

–  Although not shown on this chart, those who are good budgeters (67%) are much more likely to have had extensive discussions with their parents about saving money than others

Base: Gen Z (n = 1,001), 13- to 15-year-olds (n = 235), 16- to 18-year-olds (n = 333), 19- to 22-year-olds (n = 433), Parents (n = 1,000)

Have your parent(s)/guardian(s) ever spoken with you about saving money? Have you ever spoken to your child about saving money?

21

Budgeting Habits •  Overall, 41% of Gen Z respondents say they have a budget and carefully follow it:

–  Those who regularly follow their budget tend to be married females (66%), children who pay for their expenses (62%), those who are employed (56%), those who live without their parents (59%) and 19- to 22-year-olds (51%)

–  Those who don’t know how to budget tend to be 13- to 15-years- old (11%) and those who have others paying for their living expenses (9%)

–  A signi!cant proportion of 13- to 15-year-olds (28%) and 16- to 18- year-olds (22%) feel they are too young to have a budget, and 13% of Gen Z generally feel they don’t earn enough money to have one


Which of the following best describes you?

41

24

16 13

6

28

20

28

14 11

37

24 22

12 6

51

26

6 13

3

0

10

20

30

40

50

60

I have a budget and follow it carefully

I have a budget but don't really follow it that closely

I'm too young to have a budget

I don't earn enough money to have a budget

I don't know how to budget

% o

f Res

pond

ents


22

Saving History: Amount Currently Saved •  Overall, Gen Z have $300 saved so far, on average (median); however, the amount of

money saved is highly correlated with the degree to which a youngster is responsible for his or her own expenses – those who are more responsible for expenses have saved more:

–  Age and “!nancial independence” are related but not 100% correlated – for example, 19- to 22-year-olds have an average (median) of $510 saved, whereas those who are independent/pay for most or all of their basic living expenses, have $1,200 saved on average

–  Not surprisingly, those who claim to follow a budget regularly ($950 saved on average) have signi!cantly more savings than those who are poor budgeters/don’t budget at all ($100 saved on average)

Base: Gen Z (n = 1,001), Dependent (n = 551), Semi-Independent (n = 298), Independent (n = 152)

How much money have you put away for savings so far?

300

100

600

1,200

0

200

400

600

800

1,000

1,200

1,400

Gen Z Dependent (Someone else pays)

Semi-Independent (Shares expenses)

Independent (Pays themselves)

Ave

rage

(Med

ian)

in $

23

Savings: What Gen Z are Saving For

What, if anything in particular, are you saving for? (Note: Multiple responses allowed)

5

8

11

12

18

22

22

30

31

39

42

0 5 10 15 20 25 30 35 40 45

Other

Retirement

Wedding or other special life event

Nothing in particular

Home

Entertainment, not including vacation/travel/holidays

Vacation/travel/holidays

Computer, iPad, stereo, #at screen television, electronics

Car

Education/tuition/books, etc

Basic living expenses

% of Respondents

•  Overall, Gen Z who are saving tend to be saving for basic living expenses (42%), education (39%), purchase of a car (31%) and electronics (30%); however, what is being saved for is dependent on age: –  19- to 22-year-olds are more likely to

be saving for basic living expenses (51%), vacation/travel/holidays (29%), for a home (24%) or for a wedding or other special life event (14%) than younger age groups

–  13- to 15-year-olds are more likely to be saving with no particular goal in mind (18%) than older age groups

Base: Gen Z who say they have saved more than $0 (n = 750)

24

Knowledge of Finances, Saving and Investments •  Although there is room to learn, Gen Z and Parents both feel reasonably comfortable

with their knowledge about !nances, savings and investments – on average, Gen Z feels they would earn a modest grade of 64 out of a 100, if they were given a test on this subject:

–  Parents agree and indicated that their Gen Z children would score, on average, 68 out of 100

–  Parents feel signi!cantly more knowledgeable than Gen Z, believing, on average, that they would score 79 out of 100

Base: Gen Z (n = 1,001), Dependent (n = 551), Semi-Independent (n = 298), Independent (n = 152) Parents (n = 1,000)

If you/your child were given a “pop quiz” today about how much you know about !nances, saving and investments, what do you think your score out of 100 would

be?

64 68 59 62

67

79

0

10

20

30

40

50

60

70

80

90

Gen Z

Parents (How they think

child would score)

13- to 15-year-olds

16- to 18-year-olds

19- to 22-year-olds

Parents (Self)

Ave

rage

(Mea

n) S

core

out

of 1

00

25

Primary Sources of Financial Knowledge

Where have you learned the most about !nancial responsibility and money management?

1

1

2

2

2

3

3

4

7

11

17

46

0 20 40 60

Other

Blogs from experts

Social media

On TV or Video on Demand

Newspaper, magazine, book, etc.

Financial/bank website

Financial advisor/banking specialist

Friends

Not applicable - I have no knowledge in this area

On my own

Teacher/guidance counselor/at school

Parent(s)/guardian(s)/relative(s)

% of Respondents

•  Almost half (46%) of Gen Z indicate they are learning about !nancial responsibility and money management from their parents: –  A signi!cant minority also indicate they

are either obtaining knowledge from a teacher/guidance counselor/at school (17%) or on their own (11%)

–  Few are learning about these subjects from friends, the media or !nancial websites

•  7% of Gen Z indicate they have no knowledge at all of !nancial responsibility and money management: –  These are more often 13- to 15-year-

olds (14%) versus other older age groups (6%)

Base: Gen Z (n = 1,001)

26

What Gen Z Wants to Learn More About

Which one of the following things about money, if any, do you wish you/your child knew more about?

5

1

4

5

9

6

8

5

22

25

10

15

1

6

6

6

7

7

10

11

14

18

0 10 20 30

None of the above

Other

How to build a diversi!ed investment portfolio

Which saving and investment vehicles to use

How to establish a savings goal

How to establish a credit rating

How to manage debt

How much money I need to retire

How to budget so I can save

How to balance spending and saving

How to make savings grow

% of Respondents

Gen Z Parents •  Gen Z and Parents agree on the top three things they wish they/their child knew more about: –  How to make savings grow

–  How to balance spending and saving

–  How to budget in order to save

•  Parents think “understanding balancing spending and saving” and “learning how to budget to save” are most important, whereas Gen Z wish they knew more about “how to make savings grow” !rst and foremost

Base: All (N = 2,001), Gen Z (n = 1,001), Parents (n = 1,000)

27

12 14

74

0

20

40

60

80

Yes Don't know No

% o

f Res

pond

ents

Gen Z Stock Purchases •  Very few (12%) Gen Z indicate they have purchased stocks before – the strong majority

(74%) have not purchased any yet or don’t know if they have any (14%): –  19- to 22-year-olds, those who are employed either full time or part time during the academic year, Gen Z who

either pay for or share their expenses and “good budgeters” are signi!cantly more likely to have purchased stocks than others

Base: Gen Z (n = 1,001)

Have you ever purchased a share of stock?

28

Attitudes, Planning and Saving for Education

29

11 6 7

15

61

14

2 4

12

68

12 7

10

27

44

0

10

20

30

40

50

60

70

Very unimportant Somewhat unimportant Neutral Somewhat important Very important

% o

f Res

pond

ents

Gen Z

Importance for Gen Z child from Parent perspective How Parent felt at their Gen Z child's age

Importance of a Higher Education •  The majority of Gen Z believe obtaining a higher education is very important in order for

them to be successful in the future:

–  Parents strongly agree that a higher education is important for their Gen Z child and indicate a higher education is signi!cantly more important now than it was when they were young


How important or unimportant do you feel it is (for your child) to obtain a higher education in order to be successful in the future? How important was it when you were your child’s age?

30

18 19

63

16 18

66

0

10

20

30

40

50

60

70

Unlikely or won't Neutral Likely, will, in or have

% o

f Res

pond

ents

Undergraduate College (B.A., B.Sc.)

Graduate College (Master's, Ph.D., Doctor, Lawyer, Veterinarian, Chartered Accountant, Engineer, etc.)

Likelihood of Going to College •  A majority of Gen Z plan to attend, are already in or have completed undergraduate or

graduate college. A signi!cant minority are unsure whether they will, are unlikely to or won’t pursue an undergraduate (37%) or graduate (34%) college degree:

–  Those who say they are unsure whether they will, unlikely to or won’t attend college tend to be younger, already working, part-time students and those who are not responsible for paying their own expenses

Base: Gen Z (n = 1,001)

How unlikely or likely are you to pursue an undergraduate/graduate degree?

31

55 47

40

25 18

0

10

20

30

40

50

60

70

Assistance from parents

Assistance from scholarships, fellowships or

grants

Myself through working during college

Assistance from student loans

Assistance from grandparents/relatives

% o

f Res

pond

ents

Higher Education: How Gen Z Pays •  Those who answered that they were somewhat or more likely to complete an

undergraduate or graduate college degree (i.e., 5 or more on a 7-point scale) were asked how they expected to pay for, are paying for or paid for their education.

•  Most Gen Z children indicate their college education will be or was paid for by their parents (55%) – signi!cantly fewer believe they will have, are having or did have their college paid for by scholarships, fellowships or grants (47%), from working (40%), from student loans (25%) or through assistance from grandparents or other relatives (18%)

Base: Gen Z likely to, already in or who have completed undergraduate or graduate level college (n = 805)

How are you, do you expect to or did you pay for college?

32

58

39

3

0

10

20

30

40

50

60

Yes No Don't remember

% o

f Col

lege

Edu

cate

d P

aren

ts

43

57

0

10

20

30

40

50

60

Yes No %

of C

olle

ge E

duca

ted

Par

ents

Higher Education: Parents’ College Loans •  A signi!cant proportion of Parents are still paying back their own college debt – 58% of

Parents indicate they took loans to pay for their own college education and, of these, 43% are still paying them back

•  51% of Parents who are still paying back their own college loans also have a 529 College Savings Plan to support their Gen Z child’s education

Base: Parents who went to college (n = 459) Parents who took loans to pay for their college (n = 265)

Did you take loans to pay for your own college education?

Are you still currently paying these loans back?

51% also have a 529 for

their Gen Z child

33

35 32

17 16

31 33

21 15

32 33

19 16

40

30

14 16

42 40

12 6

0

10

20

30

40

50


% o

f Res

pond

ents


Talking About Saving Money for College •  Overall, 67% of Gen Z indicated their parents have spoken with them somewhat or

extensively about saving money for college: –  Signi!cantly more 19- to 22-year-olds indicate their parents have talked extensively about saving money for college

than younger Gen Z children

–  Signi!cantly more Parents (82%) indicate they have talked to their children about planning/saving money for college than Gen Z (67%) indicate they’ve talked to their parents about the subject

–  Good budgeters, those who work part time during the academic year and those who pay or share their living expenses are more likely to have had extensive talks with their parents about saving money for college

–  Although not shown on this slide, Gen Z indicates their parents have talked to them signi!cantly more about saving money in general (82% have talked about it) than for saving for college (67% have talked about it) – but they’ve talked about saving for college signi!cantly more than about saving money for retirement (38% have talked about it)


Have your parents ever spoken with you (have you spoken to your child) about saving money for college?

34

37

36

45

46

64

23

29

35

36

50

0 10 20 30 40 50 60 70

I considered/am considering/delayed/going to college due to how expensive it is/was

Top tier university is worth the cost because it prepares students better than state/community schools

Top tier university is worth the cost as its reputation helps secure employment

University prepares students better for the workforce than technical school

Going to college in general is worth the cost as it helps secure employment

% of Respondents Agreeing (Top 4 points on an 11- point scale)

Gen Z Parents


•  Respondents were asked to indicate the degree to which they agree or disagree with each of the following statements on an 11-point scale ranging from “0 - strongly disagree” to “10 – strongly agree.” The following chart shows the percent of respondents who agreed with each statement (i.e., answered 7, 8, 9 or 10): –  Gen Z and Parents disagree about the importance of a “big name” college education. Gen Z are less sure it will

help secure employment or that it provides a better preparation than state/community schools

–  Gen Z are also signi!cantly less concerned than parents that they will delay college due to its cost

– Gen Z may need a wakeup call

Attitudes Toward College Education


35

52

22 16

6 4

30 20

25 18

7

0

10

20

30

40

50

60

70

Never heard of them before today

I've heard the name only I know a little I know a fair amount I know a great deal

% o

f Res

pond

ents

Gen Z Parents

Knowledge of 529 College Savings Plans •  The majority of Gen Z (74%) have never heard of a 529 College Savings Plan (52%) or are

only familiar with the name (22%) –  Those living with their parents and those under 19 years old are signi!cantly less likely to have heard about 529

College Savings Plans than others

•  A surprising proportion of Parents, almost half (49%), have never heard of a 529 College Savings Plan (30%) or only know the name (20%) –  Parents from lower-income households (i.e., under vs. over $100K per year) and those with less than college

educations are more likely NOT to have heard of them


Which of the following best describes how much or little you know about 529 College Savings Plans?

36

Talking About 529 College Savings Plans •  Parents were asked if they have spoken to their Gen Z children speci!cally about 529

College Saving Plans: –  Not surprisingly, based on the number of Parents who weren’t aware of 529 College Savings Plan, only 39% of

Parents indicate they have spoken to their child “extensively” (15%) or “somewhat” (24%) about 529 College Saving Plans

–  The majority of Parents (61%) indicated they have either not talked to their children at all (43%) or have not talked to them very much (18%) about 529 College Savings Plans

Base: Parents who didn’t say they had not heard about 529 College Savings Plans before the survey (n = 706)

Have you ever spoken with your child about 529 College Savings Plans?

15

24

18

43

0

10

20

30

40

50


% o

f Res

pond

ents

37

32

68

0

10

20

30

40

50

60

70

Yes No / Don't know

% o

f Res

pond

ents

529 College Savings Plan Usage •  Only 32% of Parents indicate they have a 529 College Savings Plan or other account to

save or invest speci!cally for college for their child, which further suggests the importance of informing the public of the existence and potential bene!ts of these types of products

Base: Parents (n = 1,000)

Do you/did you have a 529 College Savings Plan or other college savings account for your child?

38

59 58

44 41

13

0

10

20

30

40

50

60

70

Assistance from parents

Assistance from scholarships,

fellowships or grants

Assistance from student loans

Child will pay through working during college

Assistance from grandparents / relatives

% o

f Res

pond

ents

Higher Education: How Parents Intend to Pay •  Parents who have a child that is not in college and who do NOT have a 529 College

Savings Plan were asked how they expect to pay for their Gen Z child’s education should they end up going to college

•  Most parents believe college will be paid for by themselves (59%) and through assistance from scholarships, fellowships or grants (58%) – a signi!cant minority also believe assistance will come from student loans (44%) and from their child working (41%)

–  Very few parents believe funding for their Gen Z child’s education will come from their child’s grandparents or other relatives

Base: Parents whose Gen Z child is not in college and who do not have a 529 College Savings Plan for their child (n = 589)

If your child ends up going to college, how do you expect his/her college education will be paid for?

39

25 30

37 41

56 62

66 70 71

82 85 90 92 95 97 98 98 98 98 99 99 100

20

30

40

50

60

70

80

90

100

1 year old or

less

2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22

Cum

ulat

ive

% o

f Res

pond

ents

529 College Savings Plan: When Saving Started •  Parents of Gen Z who said they have a 529 College Savings Plan were asked how old their

child was when they !rst started contributing to it – 82% of Parents indicate they started by the time their child was 10 years old, 56% by the time their child was 5 years old (which was also the average/median age started): –  When asked when they would have liked to start contributing to a 529 College Savings Plan for their child, Parents

said they would have liked to start three years earlier, on average (median)

Base: Parents who have a 529 College Savings Plan for their child (n = 284) Parents who started saving after a child’s !rst birthday (n = 187)

Age of child When Parent First Started Contributing to a 529 College Savings Plan

40

Attitudes, Planning and Saving for Retirement

41

43

35

37

32 26

39

71

61

51

36

23

16 0

20

40

60

80

You can never start saving too early for retirement

I/my child will not be able to count on Social Security when

I retire so I need to save myself

When I think about retirement it means I will no longer be

working for money

I have/my child has too many other priorities to start thinking

about retirement

I am/my child is too young to start saving for retirement

I/my child will have an inheritance so I don't need to

worry about saving for retirement

Gen Z Parents


•  Gen Z and Parents have very different ideas with respect to retirement: –  Respondents were asked to

indicate the degree to which they agree or disagree with each of the following statements on an 11-point scale ranging from “0 – strongly disagree” to “10 – strongly agree.” The following chart shows the percent of respondents who agreed with each of the statements (i.e., answered 7, 8, 9 or 10).

–  Signi!cantly more Parents than Gen Z believe you can never start saving too early for retirement and that social systems will have collapsed by the time Gen Z is ready to retire.

–  Signi!cantly more Gen Z indicate they don’t need to save for retirement as they are expecting an inheritance.

–  Signi!cantly more Parents believe retirement means they will no longer be working.

Saving for Retirement: Attitudes


Note: More Gen Z who are under 19 years old feel this

way – more Parents feel under 19 years old is too

young as well

42

17 21

18

44

11 17

20

52

18 21

16

45

19 24

19

38

18

31

22

29

0

10

20

30

40

50

60


% o

f Res

pond

ents


Talking About Saving Money for Retirement •  38% of Gen Z indicate their parents have spoken with them somewhat (21%) or

extensively (17%) about saving for retirement; signi!cantly more Parents (49%) indicate they have had discussions of this nature with their children:

–  As with other discussions about saving and !nances, discussions of this nature are signi!cantly more likely to occur with older children than younger ones

–  Although not shown on this slide, Gen Z indicates their parents have talked to them signi!cantly less about saving for retirement (38% have talked about it) than about saving money in general (82% have talked about it) or saving for college (67% have talked about it)


Have your parents ever spoken with you (have you spoken to your child) about saving money for college?

43

25

21

0

5

10

15

20

25

30

Gen Z Parents

Ave

rage

(Med

ian)

Age

Saving for Retirement: When You Should Start •  Gen Z believe they should start saving for retirement at age 25, on average (median).

Although not that much different from Gen Z, Parents indicate children should start saving for retirement at age 21 on average (median), four years earlier than what Gen Z believes:

–  16% of Gen Z and 8% of Parents do not know what age you should start staving for retirement.

–  More than half of Gen Z (54%) have not started saving; those who have started saving (46%) for retirement have accumulated $3,000, on average (mean), and those who have started tend to be 19 to 22 years old and “good budgeters”.

At what age do you think you should start saving for retirement?

Base: Gen Z (n = 835), Parents (n = 919) who didn’t say “don’t know”

44

14 9

77

0

20

40

60

80

Yes Don't know No

% o

f Res

pond

ents

Saving for Retirement: Custodial IRAs •  Relatively few Parents (14%) have custodial IRAs for their children:

Base: Parents (n = 1,000)

Do you have a custodial IRA account open for your child?

45

26 29 29

10 6

37

28

22

6 7

31 30 28

7 4

16

28

35

14

7

0

5

10

15

20

25

30

35

40

Never heard about it before today


% o

f Res

pond

ents


Knowledge of 401(k) •  45% of Gen Z indicate they know a little (29%), a fair amount (10%) or a great deal (6%)

about 401(k):

–  Although not shown on this chart, these results are in agreement with the !nding that 44% of Parents have discussed 401(k) with their children.

–  Not surprisingly, more 19-to 22-year-olds (56%) indicate they know a little (35%), a fair amount (14%) or a great deal (7%) about 401(k).

Base: Gen Z (n = 1,001), 13- to15-year-olds (n = 235), 16- to 18-year-olds (n = 333), 19- to 22-year-olds (n = 433)

Which one of the following statements best describes how much or how little you know about 401(k)?

46

26

35

25

9 5

39

33

19

7

2

30

36

22

9

3

16

36

30

11 7

0

5

10

15

20

25

30

35

40

45

Never heard about it before today


% o

f Res

pond

ents


Knowledge of IRAs •  More than 25% of Gen Z haven’t heard about IRAs:

–  Older children know more about them than younger ones, as with other !nancial issues.

–  Only 18% of 19-to 22-year-olds indicate they know a fair amount or a great deal about IRAs/custodial IRAs.

–  Although not shown on this slide, just more than one-quarter (27%) of Parents indicate they have discussed IRAs with their child either extensively (9%) or somewhat (18%); more than half (55%) have never discussed IRAs or custodial IRAs with their Gen Z child.

Base: Gen Z (n = 1,001), 13- to15-year-olds (n = 235), 16- to 18-year-olds (n = 333), 19- to 22-year-olds (n = 433)

Which one of the following statements best describes how much or how little you know about IRAs? Which of the following statements best describes how much or how little you know about custodial IRAs?

47

Appendix: Study Sample Characteristics

48

5

16

25 22

12

20

0

5

10

15

20

25

30

New England Mid-Atlantic South Midwest Southwest West

% o

f Res

pond

ents

Study Sample Characteristics

Base: All respondents (N = 2,001), Gen Z (n = 1,001), Parents (n = 1,000)

Region

45 41

14

0

10

20

30

40

50

Employed Students Unemployed

% o

f Res

pond

ents

Employment Status

24 33

43

0

10

20

30

40

50

13 to 15 years old 16 to 18 years old 19 to 22 years old

% o

f Gen

Z G

roup

Gen Z Age Groups

11

74

15

0

20

40

60

80

Gen Y Gen X Baby boomer

% o

f Par

ent G

roup

Parent Generations

69

6 17

8

0

20

40

60

80

High school or less

Technical degree

University degree or more

Prefer not to answer

% o

f Gen

Z G

roup

Education of Gen Z

30 21

46

3 0

20

40

60

80

High school or less

Technical degree

University degree or more

Prefer not to answer

% o

f Par

ent G

roup

Education of Parents

49

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