Young Women Far Outpacing Men, Despite Greater
Student Debt and Other Headwinds
A new study by Merrill conducted in partnership with Age Wave
finds that financial independence defines adulthood today (75
percent) – more so than the traditional milestones of employment
(61 percent), homeownership (30 percent) or starting a family (20
percent). However, due to mounting debt, higher costs of living and
other hurdles, 80 percent of early adults (ages 18-34) say it is
harder to become financially independent than it was for previous
generations. Seventy percent of baby boomers, the parents of most
of today’s early adults, agree. The study also found that despite
unique financial challenges, today’s women are progressing through
early adulthood faster and more successfully than men.
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Age Wave Early Adulthood Study (Graphic:
Business Wire)
“Early Adulthood: The Pursuit of Financial Independence” takes
an in-depth look at the experiences and challenges of contemporary
early adulthood: pressures of new roles and responsibilities;
pursuit of education and burden of student loans; the power of
intergenerational interdependence; and the ripple effects of debt.
The study revealed that one in four early adults with a retirement
account have already made an early withdrawal, primarily to pay off
credit card or student loan debt.
“Early adulthood is an exciting time of exploration and
self-discovery, but there are new choices and challenges as well.
Today’s young adults are encountering more complex financial paths
than prior generations, forcing them to postpone life milestones
and putting their ability to save for retirement at risk,” said
Lorna Sabbia, head of Retirement and Personal Wealth Solutions at
Bank of America. “To achieve financial independence, early adults
can focus on developing smart financial habits, identifying areas
to cut expenses to free up money for their goals, and seeking out
financial education and guidance.”
The study surveyed a nationally representative sample of more
than 2,700 respondents in the United States, with a focus on
Americans ages 18 to 34. Key findings include:
- Financial resources are the top
barrier to achieving goals. Early adults cite finances as their
No. 1 source of stress and top barrier to achieving their life
goals, such as buying a home and starting a family.
- Being debt-free defines financial
success. As early adults confront nearly $1.6 trillion in
cumulative student debt today1, 60 percent define financial success
as being debt-free, compared to only 19 percent who say financial
success is being rich.
- Early adults crave financial
guidance and role models. Seventy-two percent of early adults
say they would benefit from more financial guidance – more so than
those in any other life stage.
- Parental financial support is the
norm. Seventy percent of early adults have received financial
support from their parents in the last year, and as many as 58
percent say they would not be able to afford their current
lifestyles without ongoing parental support. The aggregate amount
spent by parents today on their early adult children is enormous –
over $500 billion annually2.
- Support goes both ways. As
lifespans increase, children may also be providing more support –
both financial and caregiving – to their parents down the road.
Eighty-nine percent of early adults say they would be willing to
“pay it back” by financially supporting their parents in the
future.
- Social media is exacerbating
financial pressures. With 68 percent of early adults fearing
they are continually missing out (FOMO) on what their peers are
experiencing and 49 percent feeling addicted to social media, early
adults are comparing their financial accomplishments to their peers
online. Eighty-two percent of early adults say they feel pressure
to make a lot of money, and 60 percent feel pressure to buy things
they cannot easily afford.
- Work isn’t “working” for many.
Forty-six percent say they plan to look for a new job in the next
12 months, the top reason being higher pay (69 percent). Finding
work that combines meaning with adequate pay is a growing
challenge. Less than half of employed early adults feel that in
their current job, they have career potential (44 percent), fair
compensation (41 percent), or work that aligns with their
passions/interests (35 percent).
According to Ken Dychtwald, Ph.D., psychologist/gerontologist
and CEO of Age Wave, “More than ever, early adulthood is a complex
matrix of new choices, freedoms and financial responsibilities –
and it’s a life stage as exhilarating as it is challenging. As
early adulthood becomes redefined by multiple forces, from the
dominance of technology and rising levels of debt to an
increasingly diverse workforce, it is a mistake to assume that you
understand early adulthood today if you experienced it decades ago.
When we reviewed the results of this study, I realized that I was
never their age!”
Young women’s and men’s paths are not parallelAccording
to the study, women are outpacing men in the quest for financial
independence – despite greater student debt, unequal pay and more
family caregiving involvement. Today, women carry almost two-thirds
of the cumulative student debt in the U.S.3
- Launching faster – and with less
parental support. Among those in their early thirties, 49
percent of women receive support from parents, compared to 62
percent of men. Women are around half as likely to be receiving
support across nearly all expense categories, including food and
groceries (40 percent of men vs. 23 percent of women),
rent/mortgage payments (33 percent of men vs. 15 percent of women),
vacations (36 percent of men vs. 17 percent of women) and student
loans (32 percent of men vs. 14 percent of women).
- More highly educated and ready for
the jobs of the future. For every 100 young men who completed
college last year, there were 141 women.4 Today’s young women are
better prepared to succeed in a workforce where more jobs are
requiring a college education.
- Long-term view on finances.
Women are more likely than men to say that their highest financial
priority is saving for the future and paying down debt (72 percent
of women vs. 60 percent of men). Meanwhile, men are significantly
more likely to say their highest financial priority is to “enjoy
life now” (40 percent of men vs. 28 percent of women).
- Investing remains the exception.
Only 27 percent of early adult women surveyed reported holding
investments outside employer-sponsored retirement plans, compared
to 46 percent of men. Women report less confidence than men in
managing investments5, and their biggest fear about investing is
not about market volatility or rate of return, but rather not
feeling they know enough about what they’re doing (41 percent of
women vs. 28 percent of men).
“Each generation experiences early adulthood differently. Young
adults today have opportunities – technology at their
fingertips, advanced education, and new career options –
that their parents didn’t have,” says Lisa Margeson, head of
Retirement Client Experience and Communications, Bank of America.
“Those, in addition to more accessible guidance and advice, can
help guide their path to financial independence.”
This study marks the fifth in a multi-year research series from
Merrill Lynch and Age Wave that examines five distinct life stages:
early adulthood, parenting, caregiving, widowhood, and end of
life/legacy.
1 Federal Reserve Bank of New York, “Center for Microeconomic
Data,” 20182 Age Wave/Merrill Lynch, “The Financial Journey of
Parenting: Joy, Complexity and Sacrifice,” 20183 AAUW, “Deeper in
Debt: Women and Student Loans,” 20174 National Center for Education
Statistics, 20185 Age Wave/Merrill Lynch, “Women & Financial
Wellness: Beyond the Bottom Line,” 2018
Age WaveAge Wave is the nation’s foremost thought leader on
population aging and its profound business, social, financial,
health care, workforce, and cultural implications. Under the
leadership of Co-founder Dr. Ken Dychtwald, CEO, Age Wave has
developed a unique understanding of new generations of maturing
consumers and workers and their expectations, attitudes, hopes, and
fears regarding their longer lives. Since its inception in 1986,
the firm has provided breakthrough research, compelling
presentations, award-winning communications, education and training
systems, and results-driven marketing and consulting initiatives to
over half the Fortune 500. For more information, please visit
www.agewave.com. (Age Wave is not affiliated with Bank of America
Corporation or Merrill Lynch.)
Merrill Lynch Wealth ManagementMerrill Lynch Wealth Management
is a leading provider of comprehensive wealth management and
investment services for individuals and businesses globally. With
14,796 financial advisors and $2.2 trillion in client balances as
of December 31, 2018, it is among the largest businesses of its
kind in the world. Bank of America Corporation, through its
subsidiaries, specializes in goals-based wealth management,
including planning for retirement, education, legacy, and other
life goals through investment, cash and credit management. Within
this business, Merrill Private Wealth Management focuses on the
unique and personalized needs of wealthy individuals, families and
their businesses. These clients are served by approximately 200
highly specialized private wealth advisor teams, along with experts
in areas such as investment management, concentrated stock
management and intergenerational wealth transfer strategies.
Merrill Lynch Wealth Management is part of Bank of America
Corporation. For more information, please visit
https://www.ml.com/financial-goals-and-priorities.html.
Bank of AmericaBank of America is one of the world’s leading
financial institutions, serving individual consumers, small and
middle-market businesses and large corporations with a full range
of banking, investing, asset management and other financial and
risk management products and services. The company provides
unmatched convenience in the United States, serving approximately
66 million consumer and small business clients with approximately
4,400 retail financial centers, including approximately 1,800
lending centers, 2,200 financial centers with a Consumer Investment
Financial Solutions Advisor, and 1,500 business centers;
approximately 16,400 ATMs; and award-winning digital banking with
more than 37 million active users, including over 27 million mobile
users. Bank of America is a global leader in wealth management,
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of asset classes, serving corporations, governments, institutions
and individuals around the world. Bank of America offers
industry-leading support to approximately 3 million small business
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and services. The company serves clients through operations across
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Reporters May Contact:Julia Ehrenfeld, Bank of America,
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