2015 family financial trade-offs survey highlights

2015 FAMILY FINANCIAL TRADE-OFFS SURVEY

T. Rowe Price

2

Contents

T. Rowe Price Family Financial Trade-offs Survey

Savingfor

retirementSaving for kids’

education

Perceptions About Saving for Retirement & College EducationRespondent College ExperienceFamily Financial ProfileSaving for CollegePaying for CollegeSaving for RetirementFindings on Millennials vs. Gen XersGender Data CutsRespondent ProfileObjectives & Methodology

PERCEPTIONS ABOUT SAVING FOR RETIREMENT & COLLEGE EDUCATION

4

Agree Statements – College Perceptions

T. Rowe Price Family Financial Trade-offs SurveyN=2,000 (Total respondents)

Saving for kids’

education

How much do you agree or disagree with each of the following statements?(Four-point scale – displaying percent that agree)

91%

85%

62%

54%

40%

37%

My kids believe they will go to college

I think my kids are smarter than their peers

Investing in my kids’ college education is actually an investment in my own retirement

If my kids don’t have a college education, they won’t get a job and will live with me

I don’t care if my children go to college at all. It is their choice

College isn’t worth the expense

5

Agree Statements – Paying for College


Saving for kids’

education


85%

79%

74%

63%

56%

54%

51%

49%

43%

Kids who contribute toward paying for college care more and work harder atgetting good grades

I want my kids to worry about money less than I did while I was in college

After experiencing the burden of student loans, I would not want my kids toexperience the same thing*

I feel guilty that I won’t be able to pay more for their college

If a family member is saving for my kids’ college education, I’m comfortable asking how much they are planning on saving

I regularly talk to my children about how their college will be paid for

I’d be willing to get a second or part-time job to pay for my kids’ college education

I’d be willing to delay my retirement to pay for my kids’ college education

I’ve raised my kids for 18 years; they’re on their own financially after that

* Only asked to those who had student loans (N=837)

60% saying either

6

Agree Statements – Retirement Perceptions


Saving for kids’

education

58%

51%

49%

47%

43%

34%

I sometimes feel like a failure because I’m not providing enough for my family and our future

I am trying not to think about retirement and will worry about it later

I don’t think I will ever retire

Instead of retiring, I plan on starting a new career

I lose sleep worrying about how I’m going to pay for retirement

I don’t worry about retirement because I will have a large inheritance


7

Agree Statements – Saving for Retirement


Saving for kids’

education


80%

70%

61%

58%

56%

55%

It’s important for me that my savings are easily accessible so that I can easily get to my money if I need it

How my parents have managed saving for retirement has impactedhow I save for retirement

Compared to my peers, I feel ahead of the curve in terms of savingfor retirement

Seeing what happened to my parents' retirement savings during therecession has really had an impact on how much I save and where I

put my money

I’m more likely to win the lottery than receive any money from Social Security

Because my parents are struggling with retirement (or will be), I started saving early for my retirement so I don’t end up like them

8

Agree Statements – Balancing


Saving for kids’

education


63%

63%

60%

59%

53%

46%

I would rather pay any college loans (mine or my kids’) later than divert money now away from retirement saving to college savings

I feel overwhelmed by financial pressures

Conversations about saving for retirement or college usually fill mewith a lot of anxiety

Because my kids will go to college before I retire, I feel like I shouldput money towards that first and save for retirement after

I would rather dip into my retirement savings to pay for my kids’ college education than have them take on student loans

You shouldn’t put any money in savings until you’ve paid off all your debt

RESPONDENT COLLEGE EXPERIENCE

10

Education Level

1%

10%

17%

14%

42%

18%

Did not graduate HS

HS graduate

Some college

Associate degree

Bachelor's degree

Graduate degree


Q9. What is the highest level of education you’ve completed?

• The majority of respondents attended college (89%*), with 60% having a Bachelor’s degree or higher

Note: Rounding may cause percentages not to add to 100%

* Because of rounding, combined percentage may differ than sum of bars in chart

11

Who Paid for Respondents’ College Education

76%

48%

39%

4%

Myself

Parents

Grants or scholarships

Other relatives

T. Rowe Price Family Financial Trade-offs SurveyN=1,799 (Attended college)

Q10. Thinking about all of your undergraduate college expenses, who helped pay for the cost?(Check all that apply)

• For respondents who attended college, three-quarters paid at least some of the expense themselves, while just under half relied on their parents to help pay

12

Paying for Undergraduate Expenses

74%

61%

52%

Regular income from working

Student loans

Savings

T. Rowe Price Family Financial Trade-offs SurveyN=1,368 (Helped pay for their own college expense); N=837 (Took student loan)

Q11. Which of the following have you used to payfor the portion of your undergraduate college

expenses that you covered yourself?(Check all that apply)

• For respondents who helped pay for their own college expense, three-quarters have used regular income, and 61% took college loans

• Two-thirds of respondents who took out a student loan are still paying it off

Q12. Are you still paying off student loans?

66%

34%

Yes

No

13

The Impact of Student Loans

T. Rowe Price Family Financial Trade-offs SurveyN=837 (Took student loan)

• The majority of respondents who took out a student loan say they took on too much debt to pay for college, and three-quarters say that paying off student loans has impacted their ability to pay for other things

Q13. Looking back, do you think that you took on too much debt to pay for your college education?

63%

37%

Yes

No

45%

44%

44%

37%

33%

23%

17%

25%

Take better vacations

Save for retirement

Save for my kids' college

Buy a house

Buy a car

Pay for my kids' preschool or primary ed.

Get married

None of the above

Q14. Has paying off student loans impactedyour ability to do any of the following?

(Check all that apply)

14

How Parents Paid for Respondents’ College Education

55%

41%

27%

22%

22%

20%

16%

13%

12%

Regular income from working

Regular savings accounts

College savings accounts

Student loan in my name

Credit cards

Personal loan in their name

Money given to them by my grandparents

Retirement savings accounts

Home equity loan

T. Rowe Price Family Financial Trade-offs SurveyN=854 (Parents helped pay for their college education)

Q15. Which of the following did your parents use to pay for theportion of your undergraduate college expenses that they paid for?


• Parents who contributed to respondents’ college education did so primarily through regular income and regular savings accounts

• Parents were equally likely to take out a loan themselves or pay off a student loan that was in the respondent’s name

FAMILY FINANCIAL PROFILE

16

Saver vs. Spender

T. Rowe Price Family Financial Trade-offs SurveyN=2,000 (Total respondents); N=1,726 (Married)

• Respondents are split relatively evenly between savers (48%) and spenders (52%)• 59% of married respondents say their spouse/partner is a “spender”

Q16. Would you consider yourself tobe more of a saver or a spender?

18%

34%

38%

10%

Definitely a spender More of a spenderMore of a saver Definitely a saver

Q17. Would you consider your spouse/partnerto be more of a saver or spender?

23%

36%

31%

10%

Definitely a spender More of a spenderMore of a saver Definitely a saver

17

Financial Advisors


Q18. Do you have a financial advisor (who is paid for their service)?

39%

61%

Yes

No

• Slightly more than one-third of respondents have a paid financial advisor

18

67%

33%

Kids’ Monetary Gifts

Q62. Do your kids receive monetary gifts from grandparents, friends, and/or family members each year?

Yes

No

• Two-thirds of respondents say their kids regularly receive monetary gifts

T. Rowe Price Family Financial Trade-offs SurveyN=2,000 (Total respondents); N=1,338 (Kids receive monetary gifts)

Q63. On average, how much in total doeseach child receive as gifts each year?

24%

43%

24%

9%

Less than $100

$100 to $499

$500 to $999

$1,000 or more

19

What Happens to Monetary Gifts

T. Rowe Price Family Financial Trade-offs SurveyN=1,338 (Kids receive monetary gifts)

• Respondents are most likely to let kids spend the monetary gifts they receive, or they put the money in a regular savings account

Savingfor


education

Q64. What usually happens to the money your kids receive as gifts?(Check all that apply)

43%

41%

28%

26%

23%

We let our kids spend it on an item they want

We put it in a regular savings account

We put it in a college savings account

We place it in our kids’ piggy bank

I spend it on things they need such as clothes and school supplies

20

Windfall


• With a windfall, respondents are equally likely to use it for college savings, retirement savings or reducing debt

Savingfor


education

Q60. If you suddenly had a windfall of money like an inheritanceor bonus, which of the following would you do with the money?

(Choose up to three)

44%

44%

44%

29%

21%

17%

14%

12%

Put it toward college savings

Put it toward retirement savings

Use it to reduce my debt

Add it to my emergency fund

Put it toward a major purchase

Put it toward a vacation or trip

Give to charity

Spend on everyday purchases

21

Marital Arguments

8%

11%

23%

24%

25%

31%

30%

31%

41%

35%

28%

25%

26%

23%

19%

20%

Money in general

How to raise our kids

Saving for retirement

Saving for kids' education

Never Rarely Occasionally Frequently

T. Rowe Price Family Financial Trade-offs SurveyN=1,726 (Married)

Q20. How often do you and your spouse/partner disagree about each of the following?

• Married respondents argue with their spouse/partner most frequently about money in general, followed by how to raise their kids

• Spenders are more likely than savers to argue about saving for retirement (58% vs. 36%) and saving for kids’ education (56% vs. 34%)

Top 2 Box

67%

58%

47%

45%

54% top 2 box for either

22

Planning for Kids’ Education With an Ex

T. Rowe Price Family Financial Trade-offs SurveyN=94 (Divorced/separated)

• Just under half of separated/divorced respondents argue with their ex-spouse/partner about saving for kids’ education at least occasionally

Q21. How often do you and your ex-spouse/partner disagreeor argue about the best way to save for your kid’s education?

32%

22%

30%

16%

Never

Rarely

Occasionally

Frequently

23

Parental Concerns

64%

63%

60%

60%

60%

59%

50%

48%

48%

45%

40%

The cost of health care when I'm retired

My kids having the financial resources to go to college

Balancing the need to save for retirement and my kids' education

Running out of money in retirement

My kids being able to support themselves after college

Being able to retire young enough to enjoy myself

My kids acting irresponsibly in college or as a young adult

My parents being able to support themselves through retirement

My kids being a target of bullying

Having enough money to take regular vacations

Giving my kids all the presents I want to this holiday season


Q19. How concerned are you with each of the following?(Five-point scale – displaying top 2 box)

• Respondents are most concerned with the rising cost of health care and being able to pay for kids’ college education

24

Family Saving Priorities


• Respondents are more focused on saving for kids’ college than saving for retirement

43%

57%

Saving for retirement

Saving for kids' education

Q22. Which of the following is the higher priority for you and your family?

SAVING FOR COLLEGE

26

Saving for College – Frequency


• Currently, 79% of respondents put away money for their kids’ college education at least sometimes, and an additional 5% are not currently saving, but have some money put aside

Q23. Currently, how often do you put money aside for your kids’ college education?

Savingfor


education

10%

25%

24%

30%

5%

5%

1%

Never

Sometimes, but not as often as I should

I frequently put money aside

I save automatically each month from my bank account

I'm not currently saving, but I already have money setaside for my kids' college education

I am not saving yet but plan to

I'm not sure

27

Saving for College – Starting

T. Rowe Price Family Financial Trade-offs SurveyN=1,683 (Have college savings)

• Respondents are most likely to begin saving for kids’ college education once their first child is born

Savingfor


education

Q24. When did you first start saving for your kids’ education?

41%

24%

11%

9%

8%

6%

Once my first child was born

When my first child started school

When my kids started thinking about which college to go to

When we were planning to have children

When my second child was born

When I heard my friends were saving

28

Saving for College – Types of Accounts


• Regular savings accounts are the most common account used for college savings

• An almost equal number of respondents use a 529 account and a 401(k)

Savingfor


education

Q25. What types of accounts do you use for college savings?(Check all that apply)

45%31%

30%26%

24%18%

15%13%

12%9%

8%2%

Regular savings account529 account

401(k) accountChecking account

Savings bondCertificate of deposit (CD)

Traditional IRARoth IRA

Individual securitiesAnnuity

UGMA or UTMA accountI'm not sure

Average numberof accounts = 2.3

29

Why Not a 529?

T. Rowe Price Family Financial Trade-offs SurveyN=1,167 (Have college savings, but not a 529)

• Lack of awareness is the primary reason respondents don’t use a 529• One-quarter of respondents believe there is limited access to money in a 529

Savingfor


education

Q26. Why aren’t you using a 529 account to save for college?(Check all that apply)

28%25%

19%18%

15%13%

12%9%9%

I don't know what that isI want to be able to access the money I save at any time for any reason

I want to, but haven't had the time to open an accountI don't know in which state my kid(s) will go to college

Because then I won't be able to get financial aidI've heard negative things about them

I can't afford the minimum requirements and feesI don't know how to open an account

I don't like the plan that is offered by my state

30

Negative Things About 529 Accounts

T. Rowe Price Family Financial Trade-offs SurveyN=155 (Have college savings, but not a 529; have heard bad things about 529s)

• There are several misperceptions about 529 accounts

Savingfor


education

Q27. What negative things have you heard about 529 accounts?(Check all that apply)

47%

43%

43%

41%

23%

There are high fees

The money you don't use for college is lost

You can lose money in them

There are better accounts for college savings

Our state doesn't have a good plan

31

Current College Savings


• 43% of respondents have less than $10,000 saved for their kids’ college education• One-third of respondents are very/extremely comfortable with their current college

savings

Q28. How much money do you havesaved for your kids’ college education?

8%

23%

34%

23%

12%

Not at all comfortable

Not very comfortable

Somewhat comfortable

Very comfortable

Extremely comfortable

Q29. How comfortable are you with where you are,in terms of saving for your kids’ college education?

9%

17%

17%

22%

19%

10%

6%

Less than $1,000

$1,000 to $4,999

$5,000 to $9,999

$10,000 to $19,999

$20,000 to $49,999

$50,000 to $99,999

$100,000 or more

32

Reducing College Saving

T. Rowe Price Family Financial Trade-offs SurveyN=1,584 (Currently saving for college)

• Job loss would be the primary reason respondents would reduce the amount they save for college

Savingfor


education

Q30. Which of the following would cause you to reduce theamount you regularly save for your kids’ college education?


54%22%21%20%19%18%18%17%17%

14%8%

Loss of a jobNeed a new car

Support your parents or other relativesRealize the need to catch up on retirement savings

Need to pay for home improvement projectBirth or adoption of a new child

Need to relocateHoliday shopping

Feel it will be impossible to meet increased cost of collegeExpensive family vacation

Discouraged by the low college graduation rates

33

Saving Differently for Different Kids

Q44. Do you save differently for your kids’college education depending on which kid?

36%

64%

Yes

No

• More than one-third of respondents who have more than one kid say they save differently, depending on which kid they are saving for

T. Rowe Price Family Financial Trade-offs SurveyN=1,221 (Have more than one kid); N=437 (Save differently)

Q45. Which of the following are true?

49%

41%

40%

37%

32%

I save more for my older kid(s)because they will go first

The amount I save for my kids’ college is based on how well I think

they’ll do

I base how much I save for each kidbased on where they want to go

I base college savings for each kidbased on how much they will receive

in grants and scholarships

I base how much I save on how wellthey do in school before college

PAYING FOR COLLEGE

35

Paying for Kids’ College

T. Rowe Price Family Financial Trade-offs SurveyN=2,000 (Total respondents); N=1,678 (Will not be able to cover all college costs)

• All but 16% of respondents will need help paying for their kids’ college education• Parents plan to rely on grants/scholarships and their kids (through loans and

working) to help cover the cost of their college education

Q31. Which of the following best describes how youfeel about saving for your kids’ college education?

53%

52%

46%

34%

20%

16%

15%

11%

8%

7%

Grants and/or scholarships

Student loans (kids responsible)

Kids will work

Through regular income

Personal loan (I am responsible)

Credit cards

Money from retirement accounts

Home equity loan or 2nd mortgage

Other family members

Sale of real estate

Q32. How do you think you will coverthe remaining cost for your kids’ college?


4%

50%

30%

16%

I don’t plan to save anything for college

I will be able to save enough to pay forsome of the cost of college

I will be able to save enough to pay formost of the cost of college

I will be able to save enough to pay forthe entire cost of college

36

Taking on Debt to Pay for College

T. Rowe Price Family Financial Trade-offs SurveyN=1,678 (Will not be able to cover all college costs)

• Just over half of respondents are willing to take on $25K or more of debt to pay for their kids’ college education

• Respondents are consistent in the amount of debt they think is acceptable for themselves and their kids

Q33. How much debt are you willing to take onpersonally to provide your kids with a college education?

Q34. How much debt are you willing to letyour kids take on to get a college education?

11%

18%

20%

17%

12%

9%

5%

9%

None

Less than $10,000

$10,000 to $24,999

$25,000 to $49,999

$50,000 to $74,999

$75,000 to $99,999

$100,000 to $150,000

Whatever it takes

9%

18%

23%

17%

10%

7%

4%

12%

None

Less than $10,000

$10,000 to $24,999

$25,000 to $49,999

$50,000 to $74,999

$75,000 to $99,999

$100,000 to $150,000

Whatever it takes

37

Paying Off Student Loans

T. Rowe Price Family Financial Trade-offs SurveyN=1,678 (Will not be able to cover all college costs); N=316 (Not likely to help pay off student loans)

• 44% of respondents say they are very/extremely likely to help their kids pay off student loans

Q35. How likely are you to help your kidspay off their student loans after they graduate?

57%

52%

39%

14%

If they are working, then they canafford to pay off loans

It’s not my responsibility to pay off their loans

I’ll need to be saving for retirement

I’d prefer my kids live at home after college so they can have money to pay

their own loans

Q36. Why aren’t you more likely to help your kidspay off their student loans after they graduate?


6%

13%

33%

28%

16%

4%

Not at all likely

Not very likely

Somewhat likely

Very likely

Extremely likley

I'm not sure

38

Payback


• Nearly half (43%) of respondents expect their kids to pay them back (at least partially) for college expenses

Saving for kids’

education

Q37. Do you expect your kids to pay you back for any of their college expenses that you cover?

30%

13%

57%

Yes, partially

Yes, in full

No

39

Acceptable Monthly Loan Payments


• Nearly half of respondents (47%) are willing to let their kids take on monthly debt payments of $300 or more

Saving for kids’

education

Q38. Assuming they will have 10-year student loans, how much of a monthly payment areyou willing to let your kids take on after college to pay off their student loan debt?

7%9%

20%17%

8%7%7%

4%5%

3%3%

10%

NoneLess than $100

$100 to $199$200 to $299$300 to $399$400 to $499$500 to $599$600 to $699$700 to $799$800 to $899$900 to $999

Whatever it takes

40

Asking for Help With College Expenses


• Respondents are more likely to ask for help from their spouse’s/partners’ parents than their own

Saving for kids’

education

Q39. Have you asked any of the following people to help pay for your kids’ college education?

16%

14%

26%

35%

10%

14%

13%

12%

0% 10% 20% 30% 40% 50%

Friends

Other Family

Parents

In-Laws

Yes

Plan on Asking

41

Reasons for Not Asking for Help

T. Rowe Price Family Financial Trade-offs SurveyN=949 (Have not asked anyone for help)

• The majority of respondents who have not asked anyone for help believe that it is not others’ responsibility to pay for their kids’ college education

Saving for kids’

education

Q40. Why haven’t you asked family or friends for help paying for your kids’ college education?(Check all that apply)

68%

37%

30%

18%

9%

7%

6%

It's not their responsibility

I never ask others for money

I would feel uncomfortable asking

I don't need any help

We don't talk about money in our family

I'm too embarrassed

I wouldn't want to reveal anything about my finances

42

Does Having a Plan Facilitate Asking for Help?

Q41. Would you be more likely to ask others to help pay for yourkids’ college if you had a specific plan in place for collegesavings and knew exactly how much help you needed?

20%

80%

Yes

No

• For one in five respondents, having a college savings plan would make them more likely to ask others for help

T. Rowe Price Family Financial Trade-offs SurveyN=949 (Have not asked anyone for help)

43

Expectations About Who Will Help


• Over half (57%) of respondents are expecting help from family/friends in paying for their kids’ college education

Saving for kids’

education

Q42. Whether or not you’ve asked, who of the following doyou expect to help pay for your kids’ college education?


38%

33%

13%

7%

43%

Your spouse's/partner's parents

Your parents

Friends


None of the above

44

Expectations About Who Will Help

T. Rowe Price Family Financial Trade-offs SurveyN=Varies by category (based on positive responses to Q42)

• Respondents are more likely to be aware of how much friends and in-laws will contribute than how much their parents will

Saving for kids’

education

Q43. Are you aware of how much each of the following isplanning on contributing to your kids’ college education?

77%

69%

59%

41%

Friends

Your spouse's/partner's parents

Your parents


SAVING FOR RETIREMENT

46

Saving for Retirement – Frequency


• Currently, 89% of respondents put away money for their retirement at least sometimes, and an additional 4% are not currently saving, but have some money put aside

Q47. Currently, how often do you put money aside for your retirement?

Savingfor


education

5%

19%

22%

48%

4%

2%

1%

Never




I'm not currently saving, but I already have money setaside for my retirement

I am not saving yet but plan to

I'm not sure

47

Saving for Retirement – Types of Accounts


• 401(k) accounts are the most common account used for retirement savings

Savingfor


education

Q48. What types of accounts do you have for your retirement savings?(Check all that apply)

69%

33%

25%

24%

20%

16%

15%

401(k) account

Regular savings account

Traditional IRA

Roth IRA

Regular investment account

Certificate of deposit (CD)

Annuity

48

Why Not a Roth IRA?

T. Rowe Price Family Financial Trade-offs SurveyN=1,512 (Do not have a Roth IRA)

• Lack of awareness is one of the primary reasons respondents do not have a Roth IRA

Savingfor


education

Q49. Why don’t you have a Roth IRA account to save for retirement?(Check all that apply)

20%

20%

17%

16%

16%

15%

9%

8%

6%

I’m already contributing the maximum to my workplace plan

I don't know what that is

I’m already saving in a Roth 401(k) at work

I want to but haven’t had time to open an account

I’m saving enough in my workplace plan and don’t need to save more

I want to be able to take out my contributions at any time without penalty

I don’t know how to open an account

I’ve heard negative things about Roth IRAs

I do not meet the eligibility requirements to contribute to a Roth IRA

49

IRA Savings – Frequency

T. Rowe Price Family Financial Trade-offs SurveyN=815 (Have an IRA)

Q50. How often do you put money aside in your IRA?

Savingfor


education

20%

31%

34%

13%

2%




I haven't put money in my IRA for awhile

I'm not sure

• Two-thirds of those who have an IRA put money in frequently or automatically each month

50

Current Retirement Savings


• Retirement savings amounts vary consistently from low to high, with 31% saying they are very/extremely comfortable with where they are in terms of saving for retirement

Q51. How much money do youhave saved for your retirement?

15%

21%

33%

20%

11%

Not at all comfortable

Not very comfortable

Somewhat comfortable

Very comfortable

Extremely comfortable

Q52. How comfortable are you with whereyou are, in terms of saving for your retirement?

17%

12%

15%

14%

15%

13%

14%

Less than $10,000

$10,000 to $24,999

$25,000 to $49,999

$50,000 to $74,999

$75,000 to $99,999

$100,000 to $149,999

$150,000 or more

51

Old Job Retirement Plans


• Of those who have had a retirement plan with a previous employer, the majority roll it over into an IRA or workplace retirement plan

Savingfor


education

Q53. Thinking back on old retirement plans you had atprevious jobs, what have you done with those accounts?


31%

28%

27%

20%

21%

Rolled it over into IRA

Rolled it into new employer’s workplace retirement plan

Cashed it out

Left it in my former employer’s workplace retirement plan

I’ve never had a retirement plan with a previous job

52

Why Cash Out Retirement Accounts

T. Rowe Price Family Financial Trade-offs SurveyN=531 (Cashed out a retirement account)

• Day-to-day expenses is the primary reason given by those who cashed out a retirement plan

Savingfor


education

Q54. Why did you cash out a retirement account held with a former employer?(Check all that apply)

37%

29%

28%

25%

21%

21%

19%

19%

12%

Needed it for day-to-day living

I was young and didn’t know any better

It was a really small amount and wouldn’t have made much of a difference

Put it toward paying off credit card debt

Put it toward student loans or college costs

Put it toward a medical expense

Put it toward a major purchase (e.g., house, car, etc.)

I have plenty of time to save for retirement and needed the money more…

I didn’t know what else to do with it

53

Converting to a Roth IRA

Q55. Have you ever converted assets held ina Traditional IRA or tax-deferred workplace

retirement plan into a Roth IRA?

21%

79%

Yes

No

• One in five respondents have converted a traditional IRA or workplace plan to a Roth IRA

T. Rowe Price Family Financial Trade-offs SurveyN=2,000 (Total respondents); N=424 (Converted account to Roth IRA)

Q56. Why did you convert assets into a Roth IRA?(Check all that apply)

58%

44%

36%

For the tax-free savings that RothIRAs offer

Someone advised me to do so

I’m young, and it’s not a big deal to pay taxes now

54

Reducing Retirement Saving

T. Rowe Price Family Financial Trade-offs SurveyN=1,780 (Currently saving for retirement)

• Job loss would be the primary reason respondents would reduce the amount they save for retirement

Savingfor


education

Q57. Which of the following would cause you to reducethe amount you regularly save for your retirement?


58%18%17%16%16%16%16%

14%13%

11%9%

Loss of a jobNeed a new car

Support your parents or other relativesNeed to pay for home improvement project

Birth or adoption of a new childSaving for future health care costs

Need to relocateHoliday shopping

Reading about the cost of collegeExpensive family vacation

Reading about the cost of retirement

55

Paying for Things With Retirement Money


• 58% of respondents have taken money out of a retirement account to pay for something else, with the top response being pay off debt

Savingfor


education

Q58. Which of the following things have you paid for with money taken from a retirement account?(Check all that apply)

20%13%

12%12%

11%11%11%

10%10%

9%9%

8%42%

Pay off debtDay-to-day expenses

Kids' educationTo cover expenses while unemployed

Car purchase or repairVacation

To pay taxesHealth care costs

Downpayment on a homeHome repair/renovation

Replenish emergency fundWedding

I have never taken money out of retirement savings to pay for something

FINDINGS ON MILLENNIALS VS. GEN XERS

57

Age Differences (21-34 vs. 35-50)

T. Rowe Price Family Financial Trade-offs Survey* A complete list of significant findings by gender is available in the appendix

Savingfor


education

Younger respondents are more likely than older respondents to still be paying off student loans (74% vs. 56%), feel that they took on too much debt to pay for college (70% vs. 55%), and say that paying off student loans has impacted their ability to save for their kids’ college education (48% vs. 38%).

In prioritizing saving for kids’ college and saving for retirement, younger respondents are more likely to say kids’ education is the higher priority (62% vs. 53%), and they are more likely to put aside money for college frequently (28% vs. 20%).

Younger respondents are less likely to be using a 529 for college savings (22% vs. 39%), and for those who aren’t using a 529, younger respondents are more likely to say they are unaware of what a 529 is (29% vs. 26%).

While younger respondents appear to have more financial concerns, they are more likely than older respondents to say they feel comfortable with where they are for college savings (45% vs. 26%) and retirement savings (38% vs. 24%), and they are more likely to say they will be able to pay for most or all of their kids’ college education (52% vs. 39%).

58

Age Differences (21-34 vs. 35-50) (Cont.)


Savingfor


education

Younger respondents appear to have lower expectations about their kids’ level of responsibility, as they are more likely to say they will help pay off student loans (48% vs. 39%) and less likely to say they expect kids to pay them back for the college expenses they cover (49% vs. 65%).

Younger respondents are more likely than older respondents to have a Roth IRA (19% vs. 29%), and of those who do not have a Roth account, younger respondents are more likely to say they don’t know what it is (23% vs. 17%).

59

Agree Statements – Findings by Age


Saving for kids’

education


68%

62%

64%

49%

58%

44%

49%

37%

I feel overwhelmed by financial pressures

I would rather dip into my retirement savings to pay for my kids’ college education than have them take on student loans

I’m more likely to win the lottery than receive any money from Social Security

I lose sleep worrying about how I’m going to pay for retirement Millennials

Gen X

60

The Impact of Student Loans

T. Rowe Price Family Financial Trade-offs SurveyN=837 (Took student loan)

Q13. Looking back, do you think that you took on too much debt to pay for your college education?

70%

30%

Yes

No

55%

45%

YesNo

Millennials Gen X

61

How Parents Paid for Respondents’ College Education

18%

9%

Retirement savings accounts

Millennials

Gen X

T. Rowe Price Family Financial Trade-offs SurveyN=854 (Parents helped pay for their college education)

Q15. Which of the following did your parents use to pay for theportion of your undergraduate college expenses that they paid for?


62

Saving for College – Types of Accounts


Savingfor


education

Q25. What types of accounts do you use for college savings?(Check all that apply)

34%

25%

401(k) account

MillennialsGen X

63

Paying for Things With Retirement Money


Savingfor


education

Q58. Which of the following things have you paid for with money taken from a retirement account?(Check all that apply)

35%

49%

I have never taken money out of retirementsavings to pay for something

Millennials

Gen X

64

24%

76%

Converting to a Roth IRA

Q55. Have you ever converted assets held in a Traditional IRAor tax-deferred workplace retirement plan into a Roth IRA?

Yes

No

T. Rowe Price Family Financial Trade-offs SurveyN=2,000 (Total respondents); N=424 (Converted account to Roth IRA)

Millennials Gen X

19%

81%

Yes

No

GENDER DATA CUTS

66

Gender Differences


Savingfor


education

In terms of paying for their own college expenses, women are more likely than men to rely on grants and scholarships (43% vs. 35%) and have used student loans (64% vs. 58%). Men are more likely to have parents who used home equity loans (14% vs. 8%) and retirement savings (17% vs. 9%) to pay for their college education.

Similarly, women are more likely than men to say they will use grants and scholarships (60% vs. 46%) and student loans (56% vs. 49%) to cover the cost of their kids’ college education.

Women are more likely than men to expect their kids to work to help pay for college (49% vs. 43%) and to pay them (parents) back for the expenses they incur paying for college (64% vs. 50%).

In general, women are willing to take on less debt (for themselves or their kids) than men are, and men are more willing to ask others to help pay for their kids’ education.

Women are more likely than men to be concerned about running out of money in retirement (63% vs. 57%) and the cost of health care when they are retired (66% vs. 61%), while men are more concerned about their ability to buy presents during the holiday season (43% vs. 36%).

67

Gender Differences (Cont.)

Savingfor


education

Men are more likely than women to save regularly/frequently for retirement (61% vs. 47%), have more money saved for kids’ education (45% vs. 32% - $10K or more), and have more money saved for retirement (80% vs. 62% - $25K or more).

Women are more likely than men to be unaware of what a 529 is (32% vs. 23%) and what a Roth IRA is (25% vs. 15%).

Women are more likely than men to say they have never taken money out of retirement to pay for something else (47% vs. 38%).

Women are more likely than men to say they feel overwhelmed by financial pressures (68% vs. 58%).


RESPONDENT PROFILE

69

50%50%

Respondent Profile


27%

25%

24%

23%

South

Northeast

West

Midwest

Q2. RegionQ1. Age

50%50% 35-5021-34

Q3. Gender

MenWomen

39%

43%

13%

4%

1

2

3

4+

Q4. # Kids in HH (<16)

28%

72%

Q5. Expecting

Yes

No

86%

9%

5%

0%

Married

Single

Separated/Divorced

Widow/Widower

Q8. Marital Status

Note: Rounding may cause percentages not to add to 100%

70

Respondent Profile


Q66. What is your annualhousehold income before taxes?

73%11%9%

4%2%1%0%0%

Employed full timeStay-at-home parentEmployed part time

Self-employedNot currently employed

StudentRetired

Prefer not to answer

Q67. What is your current employment status?

3%3%3%4%6%

22%23%

14%7%

4%3%2%1%2%2%

Less than $25,000$25,000 to less than $30,000$30,000 to less than $35,000$35,000 to less than $40,000$40,000 to less than $50,000$50,000 to less than $75,000

$75,000 to less than $100,000$100,000 to less than $125,000$125,000 to less than $150,000$150,000 to less than $175,000$175,000 to less than $200,000$200,000 to less than $225,000$225,000 to less than $250,000

$250,000 or morePrefer not to answer

OBJECTIVES & METHODOLOGY

72

Objective & Methodology

T. Rowe Price Family Financial Trade-offs Survey

Savingfor


education

Objective

Primary Objective: After T. Rowe Price's 2014 Parents, Kids & Money Survey found that 52% of parents said it was more important to save for their kids' college rather than their own retirement, the firm endeavored to further understand how families balance the competing priorities of saving for retirement and college.

Methodology

• T. Rowe Price commissioned an online survey of parents of children age 15 and younger who have a retirement savings account

• The survey was fielded from December 18-29, 2014, with 50/50 quotas for gender and age group

• A total of 2,000 parents in the U.S. participated; the sampling error for a sample of 2,000 is +/-2.2% at the 95% confidence interval

• The survey was fielded through MarketTools, Inc.

2015 family financial trade-offs survey highlights

Economy & Finance