Financial Confidence

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Data from the 2012 study for the Certified Financial Planner Board of Standards, Inc. and the Consumer Federation of America also shows that only 35% of people 18–24 have any money saved for retirement, far less than the 55% of people in the 24–34 age bracket and the 66% of people in the 35–44 age bracket. 11 Just because people under 25 are saving less doesn’t mean they haven’t thought about it. The same study revealed that nearly 6 in 10 of those under 25 think they’re in OK shape or can start saving for the future, far more than any other age group. 12 When we look at those under 25, it may be that we’re looking at a case of false confidence— with few current responsibilities and without a clear notion of what’s on the horizon, they may be missing out on the opportunity to establish a savings habit early, when time (and compound growth) may be the best asset they have. 16 Financial Confidence: Examining the U-Curve—and How We Might Improve the Confidence Trajectory
Age 25-34: “The upwardly immobile” Average income: $59,002 Income growth rate from previous age bracket: 111% Average percent confident: 33% Average annual vehicle payments: $3,641 Average annual mortgage payments: $2,862 Average household size: 2.8 people Average yearly expenditures: $48,087 Source: U.S. Bureau of Labor Statistics, “Table 1300. Age of reference person: Annual expenditure means, shares, standard errors, and coefficient of variation, Consumer Expenditure Survey, 2013” The false confidence picture comes into sharper relief in the next age category, those between the ages of 25 and 34. People in this age bracket are likely experiencing (or have just experienced) the biggest income increase in their lives. And their goals, which typically start to revolve around lifestyle and building for the future, tend to expand with this increase. In fact, according to LearnVest data, savings goals for weddings, home buying, and “fun” almost double in this age bracket compared to those under 25. While retirement and emergency savings contributions also begin to ramp up at this time, they may not be at the same rate that a financial planner would advise, given the upcoming financial responsibilities, retirement contributions, and slowed income growth ahead. We see a bit of an “I’ll cross that bridge when I get to it” mentality, giving this age bracket a continued sense of false confidence. It appears that lifestyle spending—not savings—inflates with growing income. 17 Financial Confidence: Examining the U-Curve—and How We Might Improve the Confidence Trajectory
Page 1 and 2: Financial Confidence Examining the
Page 3 and 4: Financial Confidence and the Workpl
Page 5 and 6: Introduction How do people feel abo
Page 7 and 8: Curious about whether income played
Page 9 and 10: A closer look at earning power Larg
Page 11 and 12: The average income for Americans gr
Page 13 and 14: The data shows that average America
Page 15: A detailed look by decade Under 25:
Page 19 and 20: Age 45- 54: “The light at the end
Page 21 and 22: found that people across age and in

Financial Confidence

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