Health
care, retirement savings and student loans are the top causes of investor’s
financial anxiety, according to a survey by Rubicoin, a digital investment
platform provider.
Among
all investors, mounting health care expenses and bills (23.5%) and a lack of
retirement savings (22.6%) are the two biggest contributors of financial
anxiousness. For Millennials, student loan debt, credit cards and health care
expenses all measured equally as causes for “extreme” amounts of financial stress.
A
lack of emergency savings and health care expenses are factors causing Millennial
women to stress the most. Gen X women cite health care expenses and a lack of
retirement savings to cause the most anxiety, followed closely by a lack of
emergency savings. Women of both generations are primarily stressed about
health care expenses and that only increases, alongside a lack of retirement
savings, the older women get.
Being
ill-prepared for retirement is another, if not the top, factor causing stress
among all Americans, not just women, according to Rubicoin.
“Millennials
are confident in the U.S. stock market to provide a substantial return, but are
extremely anxious about their personal debts and expenses, ranging from health care
to credit cards to student debt,” says Emmet Savage, CEO of Rubicoin. “It’s
important for young investors to manage and pay-down those debts while
simultaneously pursuing smart investment opportunities.”
The survey was
conducted online within the United States by Rubicoin using Google Survey
technology in October 2017 among 620 people classified as American investors. Generations
classified as Millennials, Gen X and Baby Boomers were equally represented in
the survey.
Retirement Plan Participants Need More Familiarity With Investment Fees
Even among participants who said they were very familiar with their plan's fees, 33%
hadn’t read any fee disclosures in the past year, according to research from The Pew Charitable Trusts.
In
its first report on retirement plan investment fees, The Pew Charitable Trust
says it found nearly seven in 10 survey respondents in employer-sponsored
retirement plans said they were at least somewhat familiar with their plan’s fees,
while 31% were not at all familiar with the fees.
Roughly
two-thirds had not read any investment fee disclosure in the previous year.
Even among those who said they were very familiar with their fees, 33% hadn’t
read any fee disclosures in the past year. During a media briefing, John Scott,
director, Retirement Savings Project at The Pew Charitable Trusts, said this
was the most surprising finding of the research. “It raises the question of
what the word ‘familiar’ means to respondents. Maybe they are just familiar
with how fees over time affect retirement savings. I suppose they can be
familiar without reading disclosures, but we believe people are overstating
their knowledge,” he said.
Of
the one-third who had read a fee disclosure, nearly seven in 10 said they found
the information understandable, but only 25% of all respondents said they had
read and understood a disclosure about retirement account fees. Roughly four in
five participants said it would be at least somewhat useful to have additional
information about investment fees. Scott said this suggests that although many participants
say they are familiar with retirement plan fees, they understand the limits of
their knowledge and could use more information.
Asked
what plan sponsors and advisers can do to help retirement plan participants
better understand plan fees, Scott suggested that just raising the issue of
plan fees helps participants. “I hesitate to give advice based on our research,
but plan sponsors are required by law to provide disclosures, and they can use
this opportunity to discuss fees with participants and let participants ask questions,”
he said. “There are a number of ways employer might help employees, but the key
is to seek opportunities to motivate them to raise their awareness of fees and
pay attention to disclosures.”
NEXT: Characteristics of those unfamiliar and
familiar with plan fees
Pew’s
research found Hispanics, women, younger workers, respondents with lower levels
of education, and low-income workers were among the least likely to be familiar
with the fees in their plans. Pew’s report notes that on average, workers in
these groups are less likely than other workers to be financially literate or
to have experience with the financial system.
Scott
said the reason women have less familiarity with fees can be explored further.
He speculates that since women have less opportunity to participate in plans,
they may be less familiar with investing, but he also speculates that men might
be overstating their knowledge. “We can’t tell by our research,” he told the
media. Scott
also noted that younger workers would benefit most from more familiarity with
plan fees since they have a longer time horizon for saving and investing.
The
research also found that participants who had engaged in retirement planning at
some point were more likely than those who had not to be familiar with their
retirement plan fees. In addition, those who were more confident about
investing were more likely to say that it would be helpful to have more
information about fees.
Scott
noted that Pew’s survey only covered employees at small and mid-size companies,
which are not always given the full range of services a large plan sponsor
would get from service providers. Small and mid-size companies also don’t
always have the same size of benefits or human resources staff as large
companies that could answer questions. “So, it’s possible we could see more
familiarity with plan fees at larger companies, but at the same time, this is a
difficult concept for employees at any size employer, so we probably would find
unfamiliarity among many workers at large employers,” he concluded.