Start Saving before Age 30 and Talk to Your Kids About the Financial Facts of Life, TD Ameritrade Boomer Survey Suggests

When it comes to retirement readiness, good financial behaviors and discipline may trump external challenges such as the economy

OMAHA, Neb.--()--When it comes to Baby Boomers and retirement preparedness, a little self-restraint and planning makes a big impact on success, according to a new Investor Index Survey released by TD Ameritrade, Inc. (“TD Ameritrade”), a broker-dealer subsidiary of TD Ameritrade Holding Corporation (NYSE:AMTD).

The survey was conducted among both non-retired and semi- or fully-retired Baby Boomers and unveiled key characteristics and behavioral differences among respondents who consider themselves financially prepared for retirement (“Prepared”) and those who reported they are financially unprepared for retirement (“Unprepared”).

Successful Boomers are Conservative, Even in Good Times
More than half (54%) of Prepared Boomers reported that when times are good financially, they remain conservative with their money, compared to just 35 percent of Unprepared Boomers who reported the same. Similarly, 41 percent of Unprepared Boomers admitted they are more carefree with their money when times are good, compared to just 30 percent of Prepared Boomers. And when asked if they tend to be patient and plan things carefully, 53 percent of Prepared Boomers agreed, compared to 38 percent of Unprepared Boomers.

“Financial discipline for anyone is tough, and it’s especially challenging for Boomers who grew up during a time when self-realization and fulfillment was the norm,” said Lule Demmissie, managing director, investment products and retirement, TD Ameritrade. “Despite the challenges, it’s imperative that all Americans embrace a more regimented approach to saving for retirement if they expect to be prepared for the future.”

Financial Success Impacted by Personal Choices, Parental Communication
Overall, Prepared Boomers seemed to make better financial choices than those Boomers who did not successfully prepare for retirement. They started saving significantly earlier than Unprepared Boomers (median age 30 versus 35). They’re also significantly more likely to save for retirement by having money automatically deducted from their pay than those who are Unprepared (74% vs. 54%).

However, it’s worth noting that Prepared Boomers were slightly more likely to have family who could help fund college expenses or a new home compared to Unprepared Boomers. Unprepared Boomers also reported having greater than average health care expenses.

Surprisingly, the education levels, annual household incomes and financial saving and spending behaviors of parents had a negligible effect on the financial success of Baby Boomers with respect to saving for retirement. However, if their parents talked to them about proper money management habits, the results were positive. In fact, Boomers who grew up in households where parents talked about money management and saving for retirement are significantly more likely to be Prepared (42%) than Unprepared (29%).

Top Factors that Affected Retirement Preparedness
When Prepared Boomers were asked what has allowed them to stay on track and successfully save for retirement, their top three unprompted responses were personal actions they have taken:

  • Budgeting and regular saving (37%)
  • Participation in a company retirement plan, such as a 401(k) (20%)
  • Controlling their spending and incurring little or no debt (20%)

Conversely, Unprepared Boomers cited external factors as the top three reasons they are not on track for retirement:

  • Loss of or poor employment (35%)
  • High costs of living and a poor economy (33%)
  • Above-average healthcare expenses (12%)

Despite Economic Factors, Unprepared Boomers Accept Responsibility
Despite pointing to the above external factors as top reasons for falling off track, many Unprepared Boomers still blame themselves for falling behind, perhaps acknowledging they could have done something to avoid it. More than half (53%) of Unprepared Boomers said they agree that their own actions are to blame rather than outside factors like the economy. And 47 percent of this group said they were not on track with respect to saving for retirement even before the economic downturn in 2008.

“There are always going to be external factors that get in our way, especially when it comes to finances,” continued Demmissie. “The key is to focus on what you are able to control and act accordingly so you can meet your goal.”

Boomers interested in getting back on track are encouraged to visit TD Ameritrade's website, which offers a number of free retirement planning resources that can help investors pursue their goals, including:

1. WealthRuler™ retirement calculator that can help you estimate your retirement readiness

2. Amerivest® Portfolios, which will help you develop a diversified portfolio that will fit your needs and help you pursue your retirement goals

3. Access to a network of knowledgeable, independent third-party registered investment advisors (RIAs) through the TD Ameritrade AdvisorDirectTM program.**

4. Access to Life 2.0TM, an educational resource that provides investors with tailored financial guidance and support based on life stage.

For more information on the surveys, including key findings, visit TD Ameritrade's online newsroom or follow the Company on Twitter, @TDAmeritradePR.

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Survey Method
An online survey was conducted with N = 2,000 U.S. Baby Boomers between October 10 and 12, 2012, by Head Research on behalf of TD Ameritrade, Inc. Sample was drawn from major regions in proportion to the U.S. Census, including New England (5%), Mid-Atlantic (16%), South (25%), Midwest (22%), Southwest (12%), West (20%). Approximately 50% of respondents in each region were male and 50% female. All respondents were required to be: 1) Baby Boomers (i.e., born between 1946 and 1964) and 2) Shared or sole household decision-makers concerning saving for retirement. Two primary groups were defined based on financial preparedness for retirement: 1) Prepared: “Somewhat” or “very prepared” financially for retirement (n = 1,430) and 2) Unprepared: “Somewhat “or “very unprepared” financially for retirement (n = 570). The survey took each participant 16 minutes to complete, on average. The statistical margin of error for overall results in this study is +/- 2.2%. This means that, in 19 out of 20 cases, survey results for questions based on all Baby Boomers (i.e., N = 2,000) will differ by no more than 2.2% in either direction from what would have been obtained by measuring the opinions of all Baby Boomers in the USA.

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. Please visit TD Ameritrade's 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 offices in New York, Toronto, and Montreal, Head delivers the deep customer insights that increase institutional knowledge and propel business action.

About Amerivest Investment Management, LLC
Amerivest is an investment advisory service of Amerivest Investment Management, LLC, a registered investment advisor. Brokerage services provided by TD Ameritrade, Inc. TD Ameritrade, Inc. and Amerivest Investment Management, LLC are both wholly owned subsidiaries of TD Ameritrade Holding Corporation. Amerivest is a trademark of TD Ameritrade IP Company, Inc. Amerivest provides non-discretionary and discretionary advisory services for a fee. Risks applicable to any portfolio are those associated with its underlying securities. For more information, please see the Amerivest Disclosure Brochure (ADV Part 2).

All investments involve risk, including loss of income payments and loss of principal. Past performance does not guarantee future results. There is no assurance that the investment process will consistently lead to successful investing. Asset allocation and diversification do not eliminate the risk of experiencing investment losses.

**Minimum asset level required. There is no charge or obligation for the initial consultation with the RIA. Once you select an RIA, you will pay advisory fees and standard brokerage fees. Brokerage transactions executed through TD Ameritrade are subject to standard transaction charges. You should review an RIA’s Form ADV, other applicable advisor disclosure document(s) and the AdvisorDirect Disclosure and Acknowledgement Document prior to engaging an RIA. The Form ADV contains important disclosure information relative to an RIA’s services and fees. RIAs charge an ongoing investment advisory fee for their services. RIAs will pay TD Ameritrade fees for their participation in the AdvisorDirect program. Those fees will usually constitute a percentage of the advisory fees you will pay your RIA. For additional details about the fees paid to TD Ameritrade and other conflicts of interest, please review the AdvisorDirect Disclosure and Acknowledgement Document and ask your RIA about its specific arrangement with TD Ameritrade. You are solely responsible for evaluating any advisor that you are considering. Please note: Under no circumstances should participation by a certain RIA in AdvisorDirect be considered an endorsement or recommendation by TD Ameritrade for that particular RIA.

Contacts

TD Ameritrade Holding Corporation
For Media:
Christina Goethe, 201-369-8541
Communications & Public Affairs
christina.goethe@tdameritrade.com
On Twitter @TDAmeritradePR
or
For Investors:
Jeff Goeser, 402-597-8464
Investor Relations & Finance
jeffrey.goeser@tdameritrade.com

TD Ameritrade Boomer Survey finds financial discipline key to success in retirement (Graphic: TD Ameritrade)

TD Ameritrade Boomer Survey finds financial discipline key to success in retirement (Graphic: TD Ameritrade)

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Contacts

TD Ameritrade Holding Corporation
For Media:
Christina Goethe, 201-369-8541
Communications & Public Affairs
christina.goethe@tdameritrade.com
On Twitter @TDAmeritradePR
or
For Investors:
Jeff Goeser, 402-597-8464
Investor Relations & Finance
jeffrey.goeser@tdameritrade.com