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.
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:
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!”
According 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.
“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,” 2018
2 Age Wave/Merrill Lynch, “The Financial Journey of Parenting: Joy, Complexity and Sacrifice,” 2018
3 AAUW, “Deeper in Debt: Women and Student Loans,” 2017
4 National Center for Education Statistics, 2018
5 Age Wave/Merrill Lynch, “Women & Financial Wellness: Beyond the Bottom Line,” 2018
Age 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 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.
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