Generation X Focused on Near-Term Financial Priorities, Despite Concerns About Their Financial Future

Monday, February 4, 2008 1:00 pm PST

Dateline:

SAN FRANCISCO

Public Company Information:

NASDAQ:
SCHW

SAN FRANCISCO--(BUSINESS WIRE)--Only 13 percent of Americans ages 25-40 feel strongly that theyre on the right track for retirement and know exactly what they need to do to prepare, according to a new study commissioned by Charles Schwab. The vast majority (89 percent) of this age group admit to having at least one major financial concern regarding retirement, yet nearly four out of every five (78 percent) agree that, for now, retirement planning takes a back seat to other financial priorities such as meeting daily expenses, paying off debt or buying a home. Only 27 percent of respondents consider saving for retirement to be a priority.

With so many competing priorities to focus on today, its easy to neglect tomorrow, said Rene Kim, senior vice president of Schwab Investors Services. Waiting to invest or even taking a break from investing will result in a lot of catch-up work down the road. Devising a simple plan and sticking to it goes a long way toward helping Gen Xers ensure their financial fitness now and in the future.

Among those who are saving for retirement, the study reveals a major missed opportunity: Only 24 percent are funding individual retirement accounts (IRA) and only 53 percent of Gen Xers saving for retirement are doing so in an employer plan such as a 401(k). Those represent far fewer than the number of respondents who cite using savings accounts (62 percent) or direct investment in stocks, bonds, and mutual funds (30 percent) as means for retirement savings methods which do not provide the same mix of growth potential and tax efficiency.

Lack of Understanding Results in Insecurity Over Retirement

Lack of knowledge is a key barrier to opening an IRA. Nearly nine out of ten (86 percent) Gen Xers rated their knowledge of IRAs as average or worse, while 75 percent also stated they wish they knew more about them.

Meanwhile, the study revealed a strong correlation between IRA investing and Gen X confidence in retirement. Nearly half of respondents believe they pale in comparison to their peers when it comes to their understanding of IRAs and believe that they are less prepared for retirement. Interestingly, this sentiment is strongest among those that have not been investing in an IRA: 51 percent of Gen Xers without an IRA experience such insecurity, while only 10 percent of those with an IRA feel the same way.

Supporting the benefits of IRA investing, nearly 9 out of every 10 respondents with an IRA wish that they opened their account earlier in life.

Schwabs 15-Minute IRA Designed to Help Younger Investors Save

Last year, Schwab launched its 15-minute IRA which makes it easy for people to open a retirement account online. Schwab IRAs offer a number of advantages to investors, including no account service fees, low minimum balances, automatic depositing and rollover service representatives. Schwab IRAs also provide access to a wide range of investment choices that make it easy to invest, from Schwab Target date retirement funds to hundreds of other no-load, no transaction fee mutual funds, as well as stocks, bonds, CDs and more. Investors can open an account by visiting www.schwab.com/OpenIRA, calling 1-800-435-4000, or visiting a Schwab branch. Additional resources, including an IRA Analyzer that helps investors find the IRA type thats right for them, are also available at www.schwab.com/OpenIRA.

About the Survey

The Charles Schwab IRA Survey was conducted by Kelton Research between Jan. 4 and Jan. 8, 2008 using an email invitation and an online survey. Quotas are set to ensure reliable and accurate representation of the total U.S. population ages 25-40. Results of any sample are subject to sampling variation. The magnitude of the variation is measurable and is affected by the number of interviews and the level of the percentages expressing the results. In this particular study, the chances are 95 in 100 that a survey result does not vary, plus or minus, by more than 3.1 percentage points from the result that would be obtained if interviews had been conducted with all persons in the universe represented by the sample.

Important Disclosures

INVESTORS SHOULD CONSIDER CAREFULLY INFORMATION CONTAINED IN THE PROSPECTUS, INCLUDING INVESTMENT OBJECTIVES, RISKS, CHARGES AND EXPENSES. YOU CAN REQUEST A PROSPECTUS BY CALLING 800-435-4000. PLEASE READ THE PROSPECTUS CAREFULLY BEFORE INVESTING. INVESTMENT VALUE WILL FLUCTUATE, AND SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN ORIGINAL COST.

Charles Schwab & Co., Inc. (member SIPC) receives remuneration from fund companies in the Mutual Fund OneSource® program for recordkeeping and shareholder services, and other administrative services. Schwabs short-term redemption fee of $49.95 will be charged on redemption of funds purchased through Schwabs Mutual Fund OneSource® service and held for 90 days or less. Schwab reserves the right to exempt certain funds from this fee, including Schwab Funds®, which may charge a separate redemption fee, and funds that accommodate short-term trading. Funds are also subject to management fees and expenses.

About Charles Schwab

The Charles Schwab Corporation (Nasdaq:SCHW) is a leading provider of financial services, with more than 300 offices and 7.0 million client brokerage accounts, 1.2 million corporate retirement plan participants, 262,000 banking accounts, and $1.4 trillion in client assets. Through its operating subsidiaries, the company provides a full range of securities brokerage, banking, money management and financial advisory services to individual investors and independent investment advisors. Its broker-dealer subsidiary, Charles Schwab & Co., Inc. (member SIPC, http://www.sipc.org), and affiliates offer a complete range of investment services and products including an extensive selection of mutual funds; financial planning and investment advice; retirement plan and equity compensation plan services; referrals to independent fee-based investment advisors; and custodial, operational and trading support for independent, fee-based investment advisors through its Schwab Institutional division. The Charles Schwab Bank (member FDIC) provides banking and mortgage services and products. More information is available at www.schwab.com. (0208-5222)

Contact:

Charles Schwab
Matt Hurwitz, 415-636-3700
matt.hurwitz@schwab.com

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