New Survey Finds Younger Generations of Americans Bear the Brunt of Pandemic Financial Stress
More than 3 out of 5 Millennial respondents report very high or high levels of stress.
As we near the end of a volatile year marked by the beginning of the COVID-19 pandemic, new data from a CFP Board and Heart + Mind Strategies survey of Americans reveals that Millennials are the most stressed generation, with members of Generation Z (Gen Z) and Generation X (Gen X) only slightly less stressed. The Silent Generation reported the least amount of stress.
However, the majority of survey participants reported that they do not work with a professional financial planner, who can offer guidance on creating a financial plan to stay on track amidst the uncertainty.
CFP® professionals can best support clients of all ages with an understanding of each generation’s financial stressors and motivations at this uncertain time. In addition to identifying the most stressed generation, the survey results shed light on similarities and differences in the financial concerns of different generations, from Gen Z to the Silent Generation.
Majority of Young Adult and Middle-Aged Americans Are Stressed
Millennials are establishing career paths, buying homes, getting married, starting families, and making other significant financial and personal decisions. While building retirement savings for their future selves, Millennials may have student loans, mortgages, and other debt to manage in the present. Members of Gen Z and Gen X are also making similar decisions, with Gen Z just starting out in their careers and Gen X likely caring for both their children and aging parents.
With all of this, more than 3 out of 5 Millennial survey participants reported very high or high levels of stress, while only 8% of Millennials reported very low or low levels of stress.
The COVID-19 pandemic has impacted many of these decisions financially and logistically. The economic impact of the pandemic has closed businesses, resulting in layoffs and financial hardship for many. Stay-at-home orders have prevented family and friends from gathering, and closed schools, adding more caregiving responsibilities to parents working from home whose children are now learning remotely. With all of this, more than 3 out of 5 Millennial survey participants reported very high or high levels of stress, while only 8% of Millennials reported very low or low levels of stress. Gen Z and Gen X are close behind in stress levels. Exactly 60% of Gen Z and 59% of Gen X reported very high or high levels of stress.
Within middle-aged generations, women and men are experiencing similar levels of stress, though women reported experiencing slightly higher levels. 64% of women and 57% of men ages 34 to 54 reported experiencing very high or high levels of stress.
Though the COVID-19 pandemic has been stressful across generations, Baby Boomer and Silent Generation survey participants reported lower levels of stress than younger generations. Fewer than three out of 10 respondents from the Silent Generation and fewer than half of Baby Boomers reported high levels of stress. The Silent Generation and older members of the Baby Boomers have likely already made many of the life-changing personal and financial decisions members of younger generations are in the process of making. If they are not already retired, they likely have a plan and established savings.
Americans of All Ages Name the Cost of Healthcare as a Top Concern, But Generational Differences Emerge Among Other Financial Stressors
Amidst the COVID-19 pandemic, 41% of survey participants across generations named the cost of healthcare as one of their top financial concerns, making it the most selected concern. However, generational differences among other top financial concerns reveal more about the impact of the pandemic on the unique financial priorities of each generation.
Unemployment or reduced income emerged as a top financial concern among Gen Z, younger Millennials, older Millennials, and Gen X. Younger generations of Americans may not have as substantial of savings as older Americans do to fall back on in case of emergency.
Unemployment or reduced income emerged as a top financial concern among Gen Z, younger Millennials, older Millennials, and Gen X. Younger generations of Americans may not have as substantial of savings as older Americans do to fall back on in case of emergency, so the potential negative impact of lost income on financial well-being may be more detrimental—as demonstrated by over one-third of Gen Z and younger Millennials naming rent or mortgage payments as a top area of financial concern.
Older Millennials and Gen X seem to have more forward-looking financial concerns about the impact of the pandemic. While only 13% of Gen Z respondents and 20% of younger Millennial respondents named saving for retirement as a top concern, over one-third of older Millennials and Gen X named saving enough for retirement as a top stressor. As a generation nearing, or of, retirement age, over one-third of Baby Boomers also named saving for retirement as a top concern.
While older Baby Boomers and those in the Silent Generation may already be retired, survey results show that they are concerned about protecting assets they have already established. 44% of Baby Boomers and 59% of Silent Generation respondents named protecting assets as a top financial concern, as a likely reflection of the hard-earned retirement savings and estate plans older generations wish to protect amidst the uncertainty.
Despite Experiencing High Levels of Stress, the Majority of Respondents Did Not Seek Professional Advice
More than 94% of CFP® professionals surveyed in April 2020 agreed that Americans with a financial plan are more likely to make progress toward their goals, even during these uncertain times.
However, in the latest survey, nearly 3 out of 4 survey participants reported that they did not work with a financial planner, and this figure remained relatively consistent across generations. The top financial concerns reported by those who worked with a financial planner differed from those who had not. While 36% of those who had not worked with a financial planner named unemployment or reduced income as a top concern, this percentage dropped to 22% among those who had worked with a financial planner. The percentage of individuals who named rent or mortgage payments as a top concern more than doubled from those who did to those who did not work with a financial planner (13% vs. 32%).
Having experienced high levels of stress, and, with the latest surge in COVID-19 cases still growing, Americans of any generation would benefit from professional financial advice to tackle their top financial concerns and feel more confident in their personal finances through the creation of a resilient financial plan. For more on how the economic volatility caused by the COVID-19 pandemic has underscored the importance of the financial planning profession and its position as a smart career choice, read a recent Industry Insights article on the enduring value of the CFP® certification.