Nearly three out of five (59%) Gen Z and Millennial investors said they have withdrawn early from their retirement accounts, compared to just one-third of the total population according to a new study from E*TRADE.
E*TRADE Financial Corporation’s most recent results from StreetWise, the E*TRADE quarterly tracking study of experienced investors, highlight retirement saving trends among Gen Z and Millennial investors amid the COVID-19 crisis.
Since the previous quarter, early retirement withdrawals among young investors shot up nine percentage points, the study found.
More than half of investors under 34 (51%) are worried about their lack of retirement savings, compared to about one-third of the total population (32%). In fact, not having enough saved for retirement became young investors’ No. 1 worry this quarter, outpacing concern over loss of a loved one.
Among young investors, the top barrier to saving for retirement is housing costs (67%), followed by education (64%) and healthcare costs (62%), compared to 44%, 34%, and 47% of the total population, respectively.
“Young investors have a barrage of financial obligations—whether it’s paying down student debt or a mortgage, saving for retirement, or helping care for their parents,” said Mike Loewengart, managing director of investment strategy at E*TRADE Financial. “The recent health crisis has only magnified these issues, forcing some Millennial and Gen Z investors to tap their retirement funds for relief. It’s important for young investors to remember that they have a significant benefit their older counterparts do not: time. Making consistent contributions today, no matter how small, can make an impact over the long term.”
Loewengart also noted that volatility is normal, and encouraged young investors not to lose sight of their retirement planning goals.
“As frightening as downturns can be, history has shown the market bounces back. Consumers who remain invested in the market and committed to their portfolio are best positioned to benefit in the long run,” Loewengart said. “On the other hand, those who move to the sidelines and turn to cash could lose out on potential returns and lock in current losses.
This latest wave of the E*TRADE survey was conducted from April 1-8, 2020, among an online U.S. sample of 940 self-directed active investors who manage at least $10,000 in an online brokerage account.
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.
