Gen Y may find hungry piggy banks come retirement
Despite an uncertain economy and warnings about future shortfalls in Social Security funding, today’s young adults are not stepping up to save for retirement. A recent report from Chicago research company Mintel reveals that over two-thirds (69 percent) of Generation Y (those age 14 to 31) workers who can participate in a tax-deferred 401(k) retirement savings plan are not doing so.
“Today’s young adults will likely need to rely more on individual savings for retirement than their older counterparts. But so far, they aren’t preparing to do so,” says Susan Menke, senior analyst at Mintel.
Financial advisors could help Generation Y realize the importance of long-term savings. By encouraging young adults to make small monthly contributions to a retirement account, advisors can help them build a nest egg slowly but surely.
However, most financial advisors aren’t focused on Generation Y. Mintel found that teens and twenty-somethings make up only 5 percent of financial advisors’ client base. “Advisors still primarily target wealthier, older adults,” says Menke. “With less disposable income, Gen Y isn’t seen as a lucrative clientele. But financial advisors are missing the opportunity to catch young adults now and keep them as they grow older and richer.”
The Mintel Comperemedia service, which tracks trends in direct marketing, confirms that most direct mail campaigns for investment products are sent to older Americans. In 2007, adults aged 30 and under received only 2 percent of investment direct mail offers tracked by the service. In contrast, adults over age 60 got 41 percent.
Mintel Comperemedia does show some companies making an effort to target Gen Y. For instance, USAA promotes an IRA with no fees and a low minimum contribution to encourage younger adults to start saving so their money can grow over time. Likewise in direct mail, Bank of America targets tech-savvy youth by promoting an online integrated platform for its brokerage accounts. The bank also highlights its automatic investment plan for added convenience. For more information visit www.mintel.com.
Focus groups flourish despite budget cuts worldwide
While some question the value of focus groups, you can’t argue with their popularity. Figures released in April by FocusVision Worldwide show that global use of focus groups increased 3.5 percent in 2007, to 537,000 total groups conducted, the second consecutive annual increase. And for the first time in four years, non-U.S. growth outpaced U.S. growth, according to the Stamford, Conn., research firm’s 2007 annual Focus Group Index.
U.S. growth slowed to 2.9 percent (increasing to 255,000 groups) compared to a reported total research spending growth rate of 6 percent. This is attributed to moderate shifts to other qualitative methodologies, such as online bulletin boards and ethnography studies. U.S. growth also suffered slightly from the slowest increase in advertising spending in years, as well as flat-to-declining qualitative market research spending from the pharmaceutical and financial sectors.
U.S. focus group facilities reported declining average billable amounts for focus facility services due to aggressive price competition and direct involvement from end-client procurement departments. Other trends reported include small shifts from traditional eight-to-10-respondent groups to more intimate dyad and triad formats. Qualitative/quantitative hybrid projects are also increasing. These projects involve response meters and survey components, as well as sensory and product studies encompassing high numbers of respondents over multiple days.
Non-U.S. growth activity continued strong at 4.1 percent, in line with a reported 4 percent overall increase in 2007 research spending. There have been continuing high growth numbers reported from facilities in the Latin America and Asia-Pacific regions. Another trend is face-to-face interviewing migrating from in-home to focus facility venues in developing countries. For more information visit www.focusvision.com.
Looking for the digitally savvy? Look Southwest.
Austin, Texas, is the most digital-savvy city in the United States, according to a Scarborough Research study. Twelve percent of Austin adults are digital-savvy, and they are almost twice as likely as the national average (6 percent) to be in this consumer segment. Las Vegas, Sacramento, Calif., and San Diego are also leading digital-savvy cities, with 10 percent of their residents having this higher level of technological orientation and adoption, according to the New York research firm’s Understanding the Digital Savvy Consumer study.
For the purposes of this study, Scarborough defined digital savviness as satisfying at least eight of the 18 high-tech consumer behaviors such as ownership of certain high-tech items (such as DVRs or satellite radio); consumer likelihood to engage in certain Web 2.0 behaviors (including blogging, downloading music and online gaming); and usage of leading-edge cellular device features (e-mail, text messaging, etc.).
In terms of purchasing patterns, digitally-savvy consumers are a luxury-oriented group. They are 56 percent more likely than the average consumer to own or lease a luxury vehicle; 175 percent more likely to have spent $500 or more on men’s or women’s business clothing during the past year; and 49 percent more likely to own a second home.
Online, this consumer group is equally high-end in its shopping behavior. More than half (54 percent) of the digital-savvy spent more than $500 online during the past year, and 35 percent spent upwards of $1,000 during that time frame. They are far more likely to spend online in high-end purchasing categories, such as automotive and travel, as well as everyday items, such as books and clothing.
The most digitally-savvy markets are known for leading the nation in a variety of high-tech behaviors. They also typically have the presence of major universities and represent established tech corridors in the U.S.
Politically, digital-savvy consumers are 25 percent more likely to be Independent voters. In terms of other major political parties, they are on par with the national average with being Democrat or Republican.
Active lifestyles and on-the-go living are common for this group. They are far more likely to enjoy athletic leisure activities including basketball, yoga, free weights training and jogging. The digital-savvy are 18 percent more likely to have longer commutes (one hour or more) to work each way. Given this active lifestyle, they rely on cell phones for communication and information. More than half (59 percent) of the digital-savvy use their cell phones for e-mail.
Demographically, the digital-savvy are male, young and wealthy. Fifty-six percent of them are male, and 77 percent of this consumer group is below the age of 44. They are 132 percent more likely than the average consumer to have an annual household income of $150,000 or more. In fact, more than half (57 percent) of this consumer group has an annual household income of $75,000 or greater. For more information visit www.scarborough.com/freestudies.php.
The U.S. is rich with millionaires
For the sixth consecutive year, the number of millionaire households in the U.S. (those with $1 million+ net worth, not including primary residence) has increased, this time by 5.9 percent from June 2006 to June 2007. There are an estimated 9.9 million millionaire American households, according to results from the annual Affluent Market Research Program (AMRP) conducted by New York research company TNS.
The mean age of the U.S. millionaire households is 66, with an average net worth of $4.6 million. The single most important financial goal of surveyed millionaires (56 percent) continues to be “assure a comfortable standard of living during retirement.” Retirement and education are top-of-mind for this population, with the most often-cited financial event in the past year being “rolled over a retirement account” (13 percent), “paid for a child’s education” (9 percent) and “paid for a grandchild’s education” (8.5 percent).
Long-term investing continues to be one of the key success factors for these households, with the vast majority of millionaires making few reactionary changes in their portfolios. When asked about their investment approach from June 2006 to June 2007, 59.2 percent of millionaires indicated their “approach has changed very little;” 35.6 percent “took a wait-and-see approach towards investing;” and 24 percent “took advantage of buying opportunities.”
Seventy-five percent owned individually-held stocks and bonds. Eighty percent of millionaires owned mutual funds outside of retirement accounts, reinforcing the premise that these investors develop a long-term financial plan and stick to it. Joe Hagan, TNS North America senior vice president, financial services, says that the continual rise in number of millionaires was largely due to prevailing market conditions. “The strong stock market absolutely contributed to the increase. Between June 2006 and June 2007, the NASDAQ increased by 9.9 percent; the S&P 500 by 18.4 percent and the Dow Jones Industrial Index rose an impressive 20.3 percent. It will be interesting to see how the current economic conditions in the U.S. affect the number of millionaires we see in 2008.” The following is a list of the top 10 counties with the highest number of millionaire residents: Los Angeles County, Calif.; Cook County, Ill.; Maricopa County, Ariz.; Orange County, Calif.; Harris County, Texas; San Diego County, Calif.; King County, Wash.; Santa Clara County, Calif.; Nassau County, N.Y.; Suffolk County, N.Y. For more information visit www.tnsglobal.com.
Many Americans dipping into savings early
Approximately one-quarter of adults who are actively planning for their retirement have prematurely withdrawn from their retirement investment products for reasons such as a family member losing a job and the cost of a down payment on a home. Financial pressures that motivate premature withdrawals seem to begin at age 35, when nearly one-third of respondents report doing so. Respondents under the age of 35 are more likely to withdraw funds for mortgage payments and to pay for an event than older respondents, according to a Wall Street Journal Online/Harris Interactive Personal Finance Poll study from Rochester, N.Y., research company Harris Interactive.
Wealthier respondents with income of at least $50,000 are less likely to have prematurely withdrawn funds from their retirement investment products. Those in the lowest income tier, under $35,000, are more likely to be affected by a death in the family and require premature withdrawals; however, only 35 percent of this segment is actually planning for retirement. Adults employed full-time feel the least pressure to withdraw funds prematurely from their retirement investment products, with nearly 70 percent of those actively planning for retirement never having done so.
Those working part-time experience more pressure in housing-related expenses and are more likely to prematurely withdraw funds for a down payment on a home and for mortgage payments.
Nearly one-third of adults who have prematurely withdrawn funds from their retirement products cannot pay them back, and 45 percent either cannot pay back the funds or have not begun to do so. Those ages 45-54 are more likely to be unable to pay back their premature withdrawals. The youngest adults, 18-34, seem to be more financially responsible or less financially burdened and more likely to be currently making payments. Among the oldest respondents who have prematurely withdrawn funds, one-quarter of respondents are still actively contributing to their retirement investment products. Even among the highest income earners (over $75,000) more than one-quarter of respondents cannot pay back their premature withdrawals.
Among the 90 percent of U.S. adults who plan on retiring, most continue to contribute to their 401(k), have an IRA or invest in the market. Nearly one-quarter have not yet started planning for their retirement, and about 10 percent say they do not plan to retire at all. A majority of respondents over the age of 55 have retired but nearly 40 percent are still planning for their retirement.
Those with more education are more likely to be engaged in every retirement planning activity surveyed, with each better-educated segment more prepared than the previous. College graduates make up the only segment where a majority is actively planning for retirement (65 percent). Over one-third of those with a high school diploma or less, and about one-quarter with some college education, have not begun to plan for retirement. Those with the highest incomes ($75,000+) are most active in their retirement planning. Nearly 40 percent of those with incomes under $35,000 have not begun to plan.
The proportion of the population that expects to rely on Social Security as a primary source of income in retirement has fallen compared to 2007, although a majority expect to rely on it. This decline comes mainly from respondents ages 35-44 and those over 55. Half of U.S. adults expect to rely on their 401(k), and one-third see their IRA as a primary source of income in retirement. However, nearly one-third of respondents also continue to view a pension plan as a primary source of income in retirement. Reliance on Social Security declines as respondents get younger, as reliance on 401(k)s generally increases.
Each segment with more education is more likely to cite a 401(k) and an IRA as a primary source of income than the previous. Despite the decline in offering traditional pensions, over one-third of respondents with some graduate-school experience expect to rely on a pension. This could be due to the type of employment that requires a graduate degree.
Interestingly, expected reliance on Social Security has only fallen among the least and most affluent compared to 2007. A majority of respondents across all income levels continue to see Social Security as a primary source of income in retirement. Respondents among the lower-middle class, earning $35,000-$49,999, are more likely to rely on Social Security compared to the total. The wealthiest respondents continue to be the most sophisticated and are most likely to be invested in 401(k)s and IRAs. For more information visit www.harrisinteractive.com.
Summer flavors sizzle year-round with gas grills
Grilling is no longer just a summertime activity as an increasing number of Americans fire up their grills year-round, according to Port Washington, N.Y., research company The NPD Group. NPD’s 22nd annual Eating Patterns in America report shows that outdoor grill usage in America is at an all-time high and nearly double what it was 20 years ago. In 1985, 17 percent of households used a grill at dinner at least once during an average two-week period throughout the year; in 2007, it was 38 percent.
“While summer still accounts for the highest consumption levels of grilled food, grilling has increased the most in the other seasons of the year,” says Harry Balzer, vice president at NPD and author of Eating Patterns in America.
From 1998 to 2007, households that consume at least one grilled item in a two-week period increased 5.8 percent for spring; summer, 3.0 percent; fall, 9.6 percent; and winter, 7.8 percent.
The 6.5 average increase in year-round grilling coincides with the increased ownership of gas grills, according to Balzer. The majority of households have an outdoor grill (76 percent), and the grill of choice is one that uses gas - 75 percent of grill owners have a gas grill.
In 2007, NPD estimates grill sales grew by 3.2 percent (unit sales) from the previous year. “Grills and other outdoor living products continue to be a bright spot in an otherwise challenging market,” says Mark Delaney, director of NPD’s home industry sector. “There’s a BBQ grill designed to fit the needs and budget of every consumer, helping to make this category the most popular outdoor entertaining item owned.”
Balzer also attributes the steady rise in grilling with the increasing number of men cooking at home. “This is the one cooking appliance men are more likely to use than any other appliance in the home,” he says. Forty-one percent of men say they always do the grilling, while only 17 percent of women say they always do the grilling.
The top 10 most popular foods grilled are burgers (any, with or without bun), steak, chicken, hot dogs, pork chops, potatoes, vegetables, other pork cuts, sausage and seafood. For more information visit www.npdgroup.com.