••• financial services research
Singles not planning for retirement
Still, overall retirement savings trending up
The population of single U.S. adults is increasing, comprising a larger percentage of households than ever before, partially due to a trend in consumers staying single longer. However, new research from Mintel’s Retirement Planning U.S. 2015 report reveals that only half of U.S. singles (51 percent) have a retirement savings account, compared to seven in 10 (68 percent) of those living with a partner and a full 84 percent who are married.
Mintel data shows consumers have begun to take retirement saving more seriously. The percentage of U.S. households that have a retirement plan is 72 percent, up from 65 percent in 2013. However, most Americans are not as involved in saving for retirement as they could be. Only three in 10 adults save the most they can afford to save for retirement, with just 27 percent contributing the maximum allotment to their plan. Furthermore, nearly one-quarter (22 percent) of consumers who have an employer-sponsored plan contribute only enough to get the employer match.
“More Americans are staying single longer and our data shows this trend will hold out for the foreseeable future. Millennials, in particular, are choosing to stay single longer, establishing households either alone or with a partner without feeling the need or desire to get married. Because they are young, however, they may be hesitant to start saving for retirement. By postponing saving they are losing the benefit of time which allows their savings to accumulate and grow,” says Robyn Kaiserman, financial services analyst at Mintel. “Whether consumers are heeding lessons learned during the recession, have more money to save or more are working for employers who offer plans, we’re finding that Americans have begun to take retirement saving more seriously.”
According to Mintel research, few Americans (25 percent) are confident that Social Security will be there for them when they retire, with confidence especially low among Millennials (20 percent) and Gen X (14 percent). However, even fewer are saving enough, as only 24 percent of adults feel they are on target to have enough money to comfortably retire when the time comes. This indicates that most consumers believe they are likely to experience a shortfall once they retire. In fact, consumer confidence in the ability to comfortably retire seems to be decreasing, as data from Mintel’s Consumer Attitudes toward Retirement Planning U.S. 2013 report shows that 36 percent of consumers believe they were on target to retire at age 65 or before. There is some good news, however, with 27 percent of adults saying they are making financial sacrifices now in order to save for retirement.
Above all else, consumers are concerned that they do not understand how their retirement plan works (65 percent). For example, more than half (56 percent) don’t understand the investment options available to them. Another problematic issue is that more than half of respondents who are parents believe that saving for their children’s education is more important than saving for retirement (56 percent).
Other barriers to retirement savings center around concerns with handling money and vary by generation. More so than older generations, Millennials (45 percent) and iGeneration (43 percent) believe they would be saving more for retirement if they had an adviser to help them. Many, including Gen X, already know they should be saving more but aren’t either because they can’t afford to (61 percent) or because they haven’t gotten around to it yet (49 percent).
“Retirement planning continues to be a challenge in the U.S. Although the recession taught consumers what is at risk if they don’t save, most either aren’t willing or able to put aside what they will need for retirement. However, there is evidence that the situation is beginning to improve. Retirement plan balances are trending up, more companies are automatically enrolling employees in employer-sponsored 401(k) plans and the U.S. government has begun to offer savings products to people who might not otherwise be able to save. The fact remains, even among consumers who are saving, most savings will fall short. More effort needs to be made by all parties involved to make sure consumers are taking the necessary steps to enjoy a comfortable retirement,” says Kaiserman.
••• automotive research
Miles to go
Americans not too charged-up about hybrids, plug-ins
Electric cars – encompassing the full battery of products ranging from traditional hybrids, plug-in hybrids and pure electric vehicles – have seen some impressive benchmarks come and go in recent years. 2013 and 2014 each saw sales for this segment exceeding the half-million mark and 2015 is on track for a repeat. As of the end of July, nearly 290,000 vehicles with a battery generating at least some of their momentum have been sold in the U.S., including nearly 120,000 plug-in models (whether pure electrics or plug-in hybrids).
But while that is indisputably a lot of vehicles, 2015 sales numbers to date still represent the same 3 percent of total U.S. vehicle sales seen in 2012, before some major players joined the charge. But what might lie ahead for the segment?
Just under half of American car owners (or anticipated owners) say they’d consider a traditional hybrid the next time they’re in the market for a new vehicle (48 percent, identical to 2013 findings); lower consideration levels were recorded for plug-in vehicles, whether they be hybrids (29 percent, up 2 percentage points) or pure electrics (21 percent, also up 2 points). An additional two in 10 would consider a diesel (19 percent, up 3 points), while 35 percent would consider a smaller or gas-powered vehicle to save on operating costs (down 3 points).
These are among the findings from a Harris Poll of 2,225 U.S. adults (aged 18 and older) surveyed online from May 20-26, 2015.
Most of these vehicles appeal more to some groups than to others. Millennial drivers are more likely than their elder counterparts to consider a traditional hybrid, with 57 percent saying they’d consider one (vs. 49 percent of Gen Xers, 43 percent of Baby Boomers and 38 percent of Matures). This same trend holds true for plug-in hybrids (39 percent vs. 28 percent, 22 percent and 23 percent) and pure electrics (34 percent vs. 17 percent, 14 percent and 11 percent), as well as for diesel vehicles (27 percent vs. 16 percent, 17 percent and 9 percent).
Men are more likely than women to consider an electric vehicle (25 percent men, 17 percent women) and more than twice as likely to indicate that they’d consider a diesel (28 percent men, 11 percent women).
Distance drivers – those who travel over 50 miles in an average day – are especially likely to say they’d consider a plug-in hybrid (38 percent, vs. 28 percent of those traveling 30 miles or less in a typical day), a pure electric (32 percent vs. 18 percent) or a diesel (28 percent vs. 17 percent).
Democrats and Independents are more likely than Republicans to consider a traditional hybrid (53 percent Democrat, 52 percent Independent and 42 percent Republican), a plug-in hybrid (34 percent, 32 percent and 20 percent) or a pure electric (26 percent, 25 percent and 10 percent).
When asked to select their top concerns related to pure electric vehicles, price (67 percent) and range (64 percent) rise to the top, followed by repair/maintenance costs (58 percent), reliability (53 percent), performance/power (50 percent) and the fact that it’s still new technology (42 percent).
Price (73 percent Matures, 71 percent Baby Boomers, 63 percent each Gen Xers and Millennials) and range (75 percent, 75 percent, 58 percent and 52 percent) are especially strong concerns among older Americans.
What does this mean? Well, for one thing it means that American drivers’ top concern when considering a new vehicle – reliability, which 93 percent rate “very important” – is not among the top barriers standing in the way of electric car adoption.
But money talks: In addition to being the top barrier to electric car adoption, purchase cost is the second most important consideration when looking at a new vehicle (with 81 percent considering it very important). Right now hybrids and electrics still come at a premium when shopped against otherwise comparable vehicles but those comparative costs are slowly going down. Time will tell whether this might lead to stronger sales.
••• shopper insights
In-store experience still matters to shoppers
Major-purchase journeys getting shorter
Even with the increasing influence of digital technology on retail habits, the in-store experience is important in all major purchase decisions, with an overwhelming majority of shoppers buying in-person. At the same time, shoppers continue to carefully research major purchases of $500 or more, including financing options.
Findings from Stamford, Conn.-based Synchrony Financial’s Major Purchase Consumer Study confirm that while 80 percent of major-purchase shoppers start with online research, most tend to finish the deal inside of a store.
The latest study explored attitudes about shopping and spending habits, financing and the path to making major purchases across 13 categories: appliances; automotive service, tires and products; electronics; eyewear; fine jewelry; flooring; home improvement; furnishings; bedding and mattresses; lawn and garden; musical instruments; sewing; and sports and fitness equipment.
More than 3,400 Synchrony Bank cardholders and random shoppers who had made a purchase of $500 or more in the past six months, or planned to make such a purchase, participated in the survey conducted in May 2015 by research company Rothstein Tauber Inc.
A key finding of the study is that the major purchase journey is getting shorter, with shoppers spending an average of 68 days researching a product (down from 80 in 2014).
Digital tools continue to be an important part of the research process, empowering shoppers to navigate information and narrow options. Online purchasing of larger-ticket items remained stable at 13 percent year-over-year, with the exception of consumer electronics.
The in-store experience matters more than ever, with 73 percent conducting research during their visit and 87 percent of respondents purchasing in person. Sixty-four percent of all shoppers surveyed said in-store visits had a greater influence on their purchasing decision than online research.
Financing continues to play a critical role in the major purchase process, with 75 percent of Synchrony card-holders surveyed saying they “always” seek promotional financing when making a purchase, and 89 percent indicating promotional financing makes larger purchases more affordable.
Results show that shoppers enjoy the immediacy and interaction of in-store purchases. Shopping in-store allows them to take the product home on the same day, see and feel the product, and interact with a store associate. Some respondents noted they simply like to shop at the retailer.
“These insights are a valuable reminder for retailers of the importance of the in-store experience as part of a true omnichannel strategy,” says Toni White, chief marketing officer, Synchrony Financial. “Providing an integrated and consistent experience across all channels bridges shoppers from online sources of information to visit a physical store, validate their choices, and ultimately purchase.”
Shoppers continue to carefully conduct research via a number of channels prior to making their major purchase. Steps in their path-to-purchase include product research online and off such as store visits, consulting friends and family, exploring offers and financing and checking online reviews. Consumers who purchase online are driven by value and availability and said they liked the ease and convenience, found better deals on the Web or bought items not stocked in the store.
www.synchronyfinancial.com
••• pet research
This just in: We pamper our pets
Who’s controlling the leash, anyway?
How do you define family? If you’re a pet owner, you’re likely to use the term “family” to include more than just blood relatives in your own species. In fact, people treat their furry and feathered companions more like family members than ever, pampering them with treats, gifts, toys – even home-cooked meals.
Just how deep are our ties with our pets? According to a recent Nielsen survey conducted by Harris Poll, 95 percent of U.S. pet owners consider their pets to be part of the family. And in looking at how much we spend on our pets, it’s clear that U.S. consumers are sparing no expense when it comes to their “families.”
Today, 62 percent of Americans have at least one pet in their household, so it’s easy to see how we spent $19.7 billion on pet care last year alone. Who’s spending the most? In terms of pet ownership, two generations take the kibble: Millennials (65 percent own pets) and Gen X (71 percent own pets).
When it comes to which types of pets are in today’s households, dogs sit pretty on top: 71 percent of pet owners say they have at least one dog; half (49 percent) have cats; one in 10 have fish (11 percent); and less than one in 10 have a bird (8 percent) or some other type of pet (9 percent).
And to keep their pets happy at mealtime, Americans shell out big bucks, making pet food a thriving, multibillion-dollar industry.
And we like to keep our pets’ bellies full round the clock. In fact, Americans spend $2.6 billion of the more than $9 billion spent on dog food annually purely on dog treats. But we’re not just rewarding dogs for good behavior. We also spend $476 million on cat treats.
But we do more than just pamper our faithful companions with food. Forty-five percent of owners buy birthday presents for their pets and 64 percent buy them gifts on holidays. While Gen Xers own the most pets, Millennials are the most likely to buy birthday presents for their pets: 54 percent of Millennials give birthday gifts, compared with 40 percent Gen X, 42 percent Baby Boomers and 27 percent Matures (69+). Millennials are also most likely to dress their pets in clothing.
So when it comes to birthdays and holidays, what are we gifting to our pets? Toys of all kinds are hot sellers. U.S. consumers spent $389 million on pet toys alone last year, with $32 million being spent on chew toys and $8 million on pet ropes.
Just like we do with our other family members, we’re quick to jump into action when our pets aren’t feeling well. And that level of care doesn’t come cheap. We spend $389 million on medicine, $19.2 million on pet treatments, $2.4 million on pet repellent and $379.1 million on flea and tick products.
But when our pets are well, we definitely want them looking their best. Americans spend $166 million each year on pet grooming and $11 million on new brushes.
Whether furry, feathered or finned, pets in the U.S. continue to develop close relationships with their owners, and Americans are going to great lengths to ensure that they really do have it all.
The insights reported here were derived from the following sources: an English-language survey conducted by the Harris Poll of 2,205 U.S. adults, 1,323 of whom have at least one pet, surveyed online between May 20 and 26, 2015; Nielsen Answers data July 31, 2015.
••• education research
Family spending on college on the rise
Those who borrow look for more cost-savings
The Bank of Mom and Dad is open for business as parent out-of-pocket spending became the No. 1 source of college funding, according to How America Pays for College 2015, the national study from financial services firm Sallie Mae and researcher Ipsos. This year’s report – now in its eighth year – found parent income and savings covered the largest share of college costs, 32 percent, surpassing scholarships and grants (30 percent) for the first time since 2010.
Families covered the balance of college costs using student borrowing (16 percent), student income and savings (11 percent), parent borrowing (6 percent) and contributions from relatives and friends (5 percent).
After four years of relatively stable spending, families spent 16 percent more money on college in academic year 2014-15, for an average cost of $24,164, including tuition, room and board, living expenses, and other direct and indirect costs. At the same time, fewer families were worried that economic factors would affect their ability to pay for college, fewer eliminated colleges from consideration due to cost, and fewer took actions (cost-saving measures) to control college costs.
“The increase in the amount families are spending appears to be less about the rising cost of college and more about the choices parents and students are making about how much they elect to pay for college,” says Michael Gross, vice president and head of the higher education practice at Ipsos Public Affairs. “Traditional economic concerns, such as job loss, declining home values and decreased value of savings, are less-worrying for parents this year, allowing families greater freedom to concentrate on college.”
Sixty-two percent of families did not borrow any of the money they used to pay for college during academic year 2014-15. Among those who did, the responsibility for borrowing fell primarily to the student, with students signing for nearly three-quarters of the funds borrowed.
Those students and families who did borrow, however, took more cost-saving measures to afford college than those who did not borrow. Eighty-nine percent completed the Free Application for Federal Student Aid, compared to 78 percent of non-borrowers; 73 percent of students worked while attending school, compared to 68 percent of non-borrowers; and 68 percent of students reduced personal spending, compared to 55 percent of non-borrowers.
Working students are now the norm as 74 percent of students worked during the year to help cover costs. Most worked year-round, found employment in food service or retail and worked an average of 22 hours per week.
The overwhelming majority of families (97 percent) agreed college is an important and worthwhile investment, yet only 40 percent have a plan to pay for it. In families with plans, however, students are more likely to pursue a bachelor’s degree, there is more willingness and ability to spend on college and students borrow 40 percent less than those without a plan.
“College remains a priority for parents and they are feeling more confident as they reach into their own pockets and put their money where their values are,” says Raymond Quinlan, chairman and CEO, Sallie Mae. “It’s gratifying to see families are borrowing responsibly and making efforts to reduce costs. Still, too few plan for their college investment.”
How America Pays for College 2015 is based on the results of 1,600 telephone interviews Ipsos conducted in April 2015 of 800 parents of undergraduate students and 800 undergraduate students between the ages of 18 and 24. Data and years shown reflect academic years (July 1 to June 30). The report and a related infographic are available at salliemae.com/howamericapaysforcollege.