Amid Graduation Season, E*TRADE Study Reveals Young Investors Cite Education Expenses as a Top Reason for Early Retirement Withdrawals

Data also suggest early withdrawals for education have doubled since
2016

NEW YORK–(BUSINESS WIRE)–E*TRADE Financial Corporation (NASDAQ: ETFC) today announced results
from the most recent wave of StreetWise, the E*TRADE
quarterly tracking study of experienced investors. Results reveal
concerning trends regarding education costs and saving for retirement:


  • Education is a top retirement saving roadblock. Tied with rent
    or mortgage, education expenses, including student loans, are one of
    the biggest barriers when it comes to saving, with six out of 10 young
    investors choosing it first or second. In fact, concern about these
    costs has increased nearly 20 percentage points over the past four
    years.
  • They’re making early withdrawals to pay for school. Three out
    of five young investors have made an early withdrawal from their
    retirement account, with education as the most oft-cited reason.
  • Yet they think they’re financially savvy. Nearly two-thirds of
    young investors feel extremely or very capable when it comes to
    managing their finances, and 80% say they’ve had moderate to heavy
    exposure to personal finance and investing.

“It’s no secret that education expenses can get in the way of saving for
retirement, but clearly tapping into a retirement fund early is a
serious issue that needs to be addressed,” said Mike Loewengart, Vice
President of Investment Strategy at E*TRADE Financial. “Fortunately,
there are a number of tools and vehicles designed to help make saving
for retirement easier, and the reality is younger investors have time on
their side. When one factors in compounding interest, a little can in
fact go a long way.”

Mr. Loewengart offered some tips on how recent grads can start off on
the right foot when it comes to saving and investing:

  • Don’t miss out on your employer’s 401(k) plan. Many employers
    offer a retirement plan, which is a great place to kick-start
    investing, especially if it offers a matching contribution, which is
    as close to free money as one will ever come in the investing world.
  • When it comes to contributions, you can set it and forget it.
    Automatic investing plans allow investors to deposit a fixed amount at
    regularly scheduled intervals. It takes the emotion out of the
    equation and helps reduce risk through dollar-cost averaging by taking
    advantage of the natural ups and downs of the market.
  • You don’t need to pay a lot for a diversified portfolio. Fortunately,
    today there are myriad ETFs with expense ratios that have never been
    lower, hundreds of which are offered commission-free, and deliver
    broad exposure to the market.

E*TRADE aims to enhance the financial independence of traders and
investors through a powerful digital offering and professional guidance.
To learn more about E*TRADE’s trading and investing platforms and tools,
visit etrade.com.

For useful trading and investing insights from E*TRADE, follow the
company on Twitter, @ETRADE.

About the Survey

This wave of the survey was conducted from April 1 to April 11 of 2019
among an online US sample of 917 self-directed active investors who
manage at least $10,000 in an online brokerage account. The survey has a
margin of error of ±3.20 percent at the 95 percent confidence level. It
was fielded and administered by Research Now. The panel is broken into
thirds of active (trade more than once a week), swing (trade less than
once a week but more than once a month), and passive (trade less than
once a month). The panel is 60% male and 40% female, with an even
distribution across online brokerages, geographic regions, and age bands.

About E*TRADE Financial and Important Notices

E*TRADE Financial and its subsidiaries provide financial services
including brokerage and banking products and services to retail
customers. Securities products and services, including ETFs, are offered
by E*TRADE Securities LLC (Member FINRA/SIPC). Commodity futures and
options on futures products and services are offered by E*TRADE Futures
LLC (Member NFA). Managed Account Solutions are offered through E*TRADE
Capital Management, LLC, a Registered Investment Adviser. Bank products
and services are offered by E*TRADE Bank, and RIA custody solutions are
offered by E*TRADE Savings Bank, both of which are national federal
savings banks (Members FDIC). More information is available at www.etrade.com.

The information provided herein is for general informational purposes
only and should not be considered investment advice. Past performance
does not guarantee future results.

Automatic investing plans and dollar cost averaging do not ensure a
profit or protect against loss in declining markets.

You can buy and sell ETFs available through the E*TRADE Commission-Free
ETF Program without paying brokerage commissions. To discourage
short-term trading, E*TRADE may charge a short-term trading fee on sales
of participating ETFs held less than 30 days.

E*TRADE Financial, E*TRADE, and the E*TRADE logo are trademarks or
registered trademarks of E*TRADE Financial Corporation. ETFC-G

© 2019 E*TRADE Financial Corporation. All rights reserved.

E*TRADE Financial Corporation and Research Now are separate companies
that are not affiliated. E*TRADE Financial Corporation engages Research
Now to program, field, and tabulate the study. Research Now Group, Inc.
provides digital research data and has locations in the Americas,
Europe, the Middle East and Asia-Pacific. For more information, please
go to www.researchnow.com.

Referenced Data

 
When it comes to saving what you want for retirement, how much of
a barrier is each of the following? (Top 2 box)
  Total   AGE: <34
Healthcare costs 52% 60%
Rent or mortgage 43% 61%
Day-to-day living expenses like food or utilities 39% 60%
Wanting to live for today 35% 55%
Education costs 38% 61%
Paying down student loans 34% 61%
Having a parent move in with you 30% 52%
Childcare 26% 51%
Having an older child move back in with you   25%   45%
         
When it comes to saving what you want for retirement, how much of
a barrier is each of the following? (investors under 34)
Education Costs Student Loans
Q2 2016 44% 44%
Q2 2017 56% 58%
Q2 2018 65% 69%
Q2 2019   61%   61%
 
Have you ever taken out money from an IRA or 401(k) before the
age of 59.5, and, if so, for what?
Total AGE: <34
No, I have never taken out money from an IRA or 401(k) before the
age of 59.5
65% 40%
Yes (Net) 35% 60%
Yes, to make a large purchase 12% 18%
Yes, for a medical emergency 11% 22%
Yes, because I became unemployed 10% 22%
Yes, to pay for education 10% 24%
Yes, to simply spend on myself or my family 8% 17%
Yes, to spend on a vacation 3% 5%
Yes, for holiday expenses 2% 3%
Yes, Other   2%   1%
         
Have you ever taken out money from an IRA or 401(k) before the
age of 59.5 and, if so, for what? (Investors under 34)
Yes For Education
Q2 2016 32% 12%
Q2 2017 48% 18%
Q2 2018 60% 24%
Q2 2019   60%   24%
 
How capable do you feel you are when it comes to managing your
finances?
Total AGE: <34
Extremely capable 20% 20%
Very capable 45% 43%
Somewhat capable 31% 32%
A little capable 3% 4%
Not capable   0%   1%
         
How much exposure do you feel you had to personal finance,
investing, or markets topics during your educational career?
Total AGE: <34
Heavy exposure 15% 23%
Moderate exposure 47% 57%
Minimal exposure 29% 16%
No exposure   10%   4%
 

“Young investors” defined as age 18–34

Contacts

E*TRADE Media Relations
646-521-4418
mediainq@etrade.com

E*TRADE Investor Relations
646-521-4406
IR@etrade.com

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