Northwestern Mutual

Planning & Progress Study 2017

The 2017 Planning and Progress Study seeks to provide unique insights into U.S. adults’ attitudes and behaviors towards money, financial decision making, and the broader landscape issues impacting people’s long-term financial security.

The study is based on an online survey of 2,749 U.S. adults conducted from February 14-22, 2017 (2,117 interviews with U.S. adults age 18+ in the General Population and an oversample of 632 interviews with U.S. Millennials age 18-34). Data were weighted to be representative of the U.S. population (age 18+) based on Census targets for education, age/gender, race/ethnicity, region and household income.

Planning and Progress Study 2017

  • Advisor Advantage
  • The Debt Dilemma
  • The Financial States of America

Advisor Advantage

New findings from Northwestern Mutual’s Planning & Progress Study revealed that Americans who receive guidance from financial advisors feel markedly more prepared for retirement. According to the data:

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  • 7 in 10 (70%) Americans with advisors said their retirement plan is designed to withstand market cycles compared to 30% of those who do not use an advisor
  • Nearly all those with an advisor (92%) have discussed retirement with someone relative to just have 51% of those without an advisor
  • People without financial advisors are twice as likely (53%) as those with advisors (27%) to view lack of savings as an obstacle to financial security in retirement
  • 49% of people without an advisor have taken no steps to address the possibility of outliving retirement – three times as many as those with an advisor (15%)

Read the news release.

Financial Advice – the key to confidence and the antidote to anxiety?

In addition to a heightened level of retirement readiness, Americans who use advisors tend to feel more financially confident overall. Notably, individuals with financial advisors are almost twice as likely as those without advisors to say they feel “very financially secure” (68% vs 36%). Additionally, more than three quarters (77%) view themselves as “highly disciplined” or “disciplined” planners compared to 41% of those without an advisor. Good financial habits may be a key reason why people with advisors experience significantly less anxiety about debt, income, poor credit, and unplanned health or financial emergencies.

This optimistic outlook extends beyond personal finances:

  • More than half (52%) of U.S. adults with advisors think the economy will be better this year compared to just 39% of those without advisors
  • 6 in 10 (59%) of people with advisors believe that the American Dream is still attainable to most while only 4 in 10 of those without an advisor feel the same

And the data suggests that Americans are increasingly embracing the value of professional financial advice. This year there was incremental growth in the number of Americans with an advisor (35% up from 31% in 2016). The uptick was particularly pronounced within the Millennial generation, with 29% currently using a financial advisor versus 21% in 2016.

Download Planning and Progress Studay 2017 — Advisor Advantage

The Debt Dilemma

Nearly three quarters of Americans are struggling with debt and the burden is significant in terms of both size and duration, according to new findings from Northwestern Mutual’s 2017 Planning & Progress Study. Specifically:

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  • Of those Americans with debt, 4 in 10 (45%) spend up to half of their monthly income on debt repayment
  • Nearly half of Americans (47%) are carrying at least $25,000 in debt, with average debt of $37,000 excluding mortgage payments. Notably, more than 1 in 10 say their debt exceeds a staggering $100,000
  • More than one third (36%) said they will be in debt between 6 and 20 years while 14% expect to be in debt for the rest of their lives

When looking at the sources of debt, similar to 2016, mortgages (29%), credit card bills (19%), and personal educational loans (7% gen pop and 23% for Millennials) topped the list. 

Read the news release.

The True Cost of Debt

Not surprisingly, debt emerged as a significant source of stress and pressure: 

  • 4 in 10 Americans said debt has a “substantial” or “moderate” impact on financial security and the same number consider it a “high” or “moderate” source of anxiety
  • Eliminating all debt (26%) and earning significantly more income (29%) had the most mentions when asked what changes would most positively affect people’s financial situations
  • When asked how they would use a $2,000 windfall, 40% said they’d pay down debt

Despite recognizing the downsides of debt, the lure of spending remains strong.  After covering off on necessities, Americans said 40% of their monthly income goes toward discretionary spending on entertainment, leisure travel, hobbies, etc. In fact, when asked what financial pitfalls they are prone to, one quarter of Americans flagged “excessive/frivolous” spending.

Paying the Piper – Or Not

The findings revealed that, among those managing debt, there is no clear consensus on the best strategy for repayment:

  • “I pay as much as I can on each of my debts each month” (35%)
  • “I pay off debts with the highest interest first and make minimum payments to others” (19%)
  • “I pay what I can when I can” (18% gen pop - 25% Millennials)
  • “I make minimum monthly payments to each creditor” (17%)

Download Planning and Progress Study 2017 – The Debt Dilemma

The Financial States of America

Financial States of America

While Americans feel like the country is currently on firmer financial footing today, overall confidence appears to have waned, according to new research released by Northwestern Mutual. The study found:

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  • 43% of U.S. adults 18 and over say the economy will be better this year than in 2016, which is a considerable jump from the 31% who said the same last year; and
  • Nearly three quarters (72%) of Americans feel financially secure.

These positive signals, however, were tempered by a more sober long-term outlook. Today, less than half (48%) of U.S. adults aged 25-65 say the American Dream is still attainable for most Americans, compared with 58% who said the same in 2009 – the first year of the study.

Read the news release.

Financial Vulnerability

The 2017 Planning & Progress Study suggests that while Americans still feel a high degree of financial vulnerability, there are some signs of improvement over last year:

  • The majority (67%) of U.S. adults 18 and over believe that, over time, there will likely be more financial crises. While the number is high, it’s a sharp decline from the three-quarters (76%) who said the same in 2016.
  • 43% of U.S. adults say the economy will be better this year than in 2016, versus 31% who said the same last year.
  • 72% feel financially secure. And more than a third (38%) expect their financial security to increase in the next year, which is double the number (19%) who expect to feel less secure.
  • Still, more than one in four (28%) Americans feel a level of financial insecurity, and more than one in ten (11%) feel “not at all secure.”

Financial Habits

Just as Americans are feeling slightly better about the country’s economic footing, there are signs that their financial discipline has slipped. Despite widespread expectations that financial crises are likely to occur again, people have taken a small step backwards in terms of their long-term financial planning. The study found:

  • Only 50% of U.S. adults 18 and over say they need a plan that anticipates up and down cycles. This is a drop from the 57% who said the same last year.
  • Only 41% say their long-term savings strategy has a mix of high and low-risk investments, compared to 44% last year.

Download Planning and Progress Study 2017 – Financial States of America