The volatile economic environment is contributing to a grim outlook among parents, according to the results of a new flash poll that focuses on families’ financial viewpoints.
Just half of U.S. parents feel confident they will be able to save enough for retirement or their children’s education, and just 48% say they are on track to meet their financial goals, according to the Nationwide Retirement Institute’s survey of 1,000 U.S. adults with children under the age of 18. The picture is even more dire among Gen Z parents, just 37% of whom said they are confident they will be able to save enough money for retirement.
In addition, most U.S. parents (60%) cite inflation or rising living costs among their top financial concerns as they look ahead at the next 12 months, while 88% of parents are expecting an economic downturn in the next year.
Less than half of parents (45%) have a positive perception of their family's financial situation and nearly 4 in 5 say inflation and rising prices will influence their vote in mid-term elections. Nearly a third (32%) want to see legislation to ease the financial burden on parents and caregivers.
One positive is that American parents’ top financial goals overall are saving for retirement (52%), paying off debt (51%), and saving for their children’s education (43%). Black U.S. parents, however, are more likely to prioritize building credit and improving their financial literacy, respectively 39% and 23%. Gen Z parents, meanwhile, are more likely than average to cite building credit, managing childcare expenses and buying a home among their top financial goals.
Surprisingly, while parents overwhelmingly want support with their family's finances, more are turning to family and friends (56%), rather than a professional (27%), for financial advice.
“With the cost of living high and fear of a recession looming, parents' confidence in their family's financial situation is waning,” says Kristi Rodriguez, senior vice president of Nationwide Retirement Institute. “It's understandable that families are looking for comfort during this difficult time, whether with friends and family or through their faith, but the most important step they can take is to connect with a financial professional and create a plan,” she suggests.
Gen Z Families Worse Off?
Nationwide’s study also found the inflationary squeeze is hitting Gen Z particularly hard and they are leaning on safety nets to soften the blow. Roughly three in four Gen Z parents (74%) report that they live paycheck to paycheck most of the time, and nearly a third (29%) rate their family’s financial situation as “poor”—almost double the average for U.S. parents overall.
The study revealed three key areas where Gen Z parents are struggling the most:
Planning for their family’s finances: Nearly 4 in 10 (39%) Gen Z parents report that they did not do any financial planning before they had children, compared to 28% of the national average. Another 87% of Gen Z parents say they wished they started saving or investing earlier.
Paying for childcare: Roughly 3 in 10 (32%) Gen Z parents report they spend 50% or more of their take home pay on childcare, and one in five (21%) say they took on another job in the past year to better meet the needs of their children—nearly 10 percentage points higher than the national average for parents. Another 1 in 10 (9%) quit their job this year to focus on childcare.
Finding affordable housing: Despite homeownership being a top goal for 40% of Gen Z parents, half (49%) cite the cost of rent or housing as one of their top financial concerns—21 points higher than among U.S. parents overall.
Employer Help?
According to the findings, parents are looking to their employers for improved benefits to help balance work and childcare. Nearly half of parents (48%) want to see increased flexibility in work hours, and nearly 4 in 10 (39%) say they want improved health insurance benefits. Nearly a quarter (23%) of parents want improved parental leave policies.
And while most parents indicated (72%) they would be likely to contribute to a retirement account that allows them to withdraw up to $1,000 as needed for emergencies, the survey found that Gen Z parents are slightly less likely (59%) to contribute to an account of this type.
“While each family's path to financial wellness is unique, our survey clearly demonstrates that there's an immediate opportunity for financial professionals to help build confidence and security through financial literacy, especially for younger families who are struggling in today's economic environment,” observes Rodriguez. “Financial professionals can help with planning and other financial decisions such as maximizing workplace benefits to help families solve some immediate financial concerns.”
The survey was fielded from July 11–21, 2022, by Edelman Data and Intelligence (DxI) on behalf of Nationwide.
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