Financial Firsts: When Do People Take Their First ......for information to help you make decisions about buying your first home? Base: Stated age at which they first bought a home

AARP RESEARCHAARP.ORG/RESEARCH | © 2018 AARP ALL RIGHTS RESERVED

FINANCIAL FIRSTS: WHEN DO

PEOPLE TAKE THEIR FIRST

FINANCIAL STEPS?September 2018

https://doi.org/10.26419/res.00244.001DOI:

AARP RESEARCHAARP.ORG/RESEARCH | © 2018 AARP ALL RIGHTS RESERVED 2

Objectives and Methodology 3

Key Findings and Implications 4

Detailed Findings 7

Contact 21

Table of Contents


Objectives and Methodology• Objectives: To identify the ages at which people first take certain

financial steps and to determine the sources they consult whenmaking decisions about those steps.

• Methodology: Survey was fielded online as well as by phone aspart of the August 2018 NORC Amerispeak® Omnibus usingNORC’s Amerispeak Panel.

• Sample: NORC Amerispeak Panel®, n=946 adults age 25+.

• Fielding Dates: August 16-20, 2018

• Weighting: The data are weighted by age, gender, education,race, Hispanic ethnicity, and census division to benchmarks fromthe February 2018 Current Population Survey (CPS) for personsage 25 and older.

• Questionnaire length: 3 minutes (median).

• Margin of error: ± 4.68 percentage points at the 95% confidencelevel

3

AARP RESEARCHAARP.ORG/RESEARCH | © 2018 AARP ALL RIGHTS RESERVED AARP RESEARCHAARP.ORG/RESEARCH | © 2018 AARP ALL RIGHTS RESERVED 4

KEY FINDINGS ANDIMPLICATIONS


Key Findings

• More than six in ten (63%) adults age 25+ got their first credit card before they turned 25.

• Over eight in ten (85%) opened their first checking account before age 25, including a full70 percent who did so before age 21.

• Eight in ten (80%) first paid rent for a place to live before age 25.

• More than half (58%) bought their first home before the age of 35.

• Half (50%) started saving for retirement before age 35.

• Of those who have saved for retirement, three in four (73%) started doing so in a retirementsavings account provided through their employer.

• Family and friends are commonly consulted about many of these steps, but employers arethe most common source of information regarding retirement savings.

5


ImplicationsThese findings show that the majority of adults start making important financial decisions at relatively young ages thatcan have long-lasting consequences.

6

For example, before the age of 25, the majority of adults haveopened a checking account, gotten their first credit card, andstarted paying rent. Many take these important steps entirelyon their own without consulting others, which may put them at risk.Education regarding credit card terms and leasing agreementsmay be especially useful for these young adults as they embark ontheir financial journey.

The influential role of family and friends is evident by the factthat many adults say that they turned to family or friends forinformation to help them make decisions about their first checkingaccount, first credit card, first place to rent, and first homepurchase.

However, in the matter of retirement savings, employers appear to have the most influence. Not only areemployers the most common source of information about retirement savings, but the vast majority of those who havesaved for retirement started doing so at work. This underscores the need for employers to continue their importantrole in the retirement savings process.

AARP RESEARCHAARP.ORG/RESEARCH | © 2018 AARP ALL RIGHTS RESERVED AARP RESEARCHAARP.ORG/RESEARCH | © 2018 AARP ALL RIGHTS RESERVED 7

DETAILED FINDINGS


Most received their first credit card before age 25.

8

More than six in ten (63%) adults age 25+ got their first credit card before they turned 25, including 41percent who did so before age 21. Fewer than one in ten (8%) say that they have never had a credit card.

Q1. At what age did you get your first credit card? (Your best guess is fine ifyou can’t recall exactly.) Base: All

41%

22%

17%

5% 4%

8%

2%

Under age21

Age 21-24 Age 25-34 Age 35-44 Age 45 orolder

Never had acredit card

DK/Refused

Age at Which Received First Credit Card


More than one in three reached decisions about their first credit cardentirely on their own.

9

Q1b. Which of the following sources, if any, did you turn to for information to help you makedecisions about getting your first credit card? Base: Stated age at which they received firstcredit card (n=848)

Note: Chart shows only those responses selected by more than 2 percent of respondents.

3%

4%

4%

5%

5%

18%

13%

10%

26%

36%

Magazine or book

TV

School or college (current or former)

Employer (current or former)

Internet searches

Financial institution

Friend

Family member (other than parent)

Parent

Made decision entirely on own

Information Sources Consulted When Getting First CreditCard

41% familyor friend

Parents were the most common source of information consulted (26%). Other family members as well as friends werealso relatively popular sources of information. In fact, four in ten (41%) stated that they turned to a friend or familymember (parents or others) for information.


Over eight in ten opened their first checking account before age 25.

10

Seven in ten (70%) opened their first checking account before age 21. Just 26 percent did so before age18. Women were more likely than men to have opened a checking account before age 18 (30% of womenvs. 21% of men).

Q2. At what age did you open your first checking account? (Your bestguess is fine if you can’t recall exactly.) Base: All

How many opened a checking accountbefore age 18?

70%

15%

6%2% 1% 3% 3%

Under age21

Age 21-24 Age 25-34 Age 35-44 Age 45 orolder

Never had acheckingaccount

DK/Refused

Age at Which Opened First Checking Account

30%

21%

26%


Parents top the list of information sources consulted whenopening one’s first checking account.

11

Nearly six in ten (58%) turned to a family member or friend for information when opening their first checkingaccount, including 47 percent who turned to a parent. Just under three in ten (29%) made decisions about theirfirst checking account entirely on their own. Men were more likely than women to say that they turned to afinancial institution for information (20% of men vs. 12% of women).

5%

16%

29%

6%

12%

47%




Friend


Parent

Information Sources Consulted When Opening FirstChecking Account

58%familyorfriend

Q2b. Which of the following sources, if any, did you turn to forinformation to help you make decisions about opening your firstchecking account? Base: Stated age at which they opened firstchecking account. (n=888)

Note: Chart shows only those responses selected by more than2 percent of respondents.

Financial Institution

20% 12%


Eight in ten first paid rent before the age of 25.

12

51%

29%

10%

0% 1%

7%

2%

Under age 21 Age 21-24 Age 25-34 Age 35-44 Age 45 orolder

Never paidrent

DK/Refused

Age at Which First Paid Rent for a Place to Live

Half (51%) first paid rent for aplace to live before age 21.Fewer than one in ten (7%)have never paid rent.

Q3. At what age did you first pay rent for a place to live (for a room,apartment, or house)? (Your best guess is fine if you can’t recall exactly.)Base: All


Parents and friends were the most common source ofinformation regarding first places to rent.

13

More than half (54%) turned to family or friends for information when making decisions about the first place to rent.Parents and friends were equally popular sources of information. However, more than one in three (37%) made thedecisions entirely on their own. Women were more likely than men to consult a family member other than a parent(20% of women vs. 11% of men).

5%

5%

16%

24%

25%

37%

School or college (current or former)

Internet searches


Parent

Friend


Information Sources Consulted Regarding FirstPlace to Rent

54%familyorfriend

Q3b. Which of the following sources, if any, did you turn to for information tohelp you make decisions about the first place that you rented? Base: Statedage at which they first paid rent for a place to live. (n=866)

Note: Chart shows only those responses selected by more than 2 percent ofrespondents.

Family member other than parent

11% 20%


More than half first became a homeowner before the age of 35.

14

More than half (58%) bought their first home before the age of 35, including 20 percent who did so before age 25 and38% who did so between age 25 and 34. Roughly one in four (27%) have never bought a home. Women are more likelythan men to have bought their first home before the age of 25 (26% of women vs. 13% of men) but are also more likelythan men to have never bought a home (32% of women vs. 22% of men).

20%

38%

9%

3%

27%

2%

Under age 25 Age 25-34 Age 35-44 Age 45 orolder

Never owneda home

DK/Refused

Age at Which Bought First Home

Q4. At what age did you buy your first home? (Your best guess is fine if you can’t recall exactly.) Base: All

Under Age 25 Never

13% 22%

26% 32%


Parents and other family members were the most common sourcesof information consulted regarding first home purchases.

15

3%

3%

4%

8%

21%

26%

20%

30%

32%


Lawyer

Professional financial advisor

Internet searches



Friend


Parent

Information Sources Consulted Regarding First HomePurchase

62% familyor friend

Q4b. Which of the following sources, if any, did you turn tofor information to help you make decisions about buyingyour first home? Base: Stated age at which they firstbought a home. (n=664)

Note: Chart shows only those pre-printed responsesselected by more than 2 percent of respondents.

More than six in ten (62%) turned to family or friends for information when making decisions about their first homepurchase. Parents and other family members were nearly equally popular sources of information. Roughly one infour (26%) made the decisions entirely on their own. Women were more likely than men to consult a parent or otherfamily member (59% of women vs. 46% of men).

Family member(parent or other)

46% 59%


More than one in four (27%) have never saved for retirement.

16

Half (50%) of adults ages 25+ started saving for retirement before age 35, including one in four (26%) who startedbefore age 25. Women are more likely than men to have never saved for retirement (33% of women vs. 21% of men).Men are more likely than women to have started before age 25 (30% of men vs. 21% of women).

26%

24%

13%

7%

27%

2%

Under age 25 Age 25-34 Age 35-44 Age 45 orolder

Never savedfor retirement

DK/Refused

Age at Which Started Saving for Retirement

Under Age 25 Never

30% 21%

21% 33%

Q5. At what age did you start saving for retirement? (Your best guess is fine if youcan’t recall exactly.)Base: All


Employers are the most common source of information regardingsaving for retirement.

17

Roughly half (49%) of adults ages 25+ who have saved for retirement turned to their employer to help them makedecisions about retirement savings. However, one in five (21%) made decisions entirely on their own. Three in ten(31%) turned to family or friends for information, including 19 percent who turned to parents.

3%

5%

10%

14%

10%

11%

19%

21%

49%

Professional tax preparer

Internet searches

Professional financial advisor


Friend


Parent



Information Sources Consulted Regarding Savingfor Retirement

31% familyor friend

Q5b. Which of the following sources, if any, did you turn to for information tohelp you make decisions about saving for retirement? Base: Stated age atwhich they started saving for retirement. (n=668)

Note: Chart shows only those pre-printed responses selected by more than 2percent of respondents.


Most retirement savers started saving for retirement at work.

Q5c. In which type of account did you first save for retirement?Base: Stated age at which they started saving for retirement.(n=668)

73%

23%

4%

Type of Account in Which First Saved for Retirement

Account provided throughemployer at work (such as401(k) or 403(b))

Account that you set upyourself outside of work (suchas an IRA)

Other

Account ProvidedThrough Employer

65% 80%

Nearly three in four (73%) adults ages 25+ who have saved for retirement started saving for retirement inan account provided through their employer such as a 401(k). In contrast, only 23% of retirement saversstarted saving for retirement in an account that they set up on their own such as an IRA. Women areespecially likely to have started through their employer (80% of women vs. 65% of men).


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on Twitter.

AcknowledgementsNORC at the University of Chicago administered these survey questions through its August 2018 NORC AmerispeakOmnibus using its probability-based NORC Amerispeak panel. Oscar Anderson and Karen Turner of AARP Researchassisted with design and formatting. Alicia Williams of AARP Research assisted with proofing.

http://www.aarp.org/


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Documents

Financial Firsts: When Do People Take Their First ......for information to help you make decisions about buying your first home? Base: Stated age at which they first bought a home