understanding the financial challenges unique to self-employed … · 2016-01-15 · 2. table of...
TRANSCRIPT
1
Understanding the Financial Challenges Unique to Self-employed Americans
Self-employment Survey
2
TABLE OF CONTENTS
RESEARCH METHOD 03
KEY FINDINGS 04
BECOMING SELF-EMPLOYED 06
CHALLENGES OF RUNNING A SMALL BUSINESS 15
IMPACT OF TECHNOLOGY 22
THE CHANGING BUSINESS CLIMATE 28
FINANCIAL ADVICE 40
SAVING FOR RETIREMENT 44
APPENDIX 58
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This survey was conducted by Head Solutions Group on behalf of TD Ameritrade Holding Corporation1.
The statistical margin of error for the total sample of N=1,505 American adults within the target group is +/- 2.5 %2. This means that, in 19 out of 20 cases, survey results will differ by no more than 2.5 percentage points in either direction from what would have been obtained by the opinions of all target group members in the U.S. Sample was drawn from major regions in proportion to the U.S. Census. Generations used in this report are defined according to the Pew Research Center. Millennials (born 1981 to 1997, ages 18 to 34 in 2015), Generation X (born 1965 to 1980, ages 35 to 50 in 2015) and Baby Boomers (born 1946 to 1964, ages 51 to 69 in 2015)3. 1 Head Solutions Group (U.S.) Inc. and TD Ameritrade Holding Corporation are separate, unaffiliated companies and are not responsible for each other’s products and services2 Assumes survey participants are the same as non-participants3 http://www.pewresearch.org/fact-tank/2015/01/16/this-year-millennials-will-overtake-baby-boomers/
Note: Percentages may not add up to 100 due to rounding.
New England
7%
Mid-Atlantic
15%
South
20%
Southwest
11%
West
22%
1,505 self-employed American adults
OnlineSurvey
September 29th to October 9th
2015
Average time to complete survey:
15 minutesHead Solutions Group on behalf of TD Ameritrade
Holding Corporation1
45% Male
55% Female
Midwest
25%
WHENWHATWHO
CONDUCTED BY
Research Method
4
• The business climate is perceived as unfavorable: 6 out of 10 self-employed say the business climate is moving faster now than 3 to 5 years ago
• Three in 10 self-employed businesses have been hurt by the fast moving pace of change:
• Profits are decreasing for one quarter (28%)• Cost of business has increased for one in three self-employed
(32%)
• Recent government policies have hurt businesses of self-employed Americans who say that:
• The effect of government regulations has become worse (27%)• Rising healthcare costs have reduced their ability to save (26%)
• Over 6 in 10 (64%) do not believe that small businesses will be part of the next President’s top 5 priorities
• Reducing healthcare costs is the most desired Presidential priority for half (51%) of self-employed
Key FindingsSelf-employment is a rewarding employment choice for many Americans, but can come with a personal and financial cost. In the last 3 to 5 years many have seen the costs of running their business go up, profits decrease and their ability to save for retirement impeded, leaving many self-employed Americans far behind with their savings goals
• Six in 10 (61%) self-employed are anxious about saving money for retirement and over half (55%) feel they are behind with their retirement savings
• Half (48%) say that unpredictable income and too many personal expenses (38% all, 49% Millennials) are the main barriers to regular saving for retirement
• Six out of 10 (59%) are not making regular contributions to their retirement savings
• Although they are behind in their retirement savings, 6 out of 10 (57%) of self-employed expect to fund their retirement with their own savings while half (51%) expect to rely, at least partially, on social security to fund their retirement
• If, once they reach their intended retirement age, they do not have enough money to fund their retirement, continuing to work is plan B for most self-employed (76%)
• As they are facing the challenges of saving for retirement, it is concerning to see that only 3 in 10 (28%) report having received professional financial advice in the past 12 months. Half of those not receiving advice (53%) prefer to rely on their own expertise or do not believe that professional advice would be helpful (25%)
Self-employed Americans say that their businesses are hurting, and they don’t expect that political or economic developments, or a new President, will help them
The business and political climates are impeding self-employed Americans’ ability to save for retirement.They have a Plan B: continue to work into retirement years or rely on social security
5
• Many self-employed take financial risks to start their business, with 1 in 4 (27%) relying on personal borrowing
• Personal borrowing also keeps one fifth (22%) of self-employed businesses running. Very few turn to small business loan/credits and even fewer turn to federal grants or loans (respectively 8%, 2%)
• Two-thirds (63%) feel they have sacrificed the benefits of traditional employment: many have to work long hours (52%), are never able to completely turn off (41%) and are under constant financial pressure (40%)
• When asked to make comparisons to how they felt a year ago, 6 in 10 (59%) say they are more anxious about earning a steady income, while half are more anxious about expanding their business (53%) and fulfilling their business’ financial commitments (47%)
Key Findings (Continued)Self-employment is a rewarding employment choice for many Americans, but can come with a personal and financial cost. In the last 3 to 5 years many have seen the costs of running their business go up, profits decrease and their ability to save for retirement impeded, leaving many self-employed Americans far behind with their savings goals
• Three quarters (76%) of self-employed Americans have had a taste of traditional employment before venturing out on their own
• Over 4 in 10 (43%) believe that they would be in a job they either don’t enjoy or would be overqualified for if they were not self-employed
• Furthermore, 7 out of 10 (72%) say being self-employed has been more financially rewarding than expected and half (50%) are willing to sacrifice short term comfort for future success
The challenges of self-employment are numerousand self-employment comes with financial risks and personal sacrifices
Yet, despite all of this, becoming self-employed is a rewarding choice for many
6
Becoming Self-employed
7
Which of the following best describes the historyof your working status up to this point?
Three in 4 (76%) self-employed spent time traditionally-employed before starting their self-employed careers
Q236. Base: All (N=1,505)
10%
47%
28%
13% Only ever self-employed
Traditionally-employed first, then self-employed(no overlap)
Traditionally-employed first, then self-employed(with overlap)
Various periods of traditional and self-employment
Traditionally-employed first: 76%
8
One-fifth (21%) of self-employed are in the professional and business services sector
Q100. Base: All (N=1,505)
In which sector is your business?
Other
Manufacturing
Transportation and warehousing
Wholesale trade
Agriculture
Leisure and hospitality
Financial services
Information technology
Education/Educational services
Construction
Health care and social assistance
Retail
Professional and business services 21
10
86
5
4
4
3
2
2
1
1
33
%
9
The vast majority (90%) of self-employed do not import or export goods or services
Q110. Base: All (N=1,505)
Does your business import or export any goodsor services from/to outside of the U.S.?
90% 6% 6%
Neither imports nor exports goods and/or services
Imports goods and/or services
Exports goods and/or services
Boomers: 3%Gen X: 5%Millennials: 9%
Boomers: 3%Gen X: 5%Millennials: 9%
10
Personal borrowing is the most common source of start-up funds, for 1 in 4 (27%) self-employed. One in 5 (22%) self-employed Millennials used a gift or loan from their family
Q260a. Base: All (N=1,505, Boomers n=500, Gen X n=502, Millennials n=503)
Boomer 25 10 10 2 1 0 0 60
Gen X 25 11 11 3 2 2 1 60
Millennials 29 22 13 6 3 3 3 46
When you initially started your current business, which of the following sources of funding, if any, did you use?
Personal borrowing
Financial gift/loan from
parents/family friends
Federal/state grants/
loans
Small business
loan/credit (bank)
Investmentsfor shares/ownership
Short-term online loans
Crowd-sourced funding
None
27%14% 11% 3% 2% 2% 1%
55%
11
Which, if any, of the following types of support have you relied upon to help you achieve your goals?%. Top 5 sources, plus None
A third (34%) of self-employed have had to rely on credit cards to help them reach their goals, including 4 in 10 (41%) self-employed Millennials
Q210. Base: All (N=1,505, Boomers n=500, Gen X n=502, Millennials n=503)2013 Base: Q360, All self-employed (N=1,507). 2013 survey available at http://www.amtd.com/newsroom/research-and-story-ideas/research-and-story-ideas-details/2013/Self-Employed-Survey/default.aspx
Credit card
Personal/unsecured loans and/or personal line of credit
Living with your parents/other family members for free/for a small amount of rent
A financial gift from parents/other family members that you didn't/don't need to repay
Small business loan and/or business line of credit
None of the above
2013
37%
14%
13%
15%
6%
38%
34%
14%
14%
12%
11%
38%
Boomers: 30% Gen X: 32% Millennials: 41%
Boomers: 17% Gen X: 13% Millennials: 12%
Boomers: 2% Gen X: 10% Millennials: 29%
Boomers: 7% Gen X: 10% Millennials: 18%
Boomers: 48% Gen X: 42% Millennials: 25%
12
Two-thirds (63%) of self-employed feel they have sacrificed the benefits of traditional employment
Q220. Base: All (N=1,505, Boomers n=500, Gen X n=502, Millennials n=503)
Which of the following sacrifices have you had to make to be self-employed/a small business owner?
63%52%
41% 40% 39% 36% 30%23%
The benefits of traditional employment
Working long
hours
Constant financial pressure
Never able to completely
turn off
Prioritize business
over personal life
Put aside personal
well-being
Spend less time with
family
Carry a lot of debt instead
of saving money
Boomer 62 51 36 34 36 33 28 19
Gen X 61 54 40 40 39 37 29 23
Millennials 67 53 48 46 44 39 31 28
13
Four in 10 (43%) self-employed, rising to half (48%) of self-employed Millennials, believe that if they were not running their own business they would be in a job they didn’t like, or would be overqualified for
Q270. Base: All (N=1,505, Boomers n=500, Gen X n=502, Millennials n=503)
If you had not created your own business, do you think you would be unemployed or in traditional employment?
9% 43% 34%
Unemployed In a job I wouldn’t enjoy or would be overqualified for
Employed in a job I would enjoy
14%
Not sure
Boomers: 35%Gen X: 47%Millennials: 48%
14
2 1 3 6 16 17 17 20 7 12
5 6 7 8 9 10Much worse
than I expected
Much better than I expected
72% Better than expected (6-10)12% Worse than expected (1–4)
For 7 in 10 (72%) self-employed, being self-employed has been more financially-rewarding than expected
Q275. Base: All (N=1,505, Boomers n=500, Gen X n=502, Millennials n=503)
1-4
To what extent has being self-employed turned out the way you expected when you first became self-employed, in terms of being able to live a financially comfortable life?%
Boomers: 77% Gen X: 71%Millennials: 68%
15
Challenges Of Running A Small Business
16
Six out of 10 (59%) of self-employed are somewhat/much more anxious about earning a steady income now than a year ago
Q310. Base: All (N=1,505, Boomers n=500, Gen X n=502, Millennials n=503)
Compared to 12 months ago, to what extent are you more anxious about the following aspects of being self-employed or running a small business? Your ability to….
29
35
42
13
12
10
40
41
35
19
12
12
No more anxious than 12 months ago (1) Slightly more anxious (2 to 3)Somewhat more anxious (4-7) Much more anxious (8 to 10)
Fulfil your business' financial commitments
Expand your business
Earn a steady incomeSomewhat/much more anxious (59%)
Somewhat/much more anxious (53%)
Somewhat/much more anxious (47%)
%
Boomers: 34% Gen X: 50% Millennials: 57%
Boomers: 40% Gen X: 57% Millennials: 63%
Boomers: 46% Gen X: 64% Millennials: 66%
17
One in 5 (22%) self-employed are using personal borrowing to run their current business, and more than 1 in 10 (13%) self-employed Millennials are using money from their family
Q260b. Base: All (N=1,505, Boomers n=500, Gen X n=502, Millennials n=503)
Which of the following sources of funding, if any, are you currently using to run your current business?
22%8% 8% 3% 3% 2% 2%
65%
Financial gift/loan from
parents/family friends
Federal/ state grants/
loans
Small business
loan/credit (bank)
Investments for shares/ownership
Short-term online loans
Crowd-sourced funding
NonePersonal borrowing
Boomer 18 9 4 1 1 1 1 72
Gen X 21 8 6 3 3 1 1 69
Millennials 26 9 13 6 4 5 3 55
18
One in 5 (20%) self-employed would turn to their family if they needed additional funds for their business, rising to 1 in 3 (31%) self-employed Millennials
Q261. Base: All (N=1,505, Boomers n=500, Gen X n=502, Millennials n=503)
If you needed to access additional funding for your current business, which of the following sources would you be most likely to use?
40% 38%
20%8% 8% 7% 5%
22%
Financial gift/loan from
parents/family friends
Federal/ state grants/
loans
Small business
loan/credit (bank)
Investments for shares/ownership
Short-term online loans
Crowd-sourced funding
NonePersonal borrowing
Boomer 41 41 9 3 3 3 3 27
Gen X 41 39 20 8 9 8 6 22
Millennials 37 34 31 14 11 9 7 19
19
On average, self-employed hold over $7,000 in student loan debt, rising to over $15,000 for self-employed Millennials
Q240. Base: All (N=1,505, Boomers n=500, Gen X n=502, Millennials n=503)
79
3 3 4 2 2 3 2
95
0 1 2 1 1 1 0
82
4 2 4 2 3 2 2
59
5 7 7 5 3 6 4
0
20
40
60
80
100
Zero Under $5,000 $5,000 to$9,999
$10,000 to$19,999
$20,000 to$29,999
$30,000 to$49,999
$50,000 to$99,999
$100,000 ormore
Self-employed Boomers Gen X Millennials
All self-employed Boomers Gen X Millennials
Average debt (Mean) $7,870 $1,215 $6,835 $15,525
All with student loan debt: 20%Boomers: 5%Gen X: 18%Millennials: 36%
How much student loan debt do you currently have?%
20
Which of the following statements best describes how you view the balance between living a comfortable life now and committing resources to your business?
Half (50%) of self-employed are willing to sacrifice short-term comfort for future success, rising to 6 in 10 (58%) Millennials
Q300. Base: All (N=1,505, Boomers n=500, Gen X n=502, Millennials n=503)
50%
38%
12%I am willing to make sacrifices for my business now in order to have a more comfortable life in the future
I want to be able live comfortably now, even if it means that I may not be developing or growing my business as fast as
I don't know
Boomers: 38%Gen X: 53%Millennials: 58%
Boomers: 49%Gen X: 34%Millennials: 32%
21
For self-employed, being financially secure is the most important evidence of a comfortable life
Q305. Base: All (N=1,505, Boomers n=500, Gen X n=502, Millennials n=503)
Which of the following do you consider to be important aspects of living a comfortable life?
Not having to worry about money or debt
Having savings put aside for an emergency/a rainy day
Having time to relax away from work
84%
82%
74%
66%
65%
65%
Having enough discretionary income to afford things I want but don’t necessarily need
Being able to take regular vacations
Owning a home
22
Impact of Technology
23
Which of the following roles, if any, does technology play in your business? It allows me to…
Technology is essential for self-employed to communicate and manage their business, and particularly so for self-employed Millennials
Build tools/ products/ solutions that are part
of my business offering
Manage my business
Communicate Collect/find information
None of the above
Boomers 77 69 67 32 7
Gen X 75 75 68 40 8
Millennials 80 79 68 48 5
Q130. Base: All (N=1,505, Boomers n=500, Gen X n=502, Millennials n=503)
77% 74% 68% 40% 7%
%
24
Over the past 4 years, has your business become more or less reliant on technology?
More than half (54%) of self-employed are more reliant on technology now than 4 years ago
Q140. Base: All (N=1,505, Boomers n=500, Gen X n=502, Millennials n=503)
LessMore Same Not applicable
54%
32%
4%10%
2%Slightly Less
3%Much Less
Boomers: 38%Gen X: 36%
Millennials: 22%
25%Slightly Less
29%Much Less
Boomers: 4%Gen X: 8%
Millennials: 18%
25
6 14 7 7 5 12 14 14 11 4 6
5 6 7 8 9 10
Notincreased
at all
Increaseda great deal
67% Increase (4-10)27% No increase/minor increase (1–3)
Two-thirds (67%) of self-employed have seen the cost of keeping up-to-date with technology increase in the past 4 years
Q150. Base: All (N=1,505)
Compared to 4 years ago, to what extent has the cost of keeping up-to-date with the technology your business requires increased?
4321
I Don’t Know
%
26
One in 5 (22%) of self-employed feel their businesses could not have existed 20 years ago as its existence has been made possible by technological advancements, rising to 1 in 4 (28%) of Millennials
Q160. Base: All (N=1,505, Boomers n=500, Gen X n=502, Millennials n=503)
Do you think that your business could have existed in its present form 20 years ago, or has its existence only been made possible by more recent technological advancements?
70% 22% 8%
Could have existed 20 years ago
Could not have existed 20 years ago
Not sure
Boomers: 15% Gen X: 24%Millennials: 28%
27
Do you consider yourself to be running a 'start-up'?
One in 5 self employed (20%) are running a start up, rising to a third (32%) of self-employed Millennials
Q120. Base: All (N=1,505, Boomers n=500, Gen X n=502, Millennials n=503)
1/5(20%) of
self-employed consider
themselves to be running a start-up
BABY BOOMERGENERATION X
MILENNIALS
9%
20%
32%
28
The ChangingBusiness Climate
29
Do you feel that the business climate you operate in is changing more or less rapidly than it was 3 to 5 years ago?
The business climate is moving faster now than 3-5 years ago, for most self-employed (57%)
Q320. Base: All (N=1,505)
LessMore Same
57%
32%
11%
8%Slightly Less
3%Much Less
31%Slightly More
25%Much More
30
4 2 9 14 30 18 12 6 2 3
5 6 7 8 9 10Decreased
a great deal
Increased a great deal
42% Increased (6-10)28% Decreased (1–4)
Three in 10 (28%) self-employed has seen their profits decrease over the past 3 to 5 years
Q322. Base: All (N=1,505, Boomers n=500, Gen X n=502, Millennials n=503)
1
Compared to 3 to 5 years ago, to what extent has the dollar value of profit that you make from your business increased or decreased?
2 3 4
%
Boomers: 34% Gen X: 28%Millennials: 22%
Boomers: 37% Gen X: 39%Millennials: 50%
31
Over the past 3 to 5 years, 1 in 3 (32%) self-employed say the cost of doing business has increased, and one in four (27%) believe that the effect of government regulations has become worse
Q321. Base: All (N=1,505, Boomers n=500, Gen X n=502, Millennials n=503)
Compared to 3 to 5 years ago, to what extent is each of the following aspects of the business climate you operate in better or worse?
14
15
17
22
22
27
32
14
14
20
24
8
19
25
19
24
35
41
15
23
34
53
46
28
13
55
31
9
Worse (1 to 4) Neutral (5) Better (6 to 10) Not applicable
The effects of government regulations on your business
The cost of doing business
The healthcare costs of your employees
How demanding your customers are
Ability to hire staff/expand workforce
The minimum wage
How easily you can access capital for your business, if required
%
32
Six in 10 (61%) self-employed are somewhat/much more anxious about saving money for retirement now than a year ago
Q310. Base: All (N=1,505, Boomers n=500, Gen X n=502, Millennials n=503)
Compared to 12 months ago, to what extent are you more anxious about the following aspects of being self-employed or running a small business? Your ability to….
26 13 38 23
No more anxious than 12 months ago (1) Slightly more anxious (2 to 3)Somewhat more anxious (4-7) Much more anxious (8 to 10)
Save money for retirement
61% Somewhat/much more anxious (4-10)
%
Boomers: 46% Gen X: 67%Millennials: 70%
33
A raise in the minimum wage to $15 would not impact the majority (70%) of self-employed
Q340. Base: All (N=1,505)
In what ways do you think an increase in the minimum wage to $15 could affect your business?
54%
It could reduce my willingness to take on risk/make investments/develop new products or services
17%
17%
It could reduce my personal profit/income/ability to save
It could reduce my ability to expand my work force
It will have no impact – I don't employ anyone and do not intend to employ anyone
It could limit the growth of my business
It will have no impact – I pay more than $15 per hour to people who work for my company
It could drive me to seek a full or partial workforce that is outside of the United States
17%
10%
4%
16%No impact: 70%
34
26 4 6 4 11 7 8 7 3 23
5 6 7 8 9 10Not at all Completely
49% Support (6-10)40% Do not support (1–4)
Slightly more (49%) self-employed support a rise in the minimum wage to $15 compared to 4 out of 10 who do not support it (40%)
Q342. Base: All (N=1,505, Boomers n=500, Gen X n=502, Millennials n=503)
1
As a small business owner, to what extent do you support a $15 per hour minimum wage?
2 3 4
%
Boomers: 44% Gen X: 39%Millennials: 37%
35
You may be aware that there was a change in 2012 in the way the federal government defines a small business, which means that larger small businesses (those with under 500 employees) can now apply for government grants and funding that was previously only available to small businesses with fewer than 20 employees. Which of the following best describes how you feel about this change?
Equal numbers of self-employed (1 in 5) feel the recent change in the federal small business definition to include larger small businesses is fair (18%) as feel it is unfair (19%)
Q330. Base: All (N=1,505, Boomers n=500, Gen X n=502, Millennials n=503)
19%
18%
48%
14%I think this is an unfair change that makes it harder for the smallest small businesses to succeed
I think this change is fair because all small businesses may need access to government support
I don't care about this change because my business does not/will not apply for government grants or funding
None of the above
Boomers: 12% Gen X: 20%Millennials: 22%
36
A quarter (26%) of self-employed say that rising healthcare costs have reduced their ability to save, though two-thirds (65%) say that their business has not been affected
Q350. Base: All (N=1,505, Boomers n=500, Gen X n=502, Millennials n=503)
Over the past few years, the cost of health insurance has risen for some businesses. How has the rising cost of health insurance impacted your business, if at all?
It has reduced my personal profit/income/ability to save
It has limited the growth of my business
It has reduced my ability to expand my work force
26%
10%
10%
8%
6%
65%
It has reduced my willingness to take on risk/make investments/develop new products or services
It has meant some staff have had their working hours reduced in order to avoid qualification for health insurance
There has been no impact on my business
37
Even though most self-employed have not been affected by rising healthcare costs, reducing healthcare costs is the most desired Presidential priority, for half (51%) of self-employed
Q360. Base: All (N=1,505, Boomers n=500, Gen X n=502, Millennials n=503)
Other than cutting taxes, which of the following would be the best way the next President could help self-employed and small business owners?
Reduce the cost of healthcare to self-employed and small businesses
Increase the number of grants/loans available to self-employed and small businesses
Improve the education of the workforce
51%
16%
12%
10%
6%
4%
Prevent increases to the minimum wage
Make it easier to restructure/reduce the workforce of self-employed and small businesses
Reduce access to small business loans by companies that have more than 100 employees
38
Few self-employed (19%) expect the next President to have helping small business owners within his or her top 3 priorities
Q361. Base: All (N=1,505, Boomers n=500, Gen X n=502, Millennials n=503)
4%15%
17%
44%
20%
Number 1 Priority
In the Top 3 Priorities
In the Top 5 Priorities
Not Within the Top 5 Priorities
I Don’t Know
How much of a priority do you think helping self-employed/small business ownerswill be for the next President?
Top, or in Top 3 priorities: 19%)
39
Financial Advice
40
One in 4 (28%) self-employed has received professional financial advice in the past 12 months, falling to 1 in 5 (20%) self-employed Millennials. One in 10 (9%) self-employed has used a robo-advisor
Q400. Base: All (N=1,505, Boomers n=500, Gen X n=502, Millennials n=503). Multiple responses allowed
38%I have had discussions with a spouse or partner or parents/guardians
34%
24%
I have searched for information online
I have had discussions with a professional financial planner or financial advisor
I have read financial/investment books, magazines, watched/heard television/radio programs
I have had discussions with a lawyer or accountant
I have had discussions with family members
28%
23%
17%
9%
+29% None of the above
I have used an online, automated tool to create and/or manage an investment portfolio
In the past 12 months, have you received any financial advice or guidance, or researched anything related to your long term savings and investments, in any of the following ways?
Boomers: 39% Gen X: 25% Millennials: 20%
Boomers: 6% Gen X: 10% Millennials: 12%
41
In the past 12 months, have you received any financial advice or guidance, or researched anything related to your long term savings and investments, in any of the following ways?
Retirement planning (73%) and investment management (68%) are the most common topics of discussion with a professional financial planner or advisor
Estate planningInvestment portfolio
management
Retirement planning Tax planning Access to capital
73% 68% 49% 32% 17%
Q412. Base: All receiving professional financial advice in the past 12 months (n=422)
+5% None of the above
42
Self-employed who have not received professional advice prefer to rely on their own expertise (53%), or do not believe professional advice would provide a benefit (25%)
Q420. Base: All not receiving professional financial advice in the past 12 months (N=1,505, Boomers n=500, Gen X n=502, Millennials n=503). Multiple responses allowed
Why have you not used a professional financial advisor or financial plannerin the past 12 months?
+18% Other reasons
I prefer to manage my own finances
I don't think a financial advisor or financial planner would add value beyond what I can do for myself
Financial advisors and financial planners are too expensive/not worth the cost
53%
25%
25%
15%
9%
6%
I don't trust financial advisors or financial planners to give fair/unbiased advice
I haven't been able to find a good financial advisor or planner
I prefer to use online providers or automated tools (such as 'robo-advisors')
Boomers: 18% Gen X: 25% Millennials: 29%
Boomers: 30% Gen X: 25% Millennials: 21%
43
Saving for Retirement
44
Over half (55%) of self-employed are currently saving for retirement, dropping to under half (43%) of self-employed Millennials, who are more likely to be saving for unforeseen emergencies (52%)
Q500. Base: All (N=1,505, Boomers n=500, Gen X n=502, Millennials n=503)
Boomers 69 41 25 23 17 16 5 6
Gen X 54 42 31 18 18 18 14 23
Millennials 43 52 39 23 25 18 31 19
Which of the following, if any, are you currently saving or investing for?
55%45%
32%22% 20% 17% 16% 16%
Home Improvements
Car, or other vehicle
Unforeseen emergency
Down-payment on property
Retirement Vacation Nothing in particular
Education for children
+11%Others+11% Not saving
%
45
Self-employed are most likely to only be saving for retirement, when they can afford it (41%). One in 4 (26%) self-employed saves a fixed amount of money for retirement on a regular basis
Q510. Base: All (N=1,505, Boomers n=500, Gen X n=502, Millennials n=503)2013 survey available at http://www.amtd.com/newsroom/research-and-story-ideas/research-and-story-ideas-details/2013/Self-Employed-Survey/default.aspx
13%
13%
15%41%
18%
Which of the following best describes how you save or invest money for retirement?
Fixed amount deducted before taxes on a regular basis2013: 8%
Get income first, then put fixed amount in to savings on regular basis2013: 10%
Get income first, then put money in savings on regular basis, but amount varies2013: 14%
Save what I can afford whenever I can afford it2013: 40%
Do not currently save for retirement2013: 28%
Fixed amount regularly (26%)2013:18%
46
Half of self-employed (48%) say that unpredictable income and expenses are the largest barrier to regular saving for retirement. Having too many personal expenses is also a barrier for half of self-employed Millennials (49%)
Q525. Base: All (N=1,505, Boomers n=500, Gen X n=502, Millennials n=503). Multiple responses allowed.
Which of the following, if any, prevent you from being able to save or invest the amount of money you want to save or invest for retirement each month?
Not being able to predict my income and/or expenses
Having too many personal expenses
Needing to prioritize investment in my business above saving for retirement
48%
38%
17%
9%
8%
5%
Not having enough time to pay attention to/learn about saving/investing for my retirement
Not having an automatic or easy way to save for retirement
Not having a good relationship with someone whose financial advice I can trust
Boomers: 46% Gen X: 43% Millennials: 55%
Boomers: 27% Gen X: 39% Millennials: 49%
Boomers: 13% Gen X: 17% Millennials: 21%
Boomers: 6% Gen X: 8% Millennials: 12%
47
A lack of income is the main barrier to saving for retirement, for 57% of self-employed. This was also the top reason in 2013, though for 78%. One in four (37%) Millennials has not started to save for retirement
Q545. Base: All not currently saving for retirement (n=269). Multiple responses allowed. Responses below 5% not reported. 2013: Q540 Base: All self-employed not saving for retirement (n=423)2013 survey available at http://www.amtd.com/newsroom/research-and-story-ideas/research-and-story-ideas-details/2013/Self-Employed-Survey/default.aspx
Which of the following, if any, are reasons why you are not currently saving or investing money for retirement? All reasons of 5% or above
2013
78%
28%
7%
4%
8%
I can't currently afford to save for retirement
I am too young to need to be saving for retirement
57%
29%
7%
7%
6%
My spouse/partner will fund my retirement so I don't need to save
I will live on the profits from my business, which will keep running when I retire, so I don't need to save
I haven't started saving for retirement yet Boomers: 15% Gen X: 30% Millennials: 37%
48
Over half (55%) of self-employed feel they are behind with their retirement savings
Q565. Base: All (N=1,505, Boomers n=500, Gen X n=502, Millennials n=503)
AheadBehind On Track
55%
18%14%
8%Slightly ahead
6%Very far ahead
22%Slightly behind
33%Very far behind
Thinking about how much money you need to save or invest throughout your working life for your retirement, do you feel you are ahead, behind or on track?
Boomers: 19%Gen X: 11%Millennials: 13%
+12% Don’t know
49
Not being able to save as much as desired is the main reason whyself-employed feel behind with their retirement savings (56%), followed by being unable to save regularly (44%, 50% for self-employed Millennials)
Q566. Base: All who are behind with their retirement saving (n=832, Boomers n=252, Gen X n=290, Millennials n=290). Multiple responses allowed.
Which of the following, if any, are reasons why you are notcurrently saving or investing money for retirement?
I am unable to save as much as I want to
I am unable to save regularly
I have had to use money I would normally have put aside for retirement to support my business
56%
44%
32%
29%
26%
16%
I started saving for retirement later than I should have
I do not have a regular savings plan for retirement
I haven't yet started saving for retirement
Boomers: 38% Gen X: 45% Millennials: 50%
Boomers: 16% Gen X: 22% Millennials: 40%
Boomers: 6% Gen X: 14% Millennials: 26%
Boomers: 37% Gen X: 29% Millennials: 22%
50
Three in 10 (31%) self-employed have a specific savings goal for retirement, and the average goal is $1.1mln
Q570. Base: All (N=1,505, Boomers n=500, Gen X n=502, Millennials n=503)Q571. Base: All with a specific savings goal ((n=468, Boomers n=157, Gen X n=147, Millennials n=164)2013 survey available at http://www.amtd.com/newsroom/research-and-story-ideas/research-and-story-ideas-details/2013/Self-Employed-Survey/default.aspx
31%
69%
Do you have a specific savings goal for retirement?
Yes
No
Mean Savings Goal:
$1,100,000Mean Savings Goal (2013):
$1,600,000
% with savings goal
2015 2013
Boomers 31 29
Gen X 29 34
Millennials 33 33
Mean Savings Goal
2015 2013
Boomers 1,000,000 1,100,000
Gen X 1,200,000 1,800,000
Millennials 1,400,000 1,900,000
51
On average, self-employed with a savings goal have saved 31% of it, the same as seen in 2013
Q572. Base: All with a specific savings goal ((n=468, Boomers n=157, Gen X n=147, Millennials n=164)2013 survey available at http://www.amtd.com/newsroom/research-and-story-ideas/research-and-story-ideas-details/2013/Self-Employed-Survey/default.aspx
What percentage of your retirement savings goal do you already have saved?
31
55
26
13
31
56
26
12
Self-employed Boomers Gen X Millennials
2015 2013
%
52
On average, self-employed Boomers are $335,000 away from their retirement target, meaning a potential $1.7 trillion collective ‘retirement gap’
Q571/Q572. Base: All Self-employed Boomers with a specific savings goal (n=157)1. Calculated by multiplying individual savings targets (Q571, slide 51) by how far away from target (i.e. 100% minus current savings progress, Q572, slide 52)2. 15 million self-employed http://www.bls.gov/news.release/empsit.t09.htm. Assuming similar age distribution as general population: http://www.census.gov/prod/cen2010/briefs/c2010br-03.pdf gives approximately 35% in Boomer age-range, rounded down to 5 million for conservative estimate
Potential “Retirement Gap” Calculation
Then 5 million self-employed Boomers x $335,000
And if the average savings shortfall is $335,000 across all self-employed Boomers (i.e. not just those with a savings target)
Self-employed Boomers who have retirement savings targets are, on average, $335,000 short of the target1
And if there are 5 million self-employed Boomers2
$1.7 Trillion‘Retirement Gap’=
53
On average, self-employed are putting away $400 a month innon-retirement savings or investments
Q530. Base: All (N=1,505, Boomers n=500, Gen X n=502, Millennials n=503)1. Average savings calculation excludes lowest and highest 5% (i.e. excludes outliers)
How much money do you save or invest for anything other than retirement, in a typical month?
25
10
21
812 12
63
29
7
16
7
14 15
9
4
28
8
23
8
13 12
4 3
1816
25
10 10 10
4 4
0
20
40
Zero Under $100 $100 to $249 $250 to $499 $500 to $999 $1,000 to$1,999
$2,000 to$4,999
$5,000 or more
Self-employed Boomers Gen X Millennials
All saving money for something other than retirement: 74%Boomers: 71%Gen X: 71%,Millennials: 79%
Monthly Savings All self-employed Boomers Gen X Millennials
Average (Mean) 1 $415 $525 $345 $385
Median $200 $200 $200 $150
%
54
Three-quarters (75%) of self-employed say that the recent stock market volatility has not changed the way they save or invest for retirement
Q540. Base: All (N=1,505, Boomers n=500, Gen X n=502, Millennials n=503). Multiple responses allowed, excluding the bottom option (“...has not changed the way I save or invest...”)
Has the economic and stock market volatility seen in recent months changed how you save or invest for retirement in any of the following ways?
The recent stock market volatility has not changed the way I save or invest for my retirement
I have decreased the amount of money I invest in the stock market
I have sold some investments and am holding the funds in cash
75%
10%
7%
6%
5%
3%
I have increased the amount of money I invest in the stock market
I have sold some higher-risk investments and purchased lower-risk investments in their place
I have sold some lower-risk investments and purchased higher-risk investments in their place
55
As seen in 2013, most (57%) of self-employed expect that the savings they make during their working life will fund their retirement, even when, as we have seen, most are behind with their retirement savings
Q580. Base: All (N=1,505, Boomers n=500, Gen X n=502, Millennials n=503)2013 survey available at http://www.amtd.com/newsroom/research-and-story-ideas/research-and-story-ideas-details/2013/Self-Employed-Survey/default.aspx
Where do you expect the money that you will need during retirement will come from?
Working and saving money myself before I retire
Social security / pensions from the government
Investments in my IRA
57%
51%
28%
23%
23%
22%
The retirement funds of my spouse/partner
Real estate investments
Investments in my 401(k), 403(b) or other retirement plan
2013
37%
The profits from my business, which will keep running when I retire25%
Investments (excluding real estate, IRA, 401(k))
59%
49%
38%
25%
19%
23%
22%
19%
Boomers: 73% Gen X: 48% Millennials: 31%
%, 20% or above
Boomers: 49% Gen X: 35% Millennials: 27%
Boomers: 34% Gen X: 24% Millennials: 26%
Boomers: 29% Gen X: 21% Millennials: 18%
Boomers: 30% Gen X: 21% Millennials: 16%
Boomers: 26% Gen X: 21% Millennials: 20%
56
Continuing to work is plan B for most self-employed (76%) if they do not hit their retirement savings target, followed by cutting back their outgoings (48%)
Rely on my spouse's savings/retirement
funds
Reduce outgoings and expenditures
Continue working Sell or downsize my home
Rely on support from children/
family-members
Boomers 72 47 31 14 2
Gen X 78 49 34 18 4
Millennials 78 49 32 23 10
Q590. Base: All (N=1,505, Boomers n=500, Gen X n=502, Millennials n=503)
76% 48% 32% 18% 5%
If, by the time you reach your intended retirement age, you do not have enough money to fund your retirement, which of the following, if any, will you do?
%
57
Appendix
58
Survey sample characteristics (100% Self-employed)
Base: All Self-employed (N=1,505)
7
1520
25
11
22
New England Mid-Atlantic South Midwest Southwest West
Region
1613
34 34
2
High schoolor less
Technicaldegree
Undergraduate collegedegree
Graduate/Professionaldegree
Prefer not to answer
Education
23 20 16
31
11
Less than $50k $50k- <$75k $75k - <$100k $100k + Don't know/Prefernot to answer
Household Income
Marital Status
26
63
91
Single, never married Married/ Common law Separated/ Divorced Widowed
45
55
Male Female
Gender
%
59
Survey sample characteristics (Continued)
Type of Self-Employment
2936
19
93 5
Entrepreneur One-personenterprise
Consultant/Freelance Contractor Broker/agent Other
33
1
1
2
2
3
4
4
5
6
8
10
21
Other
Manufacturing
Transportation and warehousing
Wholesale trade
Agriculture
Leisure and hospitality
Financial services
Information technology
Education/Educational services
Construction
Health care and social assistance
Retail
Professional and business servicesSectors
Base: All Self-employed (N=1,505)