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This article reports findings from a study of financial decision-making featuring analyses of responses to open-ended questions. The target audience was young adults with 69% of the sample under age 45. Four key financial decisions were explored: financial goals, homeownership, retirement planning, and student loans. Results indicated that many respondents were sequencing financial priorities, instead of funding them simultaneously, and delaying homeownership and retirement savings. Three-word phrases like “once I have…, “after I [action], ” and “as soon as…” were noted frequently, indicating a hesitancy to fund certain financial goals until achieving others (i.e., sequential goal pursuit). Implications for financial practice are provided.
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“As Soon As…” Finances: A Study of Financial Decision-Making
Barbara O'Neill, Ph.D., CFP, CRPC, AFC, CHC, CFEd, CFCS
Extension Specialist in Financial Resource Management and Distinguished Professor
Rutgers Cooperative Extension
Cook Office Building, Room 107
55 Dudley Road, New Brunswick, NJ 08901
Phone: 848-932-9126
Yilan Xu, Ph.D.
Assistant Professor
University of Illinois at Urbana-Champaign
309 Mumford Hall
1301 W. Gregory, Urbana Illinois 61801
Phone: 217-300-0465
Carrie Johnson, Ph.D., AFC
Assistant Professor and Extension Specialist in Personal & Family Finance
North Dakota State University
322B E. Morrow Lebedeff (EML)
PO Box 6050, Fargo, ND 58108
Phone: 701-231-8593
D. Elizabeth Kiss, Ph.D., Associate Professor and Extension Specialist
Kansas State University
303 Justin Hall
1324 Lovers Lane, Manhattan, KS 66506
Phone: 785-532-1946
Steven Buyske, Ph.D., Associate Professor
Rutgers University
Hill Center, 110 Frelinghuysen Road
Piscataway, NJ 08854
Phone: 848-445-7680
Brief Abstract
This article reports findings from a study of financial decision-making featuring analyses of
responses to open-ended questions. The target audience was young adults with 69% of the sample
under age 45. Four key financial decisions were explored: financial goals, homeownership,
retirement planning, and student loans. Results indicated that many respondents were sequencing
financial priorities, instead of funding them simultaneously, and delaying homeownership and
retirement savings. Three-word phrases like “once I have…, “after I [action], ” and “as soon as…”
were noted frequently, indicating a hesitancy to fund certain financial goals until achieving others
(i.e., sequential goal pursuit). Implications for financial practice are provided.
To effectively attract and serve clients, financial practitioners (i.e., advisors and educators)
need to be “generation-savvy.” In other words, they need to understand their own generational
biases and have an awareness of, and empathy for, the biases of others (Schulaka, 2017). Perhaps no
other generation needs to be understood by financial practitioners as much as Generation Y (a.k.a.,
Millennials), who represent a quarter of the nation’s population and an increasing proportion of the
nation’s workforce. Millennials are a large demographic cohort, 83.1 million people in 2015 (U.S.
Census Bureau, 2015), with unique financial characteristics. Compared to Generation X and Baby
Boomers who preceded them, they have higher levels of student loan debt, poverty, and
unemployment and lower levels of wealth and income at the same stage of life (Cutler 2015).
A report by the National Endowment for Financial Education (2016) characterized
Millennials’ financial position as “more fragile than expected.” For example, 34% of Millennials
have used an alternative financial services (AFS) provider within the previous five years. In
addition, they have a preference for experiences over things and a strong desire for work/life
balance (Finke, 2016). There is also evidence that the Millennial generation born between 1982 and
2000 is “unmoored” from major American social institutions such as politics, religion, and marriage
and family (Pew Research Center, 2014).
Research that investigates how different generations make financial decisions can inform
successful practice management efforts. For example, if young adults prefer experiences over
things, financial practitioners may have to reframe investing for retirement as an investment in
future experiences and flexibility in later life rather than savings for future financial security (Finke,
2016). This article reports findings from qualitative research of financial decision-making related to
four key personal finance topics: financial goals, homeownership, retirement planning, and student
loans. The sample consisted of 1,538 individuals who completed an online survey during June 2016.
The target audience for the study was young adults and 69% of the sample was under age 45. Basic
quantitative analyses were performed for three age cohorts (aged 34 and below, aged 35-54, and
aged 55 and above) to determine sample characteristics and the frequency of performing certain
financial practices (e.g., saving for retirement) and qualitative data were analyzed in a systematic
way to determine how respondents made financial decisions. This article describes findings for each
topic and concludes with implications for financial practitioners.
Review of Literature
Financial Goal-Setting
Many young adults, unfortunately, put off saving for future financial goals by thinking “I’ll
start saving when I pay off my student loans” or “I’ll save in a few more years when I make more
money” (Olson, 2014, p. 51). This can lead to a $1 million mistake. Someone who invests for
retirement starting at age 32 and accumulates $1 million at age 67 after 35 years of diligent saving
could have accumulated $2 million if they had only begun their retirement savings nine years earlier
at age 23 and had almost another decade of compound interest to grow their money.
For many consumers, the first step to long-term financial security is clarifying values and
setting concrete financial goals. When asked in a recent survey, the majority of those under 40 years
old (72%) reported having set financial goals (iQuantifi, 2015). General savings, saving for
retirement, buying a home, and reducing debt are frequently reported financial goals, regardless of
age (American College of Financial Services, n.d.; iQuantifi, 2015; Wells Fargo Bank, 2016).
Among younger consumers (40 years old and younger), 45% have a routine for reviewing
their finances and 54% have a budget (Wells Fargo Bank, 2016). A report of actions taken by
women to achieve their financial goals suggests priorities vary by age (American College of
Financial Services, n.d.). For example, among women 40 years old and younger, those working to
increase their savings reported reducing spending (69%), saving bonuses and tax refunds (61%),
and saving more regularly (32%). Those working to reduce debt reported reducing their spending
(77%), and creating a schedule or plan (71%). When it comes to protecting their financial security,
very few reported having disability insurance or investing on their own to grow their wealth.
Women 41-52 years old who are working to decrease debt reported attempting to cut back
on spending (80%), creating a plan or schedule (40%), and calculating how much they need (39%)
(American College of Financial Services, n.d.). Not surprisingly, another goal for women in this age
group is saving and paying for college. Those focusing on this goal report attempting to cut
spending (44%), saving regularly (37%), researching tips and information about how to save for
education (33%), calculating how much is needed (25%), and using a 529 plan (14%).
Women in the next older cohort, ages 53 to 71, reported insuring what is important to them
as one of their top goals and their actions included purchasing financial products and insurance
(68%), speaking to financial professionals (24%), and calculating the amount they need (20%)
(American College of Financial Services, n.d.). In addition to saving for retirement, another top goal
for this group was to improve their cash cushion and reduce debt.
In economics literature, homeownership decisions can be explained by a life cycle model
that is subject to borrowing constraints and a budget for consumption and saving (Artle & Varaiya,
1978). Under this framework, in order to enjoy the potentially lower future housing costs resulting
from owning a home, individuals need to forgo part of current consumption to save for the down
payment. The homeownership decision then depends on the relative size of the present value of
homeownership benefits and that of the foregone consumption. In practice, homeownership is a
personal financial decision – provided that the down payment has been accumulated and credit
access is available, a decision-maker compares the annual costs of renting to the annual costs of
A decision-maker may also factor in non-pecuniary benefits of homeownership. In
particular, the economics literature has shown that homeownership leads to better behaviors and
positive educational outcomes of children (Boehm & Schlottmann, 1999; Haurin, Parcel, & Haurin,
2002), higher political participation, and more investment in social capital (McCabe, 2013). These
benefits are mediated by the residential stability of homeownership (Aaronson, 2000; Haurin et al.,
2002), perceived control (Lindblad & Quercia, 2015), and home equity (Cooper & Luengo-Prado,
2015). The equity built by homeownership not only permits higher investment in children’s
education (Cooper & Luengo-Prado, 2015) but also fosters entrepreneurship (Corradin & Popov,
2015). Nevertheless, renting can be a wise choice for those who desire the flexibility to move
around and freedom from home maintenance responsibilities.
The housing market collapse and the mortgage credit crunch during the Great Recession
impacted millions of U.S. households. As a result of a challenging labor market and high student
loan debt, young adults were more likely to live with parents during this period, just like any time
during a recession in history (Bitler & Hoynes, 2015; Bleemer, Brown, Lee, & Van der Klaauw,
2014; Dettling & Hsu, 2014). Young adults who witnessed a parental foreclosure during the 2007-
2009 Great Recession and housing crisis were less likely to become homeowners compared to those
who did not experience parental foreclosures (Xu, 2017). Their homeownership during this period
was complicated by a credit crunch, limited financial resources, high student loan debt, and
postponed marriage and parenthood (Xu, Johnson, Bartholomae, O'Neill, & Gutter, 2015). Faced
with high expenses and/or limited job options, many young adults have moved back in with their
parents to reduce living costs and/or to pursue advanced degrees.
According to Pew Research, in 2014, for the first time in more than 130 years (i.e., since the
1880s), living with parents edged out all other living arrangements (e.g., married or cohabitating,
living alone or as a single parent, and other living arrangements) for 18-to-34 year olds (Fry, 2016).
Almost a third (32.1%) were living in the home of their parents versus 31.6% living with a spouse
or partner in their own household. With so many so-called “boomerang kids,” there is less stigma
today in living with parents. There may be long-term ripple effects, however, including
multigenerational family tensions, unanticipated inter-generational financial transfers, and delayed
marriage and parenthood (Mitchell, 2009). According to Pew Research Center (2015), 61% of
Americans with adult children helped out their children financially in the past 12 months.
Retirement Planning
Unlike shorter-term financial goals like buying a house or saving for a child’s education,
retirement planning can take place for seven or eight decades from the start to the end of someone’s
adult life (i.e., 20s through 80s or 90s). Even workplace retirement planning programs target a wide
swath of demographics ranging from recent college graduates in their 20s to soon-to-retire
employees in their 50s, 60s, and beyond (Walstad, 2017). In recent decades, responsibility for
financial security in retirement has been transferred, for the most part, from government and
employers to individuals (McGuinness, 2013). Many Americans are financially unprepared for
retirement, including millions of “middle Americans” with annual household incomes of $30,000 to
$100,000 who have low savings, high debt, and a tendency not to consult professional advisers
(Neiser, 2009).
Perhaps the best insight into how people are thinking about and planning for retirement is
the annual Retirement Confidence Survey (RCS) conducted by the Employee Benefit Research
Institute (EBRI) since 1996. Results from the 2017 study (Greenwald, Copeland, and VanDerhei,
2017) indicate that many American workers feel stressed out about retirement and are not taking
steps to prepare for it. Specifically, the RCS found that 31% of 1,082 surveyed workers reported
feeling mentally or emotionally stressed about preparing for retirement, 61% had saved money for
it, and 56% were currently saving. RCS respondents who felt stressed out about retirement
preparation were more likely than others (30% vs. 12% of workers not feeling stressed) to say that
their debt level was a major problem.
Among RCS respondents reporting savings data, 47% said the total value of their household
savings, excluding a primary home and defined benefit (DB) pension, was less than $25,000. This
included 24% who said they had less than $1,000 in savings. A recent study found that Millennials
who graduate college and begin their careers at age 22 with $30,000 in student loan debt could wind
up with $325,000 less in retirement savings than their debt-free peers (Bier, 2015). The analysis
assumed that they are able to pay back their student loans within 10 years, which is often not the
case when debt persists well into middle age (Bier, 2015).
A study by the Center for Retirement Research at Boston College (Munnell, Hou, and
Sanzenbacher, 2017), using the National Retirement Risk Index (NRRI), found that slightly more
than half (52%) of working-age U.S. households are at risk of being unable to maintain their living
standard in retirement. Almost 1 in 5 (19%) did not recognize that they are at risk for a shortfall and
are unlikely to take remedial action. Increases in life expectancy and the shift from DB pensions to
401(k) plans have contributed to the increasing proportion of at-risk households. The 2015 National
Financial Capability Study (NFCS) conducted by the FINRA Investor Education Foundation
(FINRAIEF, 2016) found that over half (58%) of 27,564 respondents had some kind of retirement
savings account, either employer-based (e.g., 401(k) plan) or independent (e.g., IRA) but only 39%
had tried to calculate how much they need to save. Over half (57%) of NFCS respondents age 18-34
were worried about running out of money in retirement, second to those age 35-54 (65%). More
than 4 in 10 (42%) Millennials in the NFCS sample did not have any type of retirement savings
account (NEFE, 2016). Two obstacles to saving are student loan debt and fear of losing savings
resulting from the 2008 financial crisis (Obstacles to Millennial Retirement, 2016).
Student Loans
The student loan debt burden of American households, especially young adults, is sobering
with 44.2 million Americans owing student loan debt (A Look, 2017). The highest frequency of
student loan use is among borrowers age 18-29 (Federal Reserve Board, 2016; Fry, 2012). Student
loan debt has increased to the point that it is crowding out other purchases such as homes and cars
according to research by the Federal Reserve Bank of New York (Brown & Caldwell, 2013). The
co-authors of the study noted “While highly skilled young workers have traditionally provided a
vital influx of new, affluent consumers to U.S. housing and auto markets, unprecedented student
debt may dampen their influence in today’s marketplace” (Brown & Caldwell, 2013, Student Debt
and Total Borrowing, para 6). Young adults have also been found to shun stocks after witnessing
the Great Recession bear market. According to a 2014 Gallup poll, just 27% of 18- to 29-year-olds
reported owning shares outright or in mutual funds (Smialek, 2014).
Approximately 37% of households headed by an adult under age 40 have some student debt
(Letkiewicz & Heckman, 2017). According to the Federal Reserve Bank of New York (FRBNY)
(2016), in 2015 those under age 30 held 30.6% of the total student loan debt, borrowers 30-39 held
33.2%, borrowers 40-49 held 18.7%, borrowers 50-59 held 12.2%, and borrowers over the age of 60
held 5.4% of the total student loan debt. Most notable is the increase of student loan debt of
individuals 60 years and older. According to data from 2005, only 2.1% of the total student loan
debt was held by this age group and in 10 years it increased by 3.3% (FRBNY, 2016).
Dependence on student loans has increased, at least in part, because of the shift in financial
aid policy toward greater individual responsibility for the costs of education beyond high school
(Center for Social Development, 2013). Student loan debt can negatively affect other areas of
personal finance including housing and retirement. Evidence suggests that students do not act
rationally when deciding whether or not to take on student debt (Center for Social Development,
2013). A focus group study conducted by Johnson, O’Neill, Worthy, Lown and Bowen (2016)
found that student loan borrowers didn’t think they had any choice but to take student loans but did
think that the debt would negatively affect their financial future.
An in-depth review of student loan literature conducted by Cho, Xu, and Kiss (2015) found
that there are many considerations and impacts related to student loan borrowing. They concluded
that an increase in human capital is a big contributing factor to taking on student loan debt. They
also determined that student loan debt can negatively affect borrowers’ health as well as life
transitions and wealth accumulation. Johnson, Gutter, Xu, Cho, and DeVaney (2016) conducted a
study to determine reasons for attending college and student loan debt satisfaction. Their results
indicated that building human capital was a big reason to attend college, but younger individuals
were increasingly attending to build social capital as well. They also determined that younger
borrowers had higher student loan debt and were less satisfied with their debt.
Financial Goal Setting and Financial Actions: Theory and Practical Challenges
The focus of this study was financial decision-making featuring quantitative analyses of
responses to open-ended questions. Specifically, respondents were asked about actions taken, goals
set, and plans formulated to buy a home and save for retirement as well as the impact of student
loans on these two key financial planning decisions. The conceptual base of this study is the Theory
of Planned Behavior (TPB), which links intentions to perform behaviors with attitudes toward the
behavior (i.e., a person’s belief about whether a certain action makes a positive contribution to his
or her life), subjective norms (i.e., everything around an individual such as social networks, cultural
norms, and group beliefs), and perceived behavioral control (i.e., a person’s belief about how easy
or hard it is to act in a certain way) (Ajzen, 2006, 1991).
According to the TPB, a positive attitude toward a behavior, favorable social norms, and a
high level of perceived behavioral control are predictors of forming a behavioral intention which, in
turn, leads to an actual displayed behavior. If people believe that taking a certain action is a good
idea, believe that others think it is a good idea, and believe that they can accomplish a task, they
will take action. If beliefs about one or more of these three constructs are unfavorable, the
likelihood of people taking action decreases. The TPB posits that intentions are the best predictor of
behavior. If people plan to do something, they are more likely to do it. The theory has been well
supported by empirical evidence as a highly accurate and reliable way to predict human behavior
and is widely used in consumer product marketing research (Taylor & Todd, 1995; Koufaris, 2002).
Gaining knowledge about people’s thought processes, behavioral intentions, and emotions related to
key financial decisions can help inform effective financial education interventions as well as client-
practitioner relationships.
Regardless of what the TPB predicts, financially constrained individuals will find it
impossible, or at least difficult, to accommodate multiple financial goals. To illustrate this point,
imagine a representative college graduate who graduates at age 22 with a student loan balance of
$34,144 (U.S. national average), makes a household income of $62,500 (median of sample in this
study), and plans to retire at age 67 (full retirement age) with a life expectancy of 81 (average for
U.S. men). With a 4.45% interest rate and a 10-year term, the monthly student loan payment is
$353.04 (i.e., 8% of after-tax income, assuming an average tax rate of 15%). Under the assumptions
of replacing 75% of pre-retirement income, a 35% Social Security income replacement ratio, a 3%
inflation, and an 7.5% investment return, this individual has to save $478.70 monthly (i.e., 10.8% of
after-tax income) for retirement if savings start immediately after graduation at age 22. This amount
will increase if retirement savings does not start immediately.
To buy a house costing $200,000 (U.S. median housing value) with a 20% down payment
and a 4.5% interest, 30-year mortgage, the monthly mortgage payment is $810.70 (i.e., 18.3% of
after-tax income) and $40,000 down payment (20% of $200,000) needs to be saved.
Accommodating all three goals, namely, student loan payment, retirement savings, and
homeownership, will require a monthly allotment of $1,642.44, which is equivalent to 37.1% of
monthly after-tax income. This level of savings is unattainable for a majority of U.S. households.
For the following scenario analyses, an ambitious 27% of the individual’s after-tax income, i.e.,
$1,195.31, was assumed for savings to support the three goals. Perhaps this person lives with
parents to save aggressively as many young adults today do (Fry, 2016; Mitchell, 2009). The
individual needs to prioritize three expensive competing financial planning priorities.
Do different prioritization strategies of financial goals affect individuals’ long-term financial
well-being? The answer is yes. Since defaulting on student loans can have a tremendous negative
impact, student loan repayment should be on a top priority. Thus, two scenarios are compared:
Scenario 1, accommodating student loan payment and housing at the same time while postponing
retirement savings, and Scenario 2: accommodating student loan and retirement savings, while
postponing homeownership.
Under Scenario 1, all remaining savings after the student loan payment is earmarked for a
house down payment, and it takes 4 years to save the down payment while paying off the student
loan. However, at the age of 26 when down payment has been accumulated, the required monthly
retirement savings has increased to $645.92, which is 14.6% of after-tax income. This savings goal
cannot be accommodated when 8% of after-tax income is first allocated to student loan and then
18.3% is allocated to mortgage payment. If retirement savings starts after the student loan is paid
off at age 32, the required monthly savings will become $1,030.51, which comprises 23.3% of after-
tax income. This goal is still unattainable even without the burden of student loan payments because
18.3% of after-tax income is prioritized for a mortgage payment. Thus, postponing retirement
savings eventually will have to result in delayed retirement.
In Scenario 2, the individual prioritizes student loan payments and retirement savings and
uses remaining savings to accumulate a down payment. It will take 9.17 years to save the down
payment. After having saved enough for the down payment, mortgage payments cannot be
accommodated by the 25% of after-tax income until the student loan is paid off. The mortgage will
be paid off at age 62, which is 6 years later than in Scenario 1, however, the goal of retiring at age
67 can be achieved by prioritize retirement savings over homeownership. These calculations were
done using a Excel spreadsheet that is available upon request.
To summarize, the scenario analyses show that student loans have an impact on
homeownership and retirement savings for average student loan borrowers. In order to pay off
student loans on time, homeownership will be delayed. Moreover, retirement financial security will
be severely affected if retirement savings is not prioritized. The result of the scenario analysis is in
line with previous studies indicating that repayment of outstanding debt is a key goal of young
adults and may be associated with deferred homeownership and retirement savings, resulting in
reduced lifetime wealth accumulation (O’Neill, Xu, Johnson, & Kiss, 2018). It also invites an
empirical question of how people prioritize their competing financial goals.
Research Questions
Based on the three constructs in the TPB theoretical model (i.e., attitudes toward a behavior,
subjective norms, and perceived behavioral control) and findings from the scenario analysis, the
following research questions were investigated:
Q1: What evidence was found about the priority of financial goals and actions that people
are taking toward fulfilling them?
Q2: What evidence was found about factors affecting housing decisions?
Q3: What evidence was found about factors affecting retirement planning decisions?
Q4: What evidence was found that student loans affect housing and retirement planning
Data were collected using an online Qualtrics survey instrument during June 2016.
Respondents were directed to the survey via social media posts made by the principal investigator,
invitations at public presentations, and from WiseBread (, a personal
finance website targeted toward young adults. A total of $1,500 in Amazon gift cards ($500 grand
prize and five $200 prizes) was awarded as incentives to encourage survey participation.
Most of the survey questions were open-ended and required a text response. Thus,
qualitative data were analyzed using regular expressions to determine themes for each response; i.e.,
keyword analysis. To determine these themes, n-grams were used; n-grams are a contiguous
sequence of a specific number of words, where n is the designated number (i.e., combinations of
adjacent words of different lengths), (What are N-Grams?, 2014).
Tables of the most frequent n-grams for each item were used to suggest topics. These topics
were augmented by ones determined by the authors on the basis of a sample of responses. Regular
expressions, also known as grep searches, are a concise language for pattern matching in text and
were used to determine topics in the responses (Linux Grep Command, 2016). Table A.1
summarizes the research questions, search terms, and common themes.
To validate the topics determined by regular expressions, a native speaker of English
selected a topic or topics for each response from the set of established topics. Agreement between
the human and algorithm selected topics on a sample of responses was measured using Cohen’s
Kappa (Landis and Koch, 1977). Cohen’s Kappa has a range of -1 to 1, with 0 indicating agreement
equivalent to random selection and 1 indicating perfect agreement. The interpretation of the
Cohen’s Kappa depends on the context, but in general Landis and Koch (1977) suggested that 0.21
to 0.40 be considered fair, 0.41 to 0.60 moderate, 0.61 to 0.80 substantial, and 0.81 to 1.00 almost
perfect agreement. All statistical analyses were performed using the R statistical platform, including
the tidyverse and psych packages.
The full sample consisted of 1,538 respondents. Among these, 1,476 provided information
about their demographic characteristics. The sample was 78% White and 75% female with over
two-thirds (69%) under age 45. Detailed data about sample characteristics are shown in Table 1,
Financial Goal-Setting
Nearly all survey participants (n = 1,520) responded to the question, “What are your top
three financial goals? Briefly list and explain.” As identified through the keyword analysis and
summarized in Table 2, the top three goals for the full sample involved saving for something (91%),
buying something (62%), or reducing debt/paying off a previous purchase (24%). Regardless of
age, the top goal for all survey participants was to save for something. Reducing debt or paying off
something was less important for respondents age 55 and older than for those who were younger.
Other top goals included being debt free and having enough resources to feel financially stable,
financially secure, or able to achieve long-term financial goals.
When asked, “What, if any, actions are you taking now to achieve your financial goals?”
again, nearly all survey participants responded to the question (n = 1,520). Regardless of age, the
most frequently reported actions included saving more and paying off something. Spending less, an
action being taken by 11% of those age 34 and under, was taken less frequently by those age 35 and
Among 1,538 respondents, 758 reported being homeowners while the remaining 760 were
non-homeowners. The homeowner respondents were asked to describe how they made the
homeownership decision. In total, 752 of the 758 homeowners answered this question. Table 3
reports the frequency of their mentioning common themes. For the entire subsample of
homeowners, the top reasons to become a homeowner were (ranked from the most mentioned to the
least): cheaper than renting, family reasons, investment, problems with renting, low mortgage rates
or low housing prices, like ownership, and lifestyle choices. In particular, 45.9% of respondents
mentioned that owning is cheaper than renting for them. Almost 30% mentioned family reasons
such as providing a good environment for family and children, marriage, and considerations for the
neighborhood, crime, and location. About 20% of respondents considered homeownership as an
investment, and 15.9% owned a home because of problems with renting. Less than 10% of
respondents mentioned that they owned a home because of lower mortgage rates/housing price, they
liked owning, or homeownership fit their lifestyle.
The three age cohorts displayed similar rankings of reasons to own a home, except that the
youngest group (aged 34 or under) were more likely to list problems with renting rather than
investment potential as a reason for homeownership. The former was mentioned by 25% of the
homeowners of this age cohort and the latter by 21.6%. Overall, the younger cohorts mentioned
specific reasons more frequently than older cohorts. For instance, 65.7% of those age 34 and below
mentioned that owning is cheaper for them while 39.3% of those aged 35 to 54 and 35.9% of those
age 55 and above mentioned the same reason. The youngest age cohort was more likely to take
advantage of lower mortgage rates and lower housing prices, with 14.7% of them mentioning it as a
reason for homeownership, compared to 5.2% for the middle-aged cohort and 2.8% for the older
The remaining 760 respondents who reported being non-homeowners were asked to explain
how they made their housing arrangement decisions. About 31% mentioned they were renting but
did not explicitly explain their reasons. Other reasons mentioned for not becoming a homeowner
included saving to buy (18.5%), living with parents (15.6%), uncertainty about location (4.4%), and
lifestyle (4.3%). The rankings of those reasons are the same for all age cohorts. The youngest age
cohort was the most likely to mention living with parents (21.3%) compared to the middle-aged
cohort (6.4%) and older cohort (4%). The frequency of mentioning specific reasons also decreased
with age.
Retirement Planning
A total of 1,507 respondents answered the question” Are you currently saving for
retirement?” Of this number, slightly less than two-thirds (62%) said that they were currently saving
and 38% were not. In response to the question “At what age do you think that you will retire (or
leave a full-time career?),” the median age response was 65 and the mean was 65.4. However, as
shown in Table 1, the mean expected retirement age of young adults under age 35 was almost 3
years younger than older respondents. In response to the question “At what age do you anticipate
collecting Social Security benefits?,” the median age response was age 66 and the mean was age
Respondents who indicated that they were saving for retirement were directed to the
question “Describe how you are saving for retirement. What retirement savings accounts are you
using?” Respondents who were not saving for retirement were asked: “When do you think that you
will begin regular retirement savings deposits?” Responses are shown in Table 4. The youngest age
group, more than older cohorts, used wording that indicated goal sequencing.
Student Loans
A total of 1,495 persons responded to the questions “Do you have outstanding student loan
balances?” Thirty-two percent (473) said they had student loan debt. Age affected the amount of
student loan debt; younger cohorts were more likely to have an outstanding student loan balance. Of
those individuals aged 34 and under, 44.7% had an outstanding balance, 25.3% of individuals ages
35-54 had a balance, and 7.2% of respondents 55 and older had an outstanding balance.
Respondents were asked if their student loans affected other financial decisions such as
housing and retirement decisions. Almost three-quarters (73.9%) indicated that their student loans
affected decisions about housing choices. For housing decisions, the age group most affected by
student loans was the age group 34 and under (76.7%). Among the older age groups, 69.7% of those
35-54 and 42.9% of those 55 and older also indicated that student loans affected their housing
Four prominent ways that individuals were affected by student loans (see Table 5) stood out
in the data. Over a third (38.2%) had less money to spend on housing, 8.1% said their credit had
been affected, 6.7% felt they had to pay off loans first, 4.8% lived with family, and 3.4% rented
instead of purchasing a home.
Respondents were also asked if their student loans affected decisions about saving for
retirement. Seventy-five percent of individuals with outstanding student loan balances indicated that
their retirement savings decisions were affected by their student loan debt. When splitting this group
into age cohorts, those whose retirement decisions were most affected were those 55 and older with
88.9% of them saying that their decisions about saving for retirement were affected by student loan
debt. Retirement savings for those 34 and under were least likely to be affected by student loan debt
(72.7%) while 79.8% of 35-54-year-olds said their student loan debt affected retirement savings
decisions. Two ways that retirement preparation was affected by student loan debt were that
respondents either contribute less money (27.5%) or nothing to retirement savings accounts
Data Analysis Agreement
Table 6 shows the estimates of Cohen’s Kappa, along with 95% confidence intervals, for the
assignment of topics to the open-ended questions. Most of the items showed substantial or better
agreement (i.e., kappa greater than 0.60) between the human rater and the regular expression
searches. However, two items, Q18 and Q19, regarding the effect of student loans on decisions
about housing choices and saving for retirement, respectively, showed only fair agreement. For
those items, a second human rater assigned topics for all responses and used those instead of the
keyword assigned topics. The agreement between the two human raters is shown in Table 6 for
those two items.
This study of financial decision-making featured analyses of responses to open-ended
questions. Four key financial decisions were explored: financial goals, homeownership, retirement
planning, and student loans. The study had several limitations. First, respondents came from a
convenience sample of online survey respondents who did not match characteristics of the U.S.
population as a whole. Second, respondents were recruited from a website, tweets, and public
presentations that focused on financial topics and may have been more conscientious about their
personal finances than others, resulting in sample selection bias. The website and Twitter chat that
recruited respondents also attracts primarily females. Third, a wide variety of words and phrases
were used to derive common topic themes. Nevertheless, the findings are instructive and reliability
testing was used to validate the connection between themes and search terms derived from the n-
Financial Goal-Setting
The top financial goals reported by participants in this study involved saving for something,
reducing debt or paying off something, and buying something. The keyword analysis also identified
two additional goals: being debt free and having enough. Respondents reported a range of things
they wanted to have enough for. A distinct pattern for those aged 34 and below is that they listed
“buying” and “reducing debt” as their financial goals more frequently than other age cohorts.
Some respondents mentioned being financially stable. For example, the ability to pay bills
on time and in full, start a family or take care of family members, or afford health costs. Others
mentioned being financially secure. For example, being able to handle emergencies, live
comfortably, travel, retire, and leave bequests. Having enough for a down payment on a house and
for their own education or their children’s education were other sentiments expressed.
In terms of actions taken, study participants described their actions as saving more, spending
less, and paying off financial obligations. The youngest cohort (aged 34 and below) was more likely
to list “saving more” and “paying off” as their actions taken. Several mentioned they save and
invest as much as possible each month. Others were focused on paying as much as possible on
credit cards or other debt. For those who were spending less, key actions involved staying within a
budget, living frugally, and deliberately stretching the life of products as much as possible.
The analysis of survey participants’ responses suggests that people are making housing
decisions based on their personal situations as well as financial considerations. For instance,
cheaper cost than renting is the top reason reported by homeowners for owning a home, followed by
family reasons and investment considerations. Age differences existed for reasons to become
homeowners. The youngest cohort aged 34 and below was more likely than other age cohorts to
report owning because of problems with renting. They were also more likely to take advantage of
low housing prices and low mortgage interest rates to become homeowners.
Among those who were not homeowners, the top reason for their housing arrangement was
that they were saving for a home. A second common reason was living with parents, which is
disproportionately mentioned more often by the youngest age cohort. Interestingly, living with
parents is not a unique phenomenon among young people as 6.4% of non-homeowners aged 35-54
and 4% of non-homeowners aged 55 reported this housing arrangement as the reason for not
owning a home. This could be partially explained by cohabitating with and caring for aging parents.
Retirement Planning
Analyses about retirement planning also revealed useful insights. When respondents who
were saving for retirement were asked about their personal retirement savings accounts, the words
and word combinations “401(k),” “IRA,” “Roth,” “employer,” “Roth IRA,” “through work,” “IRA
401(k),” “Roth IRA 401(k),” “I have an IRA,” and “I have a 401(k),” were used frequently. Clearly,
401(k)s and Roth IRAs were favored retirement savings vehicles among the respondents and many
were saving in tax-deferred accounts through their place of employment. Interestingly, respondents
aged 34 and below identified retirement accounts at higher frequencies than their counterparts in
older age cohorts. This may reflect a higher awareness of retirement accounts among Millennials.
When respondents who were not saving for retirement were asked when they thought they
would begin regular retirement savings deposits, the words and word combinations “job,” “money,”
“debt,” “bills,” “when I,” “not sure,” “as soon as,” “when I get,” “I don’t know,” “when I have,” “as
soon as I,” “when I get a,” “in a few years,” and “get a job with” were used frequently. Many of
these n-grams indicate that retirement savings is viewed as being contingent on some life event. The
youngest age cohort, aged 34 and below, was more likely than other age cohorts to condition
retirement saving on having accomplished other goals.
Student Loans
According to participant responses, both housing and retirement decisions are affected by
outstanding student loan debt. The youngest cohort’s housing decisions are the most affected by
student loans among all age cohorts. Between 2003 and 2012, homeownership rates among 30-year-
olds with no history of student loan debt declined by five percentage points while homeownership
rates for the same age group with student debt fell by more than ten percentage points (Brown &
Caldwell, 2013).
Interestingly, among those who had student loan debt, the youngest cohort were least
impacted by their student loan balances, while those over the age of 55 were most affected. This is
line with the findings of the Center for Retirement Research at Boston College (Rutledge,
Sanzenbacher, & Vitaglina, 2016), which found that retirement asset levels of 30-year-olds were
unrelated to the size of student loan balances.
As noted above, financial practitioners need to be generation-savvy and understand the
biases of clients at different ages and stages of the life cycle. By doing so, they can target their
services appropriately and effectively frame the conversations that they hold with clients or
students. For example, gen-savvy advisors can help Millennials overcome their pessimism about
investing in stocks by reassuring them that they have time on their side (Obstacles to Millennial
Retirement, 2016). Each generation has a distinct set of experiences and expectations and older
financial practitioners may need to change their business models and practices to gain and hold the
attention of younger clientele (Rabe, 2015). This study focused on key financial decisions and
provides useful insights into the “money mindsets” of Americans, especially young adults who will
become future financial planning clients. Below are implications for professional practice:
Promote Concurrent Financial Planning- There are two ways to pursue multiple goals:
sequential and concurrent goal pursuit (Orehek and Vazeou-Nieuwenhuis, 2013). Results of this
study provided evidence of sequential “as soon as…” financial decision-making where respondents
said that they wanted to complete one goal before moving on to the next through a mechanism
known as goal shielding (Orehek and Vazeou-Nieuwenhuis, 2013). In others words, some
respondents appeared to be living a postponed financial life; e.g., delaying retirement savings until a
life event occurred or another financial goal, such as repaying student loan debt, was achieved. By
postponing savings, however, the wealth-building effects of compound interest are not being
maximized. Financial education and planning interventions need to stress the importance of saving
for financial goals early in life and show people that multiple goals can be funded concurrently,
instead of consecutively. When multiple goals are pursued concurrently, financial practitioners need
to help clients understand the potential consequences of the order that goals are combined. For
example, concurrently repaying student loans while also investing for retirement so that retirement
savings can take place throughout four to five decades of a young adult’s working life rather than
focusing on retirement only after paying off student loans and buying a house.
Encourage Retirement Savings- A worrisome 38% of survey respondents was not
currently saving for retirement. Clearly, this makes a case for auto-enrollment in employer savings
plans and “financial wellness” programs at worksites that walk people through the process of
deciding to make a retirement plan contribution, how much to save, and what plan investment
options are available to select from. Encouraging savings of even small amounts can make a big
difference over a young adult’s lifetime. Many respondents reported that automating retirement
savings was a key to their savings success.
Address Risk Management Concerns- Having adequate insurance coverage to protect
against the risk of financial losses is a basic financial planning recommendation. Though it didn’t
emerge as a top financial goal in the n-grams, some survey participants did report insurance related
goals. Adequate auto, health, home, and life insurance coverage were all mentioned. Over two-
thirds of this sample was younger than 45 years old. As reported by the American College of
Financial Services (n.d.), a significant proportion of women aged 41-52 years old feel under-
underinsured or don’t know if they have enough protection. Financial planning interventions need
to continue making the connection between adequate insurance coverage, protection from risk, and
preservation of both health and wealth. Practitioners can provide tools and personalized analyses for
determining adequate coverage levels.
Promote Income-Driven Student Loan Repayment Plans - Many of the respondents
indicated that student loan debt affects other aspects of their finances (e.g., housing and retirement).
Income-driven repayment plans on federal student loans could reduce monthly payments freeing up
more money to save additional funds for a down payment and/or increased retirement savings.
There are a variety of income-driven repayment plans. Examples include Income Based, Income
Based for New Borrowers, Income Contingent, Pay as You Earn, and Revised Pay as You Earn.
Each of these repayment plans can make it easier for student loan borrowers to set and fund
multiple financial goals.
Help People Plan Future Financial Goals As seen in the previous implications, planning
is a key factor in achieving financial goals. This links well to the Theory of Planned Behavior. If
consumers feel they have control over their life and develop a plan to achieve their goals, they will
be more likely to follow through. This study suggests avenues for financial planning interventions
(e.g., addressing clients’ multiple priorities) to assist consumers in gaining a sense of control and
encouragement to turn behavioral intentions into specific goals and action steps to achieve them.
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Table 1. Summary Statistics
Less than $25,000
$25,000 to $49,999
$50,000 to $74,999
$75,000 to $99,999
$100,000 or greater
Native Hawaiian or Pacific Islander
Some high school or less
High school graduate
Some college, trade, or vocational training
Associate’s degree
Bachelor’s degree
Graduate or professional degree
Household size
5 or more
Outstanding Student Loan Balance
Has outstanding balance
No outstanding balance
Expected Age at Retirement
Table 2. Financial Goals and Actions Taken to Achieve Them
Top Financial Goals
Save for
Buy a
Reduce Debt / Pay off
Debt Free
Have Enough
Actions Taken
Save More
Pay Off
Spend Less
As Much as Possible
Table 3. Homeownership Decision-making
Cheaper than renting
Family reasons
As an investment
Problems with renting
Low mortgage rates/ housing prices
Like the ownership
Lifestyle choices
Renting without elaboration of reasons
Planning to buy
Living with parents
Uncertainty about locations
Table 4. Retirement Savings Decision-making
Retirement Accounts
401(k)/403(b)/457 plan
Two or more retirement savings vehicles
Unnamed employer-sponsored plans
Through spouse’s plan
When to begin regular retirement savings
Time horizon
Sequential/As soon as . . .
No plan
Table 5. Effects of Student Loans on Financial Decisions
Affecting Housing
Less money
Pay off loans first
Live with family
Affecting Retirement
Contribute less to retirement
Contribute nothing to retirement
Table 6. Cohen’s Kappa
Estimate of Kappa
Lower limit of 95% CI
Upper limit of 95% CI
Note: 95% confidence intervals, showing agreement on a random sample between a rater and the topic classification
algorithm for all items except Q18 and Q19. For those two items, the values show the agreement between two raters.
Table A1. Search Terms for Common Themes
Search Terms
Top three financial goals (Q3)
Save for:
house|college|car|retire|emergency |401|travel|
Reduce debt/Pay off:
Buy a:
Debt free:
debt free|debt-free|debtfree
Have enough:
have enough
What, if any, actions are you taking right now?
Save more:
Pay off:
debt|credit card|load|student loan|house|mortgage|pay|credit
Spend less:
As much as possible:
Describe your homeownership decision (Q7)
Comparison to rent:
Family reasons:
As an investment:
Problem with renting:
tired of living in apartment|renting|bad landlord
Low mortgage rate or housing price
Like the ownership:
own home|ownership
Lifestyle choices:
pet|dog|cat|change|improvement|flexibility afford|have
money|had money
Tax benefits:
afford|have money|had money
Describe your housing decision if you are not
currently a homeowner (Q9)
Plan to buy:
buying|buy|purchase|in the next|in the future|wait|save
up|save for|saving for|in the process|not
Living with parents:
parent|dad|mom|father|mother|as dependent|student|college
Uncertainty about locations:
move|where to live|same city|which city|where
move|travel|job|travel a lot|job transfer|military|grad school
Down payment constraint:
no savings|could.??n.t afford|no money|not enough|down
Credit or debt constraints:
poor credit|bad credit|debt|student loan
How you are saving for retirement? (Q12)
401(k)/403(b)/457 plan:
Unnamed employer-sponsored plans:
Through spouse’s plan:
When do you think you will begin regular
retirement savings deposits? (Q13)
Time horizon:
next few months|((within|in |next few) &
No plan:
don’t know|not sure|unsure
never|not ever
as soon as|after
How have student loans affected housing choice?
(topic selection made by rater not algorithm)
How have student loans affected retirement
savings? (Q19)
(topic selection made by rater not algorithm)
... In addition, student loan debt registers the highest delinquency rate of all consumer debt products (Cangero, 2017). Student loan debt also effects other areas of the borrower's personal and financial life, such as their health, financial capability, homeownership, and retirement savings (Cho, Xu, & Kiss, 2015;O'Neill, Xu, Johnson, Kiss, & Buyske, 2019;Xu, Johnson, Bartholomae, O'Neill, & Gutter, 2015). ...
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