Market Overview

E*TRADE Study Reveals Early Retirement Account Withdrawals Are on the Rise Among Young Investors


Data suggest retirement savings knowledge is critically needed among
young investors

E*TRADE Financial Corporation (NASDAQ:ETFC) today announced results
from the most recent wave of StreetWise, the E*TRADE quarterly
tracking study of experienced investors. Results indicate young
investors, ages 18–34, may be overly secure about achieving their
desired retirement:

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Data suggest retirement savings knowledge is critically needed among young investors (Graphic: Busin ...

Data suggest retirement savings knowledge is critically needed among young investors (Graphic: Business Wire)

  • They feel confident that they will achieve their goals. Almost
    all of the young investors surveyed (89%) feel somewhat to very
    confident that they will save enough to enjoy their retirement.
  • But early withdrawals are increasingly the norm. Almost sixty
    percent (59%) of young investors stated they had made an early
    withdrawal from their retirement account. In fact, early withdrawals
    among young investors rose significantly over the past three
    years—from roughly one out of three, to now more than half.
  • They don't think they need much. Young investors are most
    likely to think they'll only need between $250,000 and $999,999 for a
    successful retirement. Boomer investors tend to disagree, skewing
    toward recommending between $1 million and $2 million for a successful
  • They don't practice what they preach. Forty-four percent of
    young investors would recommend that a friend or family member put
    aside 6–10% of their income for retirement, but only 38% are actually
    allocating that much for themselves. Industry professionals recommend
    investors save approximately 15% of their income for retirement.1

"Saving for retirement continues to be a key challenge and a core area
of focus for investors," said Mike Loewengart, VP of Investment Strategy
at E*TRADE Financial. "While some younger investors have started on a
solid savings path, many are exhibiting behavior that runs counter to
their goals. There's a need to bridge the gap between education and
action, and the good news is, it's never too late."

Mr. Loewengart offered some guidance for young investors trying to take
control of their retirement planning:

  • Start saving. The earlier, the better. Saving steadily over a
    period of time can help your nest egg grow. So, don't wait to start
    contributing to your employer's retirement plan. The power of
    compounding interest is a huge benefit for young investors working
    toward retirement goals. Even for investors who may be getting a late
    start, every little bit helps.
  • Look, but don't touch. First, consider setting up automatic
    contributions. It removes the guesswork from deciding how much to
    invest each period. Also, it's important to keep an eye on your
    portfolio and be strategic about your asset allocation. Since you're
    investing for the long term, there will be market fluctuations, but
    it's important to remember that attempting to time the market is a
    futile exercise and withdrawing from your retirement portfolio early
    can come with serious penalties.
  • Don't leave money on the table. If your employer offers a
    contribution match to your 401(k), this is as close to free money as
    one will ever come by in the investing world. It is probably the
    easiest way to seriously kick-start long-term investing. Those with
    IRAs should consider contributing the annual maximum ($5,500 for those
    under age 50 and $6,500 for those 50 or over) to make the most of
    these tax-advantaged accounts.

E*TRADE aims to enhance the financial independence of traders and
investors through a powerful digital offering and professional guidance.
To learn more about E*TRADE's trading and investing platforms and tools,

For useful trading and investing insights from E*TRADE, follow the
company on Twitter, @ETRADE.

About the Survey

This wave of the survey was conducted from July 1 to July 11 of 2018
among an online US sample of 940 self-directed active investors with a
sample of 284 young investors between the ages of 18 and 34 who manage
at least $10,000 in an online brokerage account. The survey has a margin
of error of ±3.20 percent at the 95 percent confidence level. It was
fielded and administered by Research Now. The panel is broken into
thirds of active (trade more than once a week), swing (trade less than
once a week but more than once a month), and passive (trade less than
once a month). The panel is 60% male and 40% female, with an even
distribution across online brokerages, geographic regions, and age bands.

Referenced Data

If you could take one finance class, which would you take?
Total <34 35–54 55+
Saving for Retirement 30% 36% 36% 20%
Understanding the Markets 26% 25% 22% 31%
Active Trading 101 23% 27% 22% 20%
Introduction to Asset Classes & Derivatives 15% 9% 16% 19%
Other 6% 3% 4% 10%

Have you ever taken out money from an IRA or 401(k) before the
age of 59.5 and, if so, for what?

Total <34 35–54 55+
No, I have never taken out money from an IRA or 401(k) before the
age of 59.5
63% 41% 55% 87%
Yes (Net) 37% 59% 45% 13%

Have you ever taken out money from an IRA or 401(k) before the
age of 59.5 and, if so, for what?

Age <34
2018 2017 2016 2015
No, I have never taken out money from an IRA or 401(k) before the
age of 59.5
41% 50% 66% 69%
Yes (Net) 59% 50% 34% 31%
How much money do you think you'll need for a successful
Total <34 35–54 55+
$0–$249,999 5% 9% 4% 3%
$250,000–$999,999 36% 49% 31% 31%
$1–2 million 38% 27% 42% 43%
Over $2 million 21% 15% 23% 23%
What percent of your salary are you currently allocating to a
retirement account?
Total <34 35–54 55+
I am already retired 20% 0.40% 2% 52%
0% 1% 2% 2% 1%
1–5% 12% 20% 14% 4%
6–10% 29% 38% 38% 14%
11–16% 19% 24% 25% 9%
17–22% 12% 10% 13% 11%
>23% 7% 6% 5% 9%

How much money do you recommend that your friends and family
put aside from their monthly paycheck for retirement?

Total <34 35–54 55+
0% 0.30% 1% 0.30% 0%
1–5% 9% 14% 9% 5%
6–10% 38% 44% 35% 35%
11–16% 33% 28% 36% 35%
17–22% 13% 8% 14% 17%
>23% 6% 5% 6% 8%

How confident are you that you are currently saving enough to
enjoy the retirement that you want?

Total <34 35–54 55+
Agree (Top 2 Box) 90% 89% 85% 94%
(4) Very confident 33% 32% 21% 45%
(3) Somewhat confident 57% 57% 64% 49%
(2) Somewhat unconfident 9% 10% 13% 6%
(1) Very unconfident 1% 1% 3% 0.30%
Disagree (Bottom 2 Box) 10% 11% 16% 6%

"Young Investors" defined as age 18–34 // "Gen X" defined as
age 35–54 //

"Baby Boomer" defined as age 55+

1. Munnell, Alicia H.; Webb, Anthony; Hou, Wenliang. "How much should
people save?" Center for Retirement Research at Boston College,
July 2014,

# # #

About E*TRADE Financial and Important Notices

E*TRADE Financial and its subsidiaries provide financial services
including brokerage and banking products and services to retail
customers. Securities products and services are offered by E*TRADE
Securities LLC (Member FINRA/SIPC). Commodity futures and options on
futures products and services are offered by E*TRADE Futures LLC (Member
NFA). Managed Account Solutions are offered through E*TRADE Capital
Management, LLC, a Registered Investment Adviser. Bank products and
services are offered by E*TRADE Bank, and RIA custody solutions are
offered by E*TRADE Savings Bank, both of which are national federal
savings banks (Members FDIC). More information is available at

The information provided herein is for general informational purposes
only and should not be considered investment advice. Past performance
does not guarantee future results.

Automatic Investment Plans and dollar-cost averaging do not ensure a
profit or protect against loss in declining markets. Investors should
consider their financial ability to continue their purchases through
periods of low price levels.

E*TRADE Financial, E*TRADE, and the E*TRADE logo are trademarks or
registered trademarks of E*TRADE Financial Corporation. ETFC-G

© 2018 E*TRADE Financial Corporation. All rights reserved.

E*TRADE Financial Corporation and Research Now are separate companies
that are not affiliated. E*TRADE Financial Corporation engages Research
Now to program, field, and tabulate the study. Research Now Group, Inc.
provides digital research data and has locations in the Americas,
Europe, the Middle East and Asia-Pacific. For more information, please
go to

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