Majority Of US Households Delaying Major Life Events Due to Current Financial Situation

US Investors Concerned About Rising Healthcare Costs

Generation X Struggling With Mounting Financial Concerns

BOSTON (April 20, 2017) – According to results from the 2017 MFS Heritage Planning Survey, six in 10 investors have delayed or will delay a major life event due to their current financial situation. And two-thirds of investors have identified rising healthcare costs as one of their top concerns over the next three years. The study, which includes insights from more than 1000 US investors, was conducted in conjunction with the 20th Anniversary of MFS' Heritage Planning program for financial advisors.

"Clearly, the barrage of headlines surrounding the recent US elections and the Affordable Care Act has left many investors unnerved," said Jim Jessee, Co-Head of Global Distribution with MFS. "And although these are real concerns, they aren't insurmountable. Financial advisors can add a lot of value by talking to their clients about the things that keep them up at night and helping them get their financial houses in order."

Approximately half of the investors surveyed identified the US federal deficit, Social Security benefits and a major drop in the stock market among their top concerns. Investors aged 52-70, or Boomers, are particularly concerned about rising healthcare costs with more than three-quarters indicating they are either very or extremely concerned. Meanwhile, Millennial (aged 21-36) and Generation X (aged 37-51) investors are more focused on saving enough for retirement, with more than two-thirds of respondents in both groups indicating a high level of concern.

'Sandwich Generation' is Feeling the Pinch

Generation X investors are relatively pessimistic about their financial future. Just one-third of Generation X investors are confident in their ability to address financial concerns and meet their long-term financial goals – the lowest among all generations surveyed. Generation X is often referred to as the new 'sandwich generation' because many of them are responsible for both raising their own children and caring for their parents. According to Doug Orton, MFS Director of Business Development, Generation X investors often prioritize their immediate financial expenses over their long-term retirement needs.

"Unfortunately, many Generation X investors are woefully unprepared for retirement. They simply haven't saved enough, and unlike many of their parents, they don't have pensions or defined benefit plans to fall back on," said Orton. "They are desperately looking for guidance. In fact, 85% of Generation X investors surveyed said they look to their financial advisor for retirement savings advice and approximately 60% say they will rely on their advisor more in the coming years."

Seven in 10 Generation X investors say they have delayed, or expect to delay at least one major life event, such as buying a house, saving for their children's education, starting a new career and ultimately, retiring.

"This generation is under a lot of pressure. Wage growth has been stagnant over the past decade and we've had two major market downturns since the turn of the century," said Orton. "This means they'll likely need to save more in the years ahead if they want to reach their retirement goals."  

Misplaced Confidence among Millennials

Like Generation X, Millennials are also pushing out significant family and career milestones. Eight in 10 Millennials have either delayed, or expect to delay a major life event and nearly a quarter of those surveyed said they have held off on having children or buying their first home. Still, Millennials are fairly optimistic about the future. Seven in 10 believe their financial situation will improve over the next three years and roughly half of those surveyed are confident in their ability to meet their long-term financial goals.

"Having grown up in the information age, it's not surprising that 40% of Millennials surveyed say they are highly knowledgeable when it comes to investing," said Jessee. "However, when you look at their investment behaviors there is a clear knowledge gap that needs to be addressed."

Seven in 10 Millennials surveyed say that growing assets and generating income are their primary investment objectives. However, according to the survey, this generation has over a third of its assets allocated to cash and certificates of deposit – two asset classes that are geared toward protecting capital. This misallocation is likely the result of too many investment options. Six in 10 Millennials surveyed say they are overwhelmed by the number of available investment choices.

"This research reminds us that, across generations, financial guidance is important and there are real opportunities for advisors to educate clients and help them achieve their long-term financial goals," said Jessee.

About the survey
MFS Investment Management reexamined the research behind its Heritage Planning program by conducting a study among individual investors in the United States. The sample totaled 1,002 respondents, broken out as follows: 303 Millennial investors, 266 Generation X investors, 302 Baby Boomer investors and 131 Silent Generation investors. Gen Y refers to investors ages 21 to 36. Gen X refers to investors ages of 37-51. Boomers refers to investors ages of 52-70. The Silent Generation refers to investors ages 71 to 81. To qualify, individual investors must have $50K or more in household income, own at least one mutual fund, have at least 1% of their assets under advisement (i.e., using a financial advisor), and make or share in the financial decision making for their household. The survey was conducted from December 14, 2016 to January 9, 2017. MFS was not identified as the sponsor of the survey.

About MFS Investment Management
Established in 1924, MFS is an active, global asset manager with investment offices in Boston, Hong Kong, London, Mexico City, São Paulo, Singapore, Sydney, Tokyo and Toronto. We employ a uniquely collaborative approach to build better insights for our clients. Our investment approach has three core elements: integrated research, global collaboration and active risk management. As of March 31, 2017, MFS manages $440.9 billion in assets on behalf of individual and institutional investors worldwide.

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