Published: December 08, 2009

Fidelity Investments Study Finds Shift in Generation Y Attitudes Toward Finances, Employment and Benefits

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BOSTON - (BUSINESS WIRE) - Fidelity Investments today announced the results of a new study¹ of young working Americans which reveals a shift toward more conservative behavior in financial matters and employment decisions.

The Fidelity Generation Y study - which looked at the attitudes and behaviors of more than 1,000 employed Americans ranging from 22 years to 33 years old² - is a follow up to research Fidelity conducted in early 2008.

Despite the fact that three out of four Gen Y workers feel secure in their jobs, over 70 percent are very concerned about their finances and have set the goal of daily money management and budgeting as their biggest focus. Most Gen Y individuals are using mobile technology to stay updated on their cash flow situations with 64 percent reporting that they typically check their balances online before making a purchase of $300 or more. On average, this younger generation holds over three credit cards with one fifth (20%) carrying a balance greater than $10,000 and one in four (25%) believing they will never be free of credit card debt during their lifespan.

Changing Perspectives on Job Tenure and Benefits

Many young workers surveyed (41%) say the economic crisis has made their generation more conservative, which is reflected in not only their financial decisions, but also their employment choices. More Gen Y individuals today show a reluctance to "job hop" with one in four indicating the intent to remain with a current employer until retirement, up from 14 percent of those surveyed in early 2008.

Gen Y individuals overwhelmingly (75%) agree that work-life balance still drives their career choices, similar to what they said in 2008, but workplace benefits have taken on greater importance. The majority of Gen Y (62%) individuals responded that the quality of benefits packages influences their choice of employer today with slightly more (64%) stating it also impacts their job loyalty. Four in ten (44%) believe that the value of the benefits they receive should be tied to their workplace performance with nearly half (49%) describing the current benefits approach as a one-size-fits-all system where everyone gets the same package. When asked which benefits are a "must have," Gen Y individuals ranked health insurance first (82%), followed by paid vacation time (68%) and access to a retirement savings plan (57%).

"The change in the mindset of young workers has been remarkable," said Brad Kimler, executive vice president of Fidelity's Consulting Services business. "Their attitudes and views toward their employer and finances are now more conservative and reflective of their parents' generation, yet this generation will be faced with different challenges including higher debt, greater responsibility for costs associated with benefits and less access to traditional pensions."

Retirement Savings Become a Bigger Priority

Nearly half (47%) of Gen Y employees with an employer-sponsored retirement savings plan report that managing everyday finances, such as paying the mortgage or credit card debt, is a more crucial obligation than saving for retirement. The majority (57%) believe that these types of savings plans are the best way to save for retirement. More (18%) now consider saving for retirement to be their "most crucial goal" versus just 13 percent in 2008.

"Many Gen Y-ers have become more engaged with their finances through this economic downturn and are recognizing how critical it is to save early for retirement," said Philippe Mauldin, executive vice president, Workplace Investing at Fidelity. "However, this is the life stage when retirement is competing with an ever growing list of financial priorities."

Like many Americans, Gen Y individuals believe rising unemployment is one of the most important issues their generation faces today. Whether a Gen Y worker loses his/her job through voluntary or involuntary means, many find themselves faced with the decision of whether to roll over their workplace savings, cash out or remain in their current plan. Fidelity's study found that guidance provided during this time may play a crucial role in that decision. Job changers who had funds in an employer-sponsored retirement plan and sought guidance cashed out 29 percent of the time versus 49 percent for those who didn't receive guidance.

Overall, 35 percent of Gen Y job changers with funds in a plan stated that they had cashed out of their 401(k) s or 403(b) s during their most recent job change. The most common reasons for doing so were: a small balance perceived to be not worth rolling over (30%); job loss led to a greater need for the money (24%); money was needed for a major purchase (20%); money was needed for every day expenses (19%).

The Methodology

Data for the Consulting Services' survey was collected August 19-26, 2009, by TNS Global and is based on responses from a national sample of 1,017 employed adults aged 22 to 33 years old with annual household incomes of at least $15,000. The results of the Fidelity Generation Y study may not be representative of all persons meeting the same criteria as those surveyed for this study.

About Fidelity Investments

Fidelity Investments is one of the world's largest providers of financial services, with assets under administration of nearly $3.1 trillion, including managed assets of more than $1.4 trillion as of October 31, 2009. Fidelity offers investment management, retirement planning, brokerage, and human resources and benefits outsourcing services to over 20 million individuals and institutions as well as through 5,000 financial intermediary firms. The firm is the largest mutual fund company in the United States, the No. 1 provider of workplace retirement savings plans, the largest mutual fund supermarket, a leading online brokerage firm and one of the largest providers of custody and clearing services to financial professionals. For more information about Fidelity Investments, visit www.fidelity.com.

Fidelity Investments is a registered service mark of FMR LLC.

TNS is an independent entity and is not affiliated with Fidelity Investments.

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¹ Survey conducted online by TNS Global from August 19 - 26, 2009. It included 1,017 employed members of Generation Y.

² For this study, Gen Y was defined as people ranging from 22 years to 33 years old.

Fidelity Investments
Corporate Communications, 617-563-5800