NEW YORK—Amid rising consumer debt, American parents continue to be focused on reducing the amounts they owe, a new report reveals.
A survey from New York Life found that 72% of parents identify debt reduction as a top financial priority for 2019. That number is even higher for Millennial parents (ages 18-34), with 80% planning to focus on debt reduction this year, the report shows.
Although most parents, 67%, say they plan to save more, when asked what they’d do with a $5 million lottery jackpot, 58% rank paying off debt as one of the top three uses for their winnings. In comparison, only 33% say they would use hypothetical lottery winnings to save for retirement.
“While reducing debt can be a worthwhile endeavor, a singular focus on it at the expense of other planning can be dangerous to a family’s overall financial well-being,” said Brian Madgett, vice president, New York Life. “Adopting a protection-first financial planning approach is crucial, as even the best laid plans can get derailed without a strong long-term foundation.”
Optimism Shown
Although many families carry debt that might prevent them from achieving financial stability, parents are optimistic about their finances in the year ahead, the report shows. Fifty-eight percent of parents expect their finances to improve this year, and 61% believe they will be better prepared for the unexpected. Younger parents have a particularly sunny outlook, tying their ability to pay down debts to a brighter financial future: 65% say their finances will improve this year, and 77% say their families will be better prepared for the unexpected.
Optimism may not lead to action, however, noted New York Life. “Just 28% of parents believe it is important to have a financial plan in place to care for their children in case something happens to them. Further, fewer parents than last year (30% versus 38%) are planning to seek expert advice in 2019. However, younger parents – despite their focus on debt – are more likely to recognize the importance of long-term planning, with 44% saying they will seek professional financial planning advice this year.”
‘A Disconnect’
According to Madgett, the findings illustrate a disconnect between expectations and reality when it comes to financial planning. “
It’s encouraging to see a more positive outlook for 2019, especially among younger parents who have the benefit of time, but optimism can only carry us so far,” said Madgett. “Finding a qualified financial professional who can help identify your family’s needs and financial goals and work with you to create a plan is an important step toward ensuring parents’ optimism can be sustained no matter what life might bring.”
The survey was conducted between Nov. 15 - 19, 2018 by Ipsos on behalf of New York Life. A sample of 1,102 adults ages 18 and over from the continental U.S., Alaska and Hawaii was interviewed online.