How Old is Too Old to Be Living With Parents? Gen Z Says Age 28+ Would Be Embarrassing

How Old is Too Old to Be Living With Parents? Gen Z Says Age 28+ Would Be Embarrassing

Despite Concern About Tuition Costs and Student Loan Debt, Gen Z is Willing to Tackle College, Moving From Home, First Salary and Savings as Realists

OMAHA, Neb.--(BUSINESS WIRE)-- Nearly half (46%) of those in Generation Z say their biggest worry is having a large student loan balance when they graduate college (up from 39% in 2012), and 36 percent are concerned about being able to afford college at all, according to the 2nd Annual Generation Z Survey, released by TD Ameritrade Holding Corporation (NYS: AMTD) . When you consider that the cost of college has risen more than 1,120 percent 1 in the last 35 years, that comes as no surprise. But, the survey uncovered many more surprising insights into this group of teens and early 20-somethings.

Gen Z Goes to College ... Despite Rising Tuition Costs
In spite of the climbing cost of college tuition, more than half (54%) of those in Gen Z still believe obtaining a higher education is critical to achieving success. And 64 percent agree that college is worth the cost because it helps secure employment.

The majority of those in Gen Z (72%) expect to attend college or are currently attending college, and despite the large price tag, 61 percent plan to seek an advanced/graduate degree. Only 1 in 5 have considered delaying college due to the expense.

How will they foot the bill? According to the survey, members of Gen Z plan to tap several sources to help fund their education. More than two-thirds (68%) say college will be paid for by assistance from scholarships and grants, 55 percent expect to receive some help from their parents, 46 percent say they will be paying for the expense themselves with savings or money earned while working during college years, and 44 percent anticipate assistance from student loans. Regardless of how they plan to pay, according to National Postsecondary Student Aid Study (NPSAS), 52 percent of students can expect to receive some sort of grant and 62 percent of students can expect to graduate with some education debt.2

"While the expense of college has skyrocketed, education is still viewed as critical to establishing a career, which is why it's more important than ever for families to create a sound plan for how they will cover the costs," says Carrie Braxdale, managing director, investor services TD Ameritrade, Inc.3 "There are many options for advanced planning, like 529 plans or Coverdell accounts. And for those who may not have planned ahead, there are still resources available to help. The key is for parents and kids to clearly outline how they will manage paying for college, and how that fits into other long-term financial plans."

Sitting down with your child and developing a plan to pay for college is also a great opportunity for parents to teach financial responsibilities to their children. And the conversation may not be too tough. These teens and early 20-somethings seem to understand the importance of saving money. If given $500 a whopping 70 percent would save at least a portion of it - and 34 percent would save it specifically for college.

Growing Up and Moving Out
On average, members of Gen Z expect to be living on their own by age 21. But, 63 percent say they feel welcome to move back in with their parents in the future if they can't afford to swing it on their own. This young generation appears to have no qualms about moving back home, either. In fact, many see some benefits to living with their parents. Eighty-one percent of those currently living at home after college or planning to do so say it allows them to save money, while nearly half (48%) say it allows them to be selective about employment opportunities.

But parents, fear not. Gen Z doesn't plan to live at home forever. The magic number is 28: When asked at what age they would be embarrassed to still be living at home, Gen Z, on average, said age 28. Nearly nine out of 10 (88%) would be embarrassed to still be living at home at 30, and half (49%) would be embarrassed to still be living at home at age 25.

For parents who want to encourage their kids to flee the nest after college, it appears having a job may inspire independence. The survey revealed that Gen Z kids who have had or currently have a job are less likely to move back in with Mom and Dad after college. Those who have never worked are significantly more likely to want to return to live with parents (39% vs. 26%).

First Job Expectations
The bleak job market and high unemployment rates appear to have triggered a sense of pragmatism among Gen Z when it comes to salary expectations. They're not expecting six figures out of college. Instead, members of Gen Z anticipate a conservative $36,900 annual salary for their first job out of college, compared to the National Association of Colleges and Employers, which said the starting salary for graduates in 2012 is approximately $44,000. Yet, they do expect their income to grow over time and anticipate making $119,000 per year by the time they reach age 60.

For Gen Z, job satisfaction is a priority. Seventy-seven percent say job satisfaction is of equal importance to, if not more important than their salary, and 44 percent are willing to move almost anywhere for their ideal job (girls are significantly more likely than boys to do so; 49% vs. 41%).

Expected Life Stage Flow
When it comes to the path they plan to take, those in Gen Z expect major milestones will occur in this order:

1. Start a job.
2. Buy a car.
3. Pay off student debt.
4. Get married.
5. Buy a home.
6. Start saving for retirement.
7. Have children.

Retirement may not be top of mind yet for Gen Z, but it should be. Especially when you consider that:

  • 39% of those in Gen Z worry they won't be able to count on Social Security or other government retirement programs when they get older (31% in 2012)

  • 31% of those in Gen Z are concerned about not being able to put money away for retirement

It seems 28 is the magic number for Gen Z. Not only do they hope to be independent and living on their own by then, but it's also the age members of Gen Z, on average, plan to start saving for retirement. According to TD Ameritrade's Retirement Reformation Survey, Baby Boomers, on average, say they started saving at age 32, but if they had to do it over again, they would have started saving at age 24. Gen Z may want to take note.

"It's interesting to see that this young generation plans to take a fairly traditional path to their futures, however; the one piece that looks out of place is saving for retirement," continued Braxdale. "Time and time again we hear Baby Boomers say they wish they would have started saving earlier, and the hope is that we can spread the word to Gen Z to start saving as soon as they start working, rather than waiting until they reach other milestones. Even a little bit can go a long way, and the power of compounding interest is an opportunity they do not want to miss out on."

Parents looking to learn about education savings can visit TD Ameritrade's college planning website to determine which of the following savings plans might be right for them:

Gen Z's recent college grads looking to get a jump start on retirement can open an account with TD Ameritrade with no minimum and no maintenance or inactivity fees. Bottom line: In their early 20s, their money may feel scrawny, but it packs the biggest punch. Start early, finish strong.

1 Bloomberg, by Michelle Jamirsko & Ilan Kolet, "Cost of College Degree in U.S. Soars 12 Fold," August 15, 2012.

2 National Postsecondary Student Aid Study, "Distribution of Total Undergraduate Debt by Sector and Type of Degree or Certificate", 2007-08 and "Percent of Undergraduate Who Received Grants," 2007-2008.

3TD Ameritrade, Inc. is a broker-dealer subsidiary of TD Ameritrade Holding Corporation (NYS: AMTD) .


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Head Research is a division of Head Solutions Group (U.S.) Inc., a leading market research partner for Financial Services companies in North America. With offices in New York, Toronto and Montreal, Head delivers the deep customer insights that increase institutional knowledge and propel business action. TD Ameritrade and Head Research are separate and unaffiliated firms, and are not responsible for each other's services or policies.

About the Gen Z and Money Survey Methodology 2013

An online survey was conducted among N=1,000 Americans aged 14 to 23 from April 25 to May 6, 2013, by Head Research on behalf of TD Ameritrade, Inc. Sample was drawn from major regions in proportion to the U.S Census. The statistical margin of error for overall survey results in this study is +/- 3% (assumes panelists do not differ from non-panelists, and respondents do not differ from non-respondents). This means that, in 19 out of 20 cases, survey results for questions based on all survey respondents (N=1,000) will differ by no more than 3% in either direction from what would have been obtained by measuring the opinions of all Americans aged 14 to 23.

About the Gen Z and Money Survey Methodology 2012

2,001 U.S residents participated in an online survey from April 27 to May 1, 2012. The 2,001 survey respondents sample was drawn from major regions in proportion to the U.S. Census - New England (5%), Mid-Atlantic (16%), South (25%), Midwest (22%), Southwest (12%) and West (20%). In each region, approximately half of the respondents were male and half were female. The two primary groups included were: Gen Z = 1,001 (born 1990 to 1999) and Parents of Gen Z = 1,000 (has a child in their household aged 13 to 22). The statistical margin of error in this survey is ±3.1%. This means that in 19 cases out of 20, overall survey results for primary groups in the study (i.e., Parents of Gen Z vs. Gen Z) will differ by no more than 3.1% in either direction from what would have been obtained by measuring the opinions of all target group members born in the U.S. Head Research conducted this survey on behalf of TD Ameritrade Holding Corporation.

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