In 2009, Northwestern Mutual commissioned a study among U.S. adults aged 25+ to explore their attitudes and behaviors toward money and financial decision-making, as well as their opinions about broader ideas such as the attainability of the American Dream. The project was ultimately named the “Planning & Progress Study” and has been conducted every year for the last decade.
To mark the 10-year milestone of the research, Northwestern Mutual looked back at the original cohort surveyed – people who were aged 25+ in 2009 and are 35+ today. The new findings revealed deep changes in their attitudes toward money and risk.
For starters, overall financial security and financial habits have markedly improved:
- 71 percent said they felt financially secure today versus only 47 percent who felt financially secure in 2009
Compared to 10 years ago:
- 73 percent said their financial situation was better now;
- 88 percent said their financial habits were better;
- 74 percent said they were carrying less debt;
- 74 percent said they were more frugal;
- 66 percent said they had specific goals for the next five to 10 years, while only 57 percent said the same in 2009.
Despite the stronger financial footing, Americans have gotten substantially more cautious over the last 10 years, Northwestern Mutual said. Much of that can be pegged back to the financial crisis of 2008 – something that left a deep behavioral mark on people's lives which extends well beyond finances.
“In many ways, 2009 feels like ancient history, but the imprint that period left is still visible in the data we collected in 2019,” said Emily Holbrook, director of planning at Northwestern Mutual.
When comparing today to how they felt during the financial crisis:
- More than one-third (37 percent) of adults said that they had become less comfortable today taking financial risks versus 18 percent who said that they were more comfortable;
- A quarter (26 percent) said that they had become less comfortable taking career risks versus 17 percent who said that they were more comfortable; and
- More than one-third (35 percent) said that they had become less comfortable taking risks with their healthcare coverage versus 13 percent who said that they were more comfortable.
“It's remarkable when you consider that the people we surveyed today are more financially stable than they were 10 years ago; they're presumably more advanced in their careers and have witnessed the longest bull run in the history of the stock market. And yet they've become more cautious and diligent about their finances,” said Ms. Holbrook. “For the most part we see this as change for the better, but we also suspect there's some financial trauma mixed in, too. It's important to recognize the behavioral elements of financial decision-making – that's where good planning comes in.”
Despite the prolonged U.S. economic recovery over the last 10 years, American optimism has remained essentially flat since 2009, Northwestern Mutual reported. Among adults age 35 and older, the study found:
- Just over half (54 percent) said that they agreed that the American Dream was attainable for most Americans. That was down slightly from the 58 percent who said the same in 2009.
- Nearly three-quarters (73 percent) said that they believed people could accomplish anything if they put their mind to it, but confidence was higher in 2009 when 82 percent said the same.
- Two-thirds (65 percent) said that they believed they would get to where they wanted to be in life, which was flat to the 65 percent who said the same in 2009.
- A little more than one-third (36 percent) said that they believed the United States generally was headed in the right direction, which was an uptick from the 27 percent who said the same in 2009. But 44 percent said that they felt the United States was not headed in the right direction, which was slightly more than the 40 percent who said the same 10 years ago.
“There's a real mix of optimism and pessimism in these numbers,” said Ms. Holbrook. “At the individual level, people continue to believe in themselves, but they're more cynical about the broader questions such as the direction of the country and the attainability of the American Dream. That's very similar to what we heard 10 years ago, which is interesting given the uptick in financial stability we've seen at both the national and individual levels. It's very likely connected to the same rise in risk-aversion and caution we've seen in other parts of the study.”
The attributes that best fit people's definition of success continued to favor relationships, health, and lifestyle over material, career, and wealth. The top six attributes cited in 2019 include:
- (Tie) “Spending quality time with family”
- (Tie) “Being Healthy”
- “Having a good relationship with your spouse or partner”
- “Being financially prepared for the future”
- “Having a good work/life balance”
- “Being a good parent”
Each of these far surpassed things such as “Earning a high income” (No.12), “Owning the home of your dreams” (No.11), and “Having nice belongings” (No.19).
In 2009, the answers were very similar with only slightly more priority going to work/life balance and slightly less to being financially prepared for the future. The top six attributes were:
- “Spending quality time with family”
- “Having a good relationship with your spouse or partner”
- “Being healthy”
- “Having a good work/life balance”
- “Being a good parent”
- “Being financially prepared for the future”
Here again, these attributes were cited substantially higher than “Owning the home of your dreams” (No.15), “Earning a high income” (No.16), and “Having nice belongings” (No.19).
This is the first round of findings from the 2019 study. Northwestern Mutual said that in the future it will explore topics such as debt, retirement, the middle class, and generational differences.
Learn more: Northwestern Mutual.
Victoria Spears
Victoria Prussen Spears is senior vice president of Meyerowitz Communications Inc., a law firm marketing communications consulting company. A graduate of Sarah Lawrence College and Brooklyn Law School, Ms. Spears was an attorney at a leading New York City law firm before joining Meyerowitz Communications. She may be contacted at [email protected].