How COVID-19 is impacting young Americans' finances

TD Ameritrade Director of Investment Guidance Keith Denerstein joins Yahoo Finance’s Zack Guzman to discuss how COVID-19 has impacted Americans under the age of 30 and their ability to support themselves financially without help from family.

Video Transcript

ZACK GUZMAN: Clearly, there are a lot of economic impacts here through the COVID-19 pandemic, and no doubt impacting younger Americans who might be more susceptible to feel economic shocks-- just out of college, perhaps battling college debt as well. And a new survey here from TD Ameritrade is digging into that with the help of a Harris Poll to see how impacted young Americans actually are through all this. And for more on the results of that survey, we're joined by Keith Denerstein, TD Ameritrade Director of Investment Guidance.

And Keith, obviously, a lot of Americans, if this is their first job, younger, coming out of school-- not a lot of wiggle room. Not a lot of savings built up. So what did you guys find out about how impacted younger Americans actually are through this?

KEITH DENERSTEIN: Well, even before the pandemic started, young Americans were already anxious about their financial independence. They know that it's a journey. And they're thinking about their financial security all the time. But even before this all started, 2/3 of young Americans didn't even know how they could get by without relying on their family. Between student debt, high cost of living, and stagnant wages, they were already behind the eight ball.

And then, obviously, since the pandemic struck, it has just raised the level of anxiety. They're thinking about their finances more. They're more concerned about their employment situations than Americans overall.

But the bright side is that anxiety trumps obliviousness, so as long as they know there's an issue. The hopeful thing is that we do see young Americans taking a lot of the steps necessary in order to secure financial independence once we are able to move through the pandemic.

ZACK GUZMAN: I have something to admit here-- I may or may not still be on the family plan when it comes to the cell phone bill, though I am Venmoed for it. But when we think of the age group here in discussion, age 15 to 29, digging into it, interesting to see 59% saying that this pandemic derailed their goal to become financially independent. So, I mean, how does that stack up to how they were feeling maybe before this and what they see in the months and years to come?

KEITH DENERSTEIN: Yeah, so the anxiety was there before. But, obviously, when you get struck with a pandemic of this magnitude, or any incident that's this large that really hasn't happened in 100 years, then, of course, it's going to raise the level of anxiety. And then you think of the young Americans, 15 to 29-- this is really the first crisis that they have experienced as adults. They were really coming of age during the '08 crisis. So this is the first time that they've seen the economy move in this direction with this magnitude.

But they're taking a lot of the right steps. In terms of their investments, they're continuing to invest. They're remaining invested and remaining on track as far as trying to keep their retirement plans together, not liquidating their retirement portfolios. So those are the important steps that they're taking.

But on the other side, they know that they need to control their expenses. So we've seen a rising majority of-- or rising proportion of young Americans moving back in with their parents, taking the steps necessary to control their expenses, and even taking on side hustles or finding other areas of income in order to help themselves when it comes to their finances and their financial independence.

ZACK GUZMAN: Yeah, Keith, I don't think it'd be a stretch here to say that boomer-millennial relations have been stretched as of late. And probably, I mean, on an anecdotal basis, if you're dealing with your own kids, you're probably-- I don't know, I guess it's case-by-case-- you're probably not going to be necessarily mad that they're moving back in. But some of that disdain might spill over for labeling all millennials to be lazy here.

But when you think about how all of this stacks up historically and how younger Americans have always kind of had to wait before they built up their savings, I mean, how does it stack up in terms of other generations coming out of college and what millennials today are dealing with compared to maybe older Americans coming out of college back in the '80s and '70s?

KEITH DENERSTEIN: Well, there's always been the friction between generations. And the thing about this generation is that the stigma, any sense of shame about relying on your parents for support or potentially moving back home, seems to be either eliminated, or at least greatly reduced. Young Americans know that it takes a lot to achieve financial independence. It takes a lot of hard work and dedication over a period of years.

But the situation that they're in, pandemic aside-- you know, I mentioned before high debt levels, particularly student debt that many of them have had to take on, wages, which are stagnant, costs of living which continue to increase-- they're coming of age during a very difficult time in our nation. But at the same time, they're really taking the steps necessary, and I think that eliminating that sense of stigma when it comes to relying on your family for support. And we see that young Americans are really open about their reliance on family members, on other areas of income.

Hey, you said it yourself, being on the family plan when it comes to your cell phone bill-- every little area where you could save on your expenses and propel yourself even further when it comes to financial independence-- we really see this generation taking those steps, and being very creative when it comes to it.

ZACK GUZMAN: Yeah, to clarify, I just want to make it clear-- on the cell phone family plan, still pay for the cell phone, though. I just want to make that clear. But 58% say out there that parents do pay for their cell phone when we talk about younger Americans. So that's a pretty large number.

One in four still relying on their parents to cover their entire rent check. So if you're below that, I guess you're doing better than the rest of one in four young Americans out there. But Keith Denerstein, appreciate you joining us to break all that down. Very interesting insights to compare to there.