Americans under 35 piling up debts

A new study reveals that financial problems are getting worse for Americans under 35. About three out of four are in as much or more credit-card debt this year as last, with slightly more than half making minimum monthly payments, according to a study just released by Qvisory.

Fully 55% of the survey respondents said that financial matters topped the list of concerns, a 10-point jump from last year, according to the study by Washington-based polling firm Greenberg Quinlan Rosner.

In addition, 37% of the 1,000 people 18 to 34 surveyed online said they have more debt than they did last year, and 38% reported the same amount of debt as last year. Twenty-two percent said they owe more than $10,000 and 51% said they make only monthly minimum payments. Only 14% said they turn to a financial adviser for help.

“It’s not a good thing for this country, or for these individuals, not to be able to establish themselves economically,” said Eileen Quigley, president and executive director of Seattle-based Qvisory, referring to the study’s findings.

Medical costs have added to the financial struggle for young adults, with 54% saying they have gone without health insurance at some point in the last five years and 28% now carrying medical debt. Only 33% said they have a retirement plan.

Financial advisers could play a huge role in helping young adults navigate these challenges, but very few seek out planners or can afford them, said Carol Friedhoff, president of Savvy Outcomes Inc. in Dublin, Ohio.

When survey participants were asked where they go for advice, an adviser was their last choice, behind banks, parents, other relatives, friends and the Internet. “It’s something that is not on their radar,” said Ms. Friedhoff.

DISCOUNTS

Ms. Friedhoff, who offers discounts to young adults who come to her for financial-planning advice, said she has two clients now who are struggling to pay off student loans.

Ms. Friedhoff said she encourages minimum payments on such loans. She also suggests setting up an aggressive investment strategy and an easily accessible liquid-cash account. And she urges clients to participate in company defined-contribution plans to capitalize on the matching contributions offered.

Young adults should allocate as much of their earnings to a 401(k) as they can, she said.

Ms. Friedhoff’s Dublin, Ohio-based firm has more than $11 million in assets under management.

Jill Gianola, president of Columbus, Ohio-based Gianola Financial Planning LLC, is also seeing young adults with debts. Like Ms. Friedhoff, she sometimes offers discounts for her advice. She also recommends purchasing a temporary healthcare plan that covers catastrophes.

“It’s hard for [young adults] to figure out what their standard of living should be,” she said. “They find themselves in a tougher cash-flow problem from the beginning.”

The Financial Consulate Inc. offers young adults a complete “financial physical,” according to Tim Maurer, director of financial planning for the Lutherville, Md.-based advisory firm. “One of the things squeezing this age group is that they are almost being ignored,” said Mr. Maurer, who spearheaded his firm’s effort to create services geared toward young adults. “Sadly, most Generation Xers and Generation Yers are living paycheck to paycheck.”

Ms. Friedhoff and Mr. Maurer declined to provide details on their respective assets under management.

Qvisory was formed late last year as a nonprofit online advocacy and service organization to support the health, financial well-being and career goals of adults 18 to 34. The group’s first study was conducted in May 2007. It intends to conduct annual polls on the problems faced by young adults, according to Ms. Quigley.

E-mail Andrew Coen at [email protected].