How has the average age of 529 beneficiaries changed over the last nine years?
The data in the chart and analysis in the written section below comes from the annual 529 Industry Analysis 2020 Report which is ISS Market Intelligence’s 22nd study on college savings. Its purpose is two-fold:
• To provide the education savings industry participants with a qualitative and quantitative analysis of key trends that we believe will drive industry growth over the next five years
• To outline actionable steps to help product providers and distributors restructure their legislative, product, marketing and distribution to better align with the demands of investors, families, employers and advisers, and, therefore, to improve the growth rates of both their plans and the industry
The 529 Industry Analysis 2020 builds upon 21 prior ISS Market Intelligence college savings studies:
– 529 Distribution Analysis 2019
– 529 Plan Industry Analysis 2019
– 529 Plan Distribution 2018
– 529 Industry Analysis 2018
– 529 Distribution Analysis 2017
– 529 Plan Industry Analysis 2017
– 529 Plan Distribution 2016
– 529 Industry Analysis 2016
– 529 529 Distribution Study (2015)
– 529 Industry Analysis (2015)
– 529 Distribution Study (2014)
– 529 Industry Analysis (2014)
– 529 Advisor Study (2013)
– 529 Industry Analysis (2013)
– 529 Financial Advisor Support, Selection and Distribution Preferences (2012)
– 529 Industry Analysis (2012)
– 529 Plans and Distribution Analysis (2011)
– 529 Advisor Perspectives (2011)
– Evaluating the College Savings Market Opportunity (2009)
– 529 Strategies for Success (2004)
– 529 Plans: An Investment in Your Company’s Future (2002)
The primary goal of this study is to analyze the decision-making and product-selection processes of individuals who were at the time of our survey either 529 users, non-529 college savers or non-college savers.
For ISS Market Intelligence’s 2020 College Savings Consumer Survey, we partnered with a premier B2B and B2C panel provider and data-collection services company to conduct a proprietary survey of 1,001 consumers in March 2020. This nationally representative sample included U.S. household decision-makers between the ages of 25 and 82, with annual incomes of $25,000 or more, who were either parents or legal guardians of a child or children under the age of 18.
The survey utilized a choice model method that mapped the target market into three categories: 529 users, non-529 college savers and non-savers. This approach provides firms with strategies on how to convert non-college savers to college savers; college savers to 529 users; and 529 users to 529 “power users.” 529 power users are defined as those fully funding the account to its annual maximum, or leveraging multiple sources of contributions such as friends, family, employers or credit card rewards programs. Longitudinal analyses are reported for certain data points, as ISS Market Intelligence conducted similar proprietary consumer surveys with enhancements based on feedback in 2012, 2013, 2014, 2015, 2016, 2017, 2018 and 2019, partnering with the same firm to poll consumers. While there were no changes in the demographics of survey-takers in 2020, one change in the 2016 demographics was to include those with annual incomes of $25,000 or more, as opposed to $30,000 or more, to improve sample alignment with the U.S. Census. While this broadened the target market of the survey takers, we do not project material changes in results due to the inclusion of the category. Therefore, year-over-year trend reporting will be included in charts and tables and in the written analysis.
Other surveys and interviews
In addition to the consumer surveys described above, ISS Market Intelligence regularly conducts proprietary industry surveys of product providers, financial advisers, broker-dealer home offices, plan sponsors and parents to give firms a 360-degree view of the current and projected state of the college savings plan industry.
ISS Market Intelligence also regularly conducts primary research in the form of interviews and meetings with industry executives in order to understand the latest trends in product development, marketing and distribution of college savings plans.
The table above reports the percentage of 529 beneficiaries by age brackets. While the percentage of 529 users with younger beneficiaries decreased from 2016 to 2020, the percentage with older beneficiaries increased. That means that the first wave of 529 users have successfully used their college savings for their intended purpose, and the industry is shifting toward successive generations of investors. Advisors, accountants and estate planners should note that long-term and short-term strategies are needed in college financial planning as the beneficiaries approach college age, and that younger parents are more receptive now to having the college financial planning discussion than even five years ago. Have the college financial planning discussion today.
Analysis: How has the average age of 529 beneficiaries changed?