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Places That Lost the Most Bank Branches

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

Not only are banks shuttering many of their branches across America, but they’re also declining to build more branches to accommodate population growth in others.

In a new study by MagnifyMoney, we found that there were 7% fewer bank branches in 2017 than there were a decade earlier in America’s 100 biggest metros.  At the same time, the population of those metros grew an average of 11%, so the number of branches per capita actually dropped an average of 16%.

For the analysis, we looked at a combination of data, including a record of active bank branches from the U.S. Federal Reserve and population data from the U.S. Census Bureau American Community Survey.

Even in some fast-growing places, we found banks are shuttering brick-and-mortar locations at a pretty good clip.  It’s a lot easier to not build new branches than it is to close existing ones, so it seems likely that failure to keep pace with a growing population fits nicely into a strategy of reducing branches for a growing customer base.

There are several reasons for this trend, but here are the big ones.

Merging banks means less need to compete through branch access

The word “synergy” is a popular one for the Mergers & Acquisitions crowd, and the banking world has been pretty gung-ho about mergers over the last few years. Indeed, the FDIC reports that the number of individual banking companies that conduct their business with branches dropped an astounding 25% between 2006 and 2016, thanks to 2,447 mergers among commercial banks and 349 among savings banks.  The newly consolidated banks don’t need branches that cover the same areas, and they may find that the reduced competition means they don’t need to fight for customers with more storefronts.

Branch access isn’t as important to banking customers as it used to be

A 2015 survey by the consulting firm Accenture reported that only 19% of customers say they would close their accounts if they lost their local branches, a significant drop from 2013, when 48% said they would close their accounts due to the inconvenience.

Friday afternoon teller lines to deposit paychecks and get the week’s cash have gone the way of rotary phones, but even the need for ATMs has been steadily declining thanks to easier card-over-cash use, online access and mobile banking apps that have improved exponentially over the last couple of years.  Users don’t even have to set foot in a bank to deposit the occasional physical check, thanks to smartphone scans, and friends can pay each other back with independent apps.

People are becoming more comfortable with accessing their money by digital means only, and they’re often getting better returns on, and cheaper access to, their money with savings account rates at online banks often much higher than those at traditional banks.

While many people find walking into a bank and talking to a professional behind a large desk a reassuring way to deal with the uncertainty and anxiety around buying financial products and services, more and more people prefer to gather as much information as they can across multiple banks, lenders and other businesses in the financial products space.

One exception to the trend

J.P. Morgan Chase & Co. recently announced that it will use part of its recent tax-cut windfall to build new branches, but at first glance, this appears to be a push into new markets, not a revitalization of existing ones.

Places that lost the most branches

1 – Lakeland, Fla.

Banks are shutting more branches in this in central Florida community than in any of the others we reviewed — a loss of 23% over 10 years.  Thanks to a healthy population increase of 19%, Lakeland-Winter Haven lost even more branches on a per capita basis: 35%.  That brings them down to 17 branches per 100,000 residents, which is considerably lower than the average 25 per 100,000 residents we found for the 100 cities we reviewed. Interestingly, Winter Haven is home to CenterState Bank, which has been on a buying spree to become the state’s biggest community bank. They closed 100 of their branches between 2009 and 2017 (just under half of what they had and acquired), which they say resulted in a per-branch deposit increase of 185%. They show no sign of slowing down this approach.

2 – Buffalo, N.Y.

Buffalo lost one out of five bank branches in the last decade.  This was marginally offset on per capita basis by the slight population loss (less than half a percent).  This may be in part because Buffalo’s hometown bank company, M&T, has closed branches as they gobble up banks in other communities, but they’re certainly not alone.  For example, KeyBank shut down several branches after purchasing local First Niagara.

3 – Baltimore

Some 19% of Baltimore’s bank branches closed their doors in the last ten years, although that still leaves them with slightly higher than average 27 branches per 100,000 people.  That’s especially surprising, given that the population increased by 8%, leading to a per capita loss of 25% (16% is the average for the 100 cities we examined).  Baltimore started the decade with almost 36 banks per 100,000, significantly higher than the 2007 average of 30.  While many banks closed branches, Santander shuttered every one of its Maryland branches in 2015, many of which they had thanks to the 2009 acquisition of Sovereign Bank.

4 – Stockton, Calif.

Stockton started with fewer bank branches on a per capita basis than most other big cities (18 versus an average of 30 for every 100,000 residents), but that didn’t stop them from closing their doors at a rate of 18% over the last ten years.  This combined with a population bump of 9% over the same period, to create a per capita loss of 28%.  If the city’s guaranteed basic income experiment works out, banks may take another look at the struggling community.

5 – Melbourne, Fla.

Palm Bay and Melbourne sit due east of Winter Haven, and while CenterState doesn’t appear to have a stake in this community, plenty of other community banks are consolidating in central Florida.  Melbourne has changed at a similar rate to Stockton: 18% fewer branches, 8% more people, leaving 24% fewer branches per capita, but that still leaves them with 20 branches per 100,000 people.

Places that saw an increase in branches

1 – El Paso, Texas

El Paso has 11% more branches now than it did 10 years ago, but that may be because they were so underserved to begin with.  To put this in perspective, the metro of 838,000 has 90 bank branches, which comes out to just under 11 branches per 100,000 people.  The average among the 100 biggest cities is 25 branches per 100,000 people, even after the drawdown.  The addition of nine new branches hasn’t kept up with the population increase of 14%, leading to an overall drop in branches per person of over 2%.  It looks like banks may continue to open branches, with a revitalization effort underway for Western Heritage Bank (in part, at least, through acquisition) and El Paso’s downtown.  Meanwhile, El Paso’s biggest credit union, GECU, is trying a strategy of more, but smaller, branches.

2 – Raleigh, N.C.

Like other many other southern cities, Research Triangle has seen a population explosion of 32% in the last decade. The addition of 24 branches (9%) doesn’t cover the distance, which means the number of branches per capita actually dropped by a substantial 17%.

3 – Oklahoma City

Oklahoma City is something of an anomaly, in that they added more branches to their already higher than average (per capita) number (33 per 100,000 residents in 2007).  That may be a function of the sheer land mass – the metropolitan statistical area comprised over 5,500 square miles.  They’ve added 18 branches over the last ten years, an increase of over 5%, but in a familiar story, that increase didn’t keep up with the 17% population increase.

Methodology:

Because the borders of Metropolitan Statistical Areas (“MSAs”) changed at the 2010 census, sometimes dramatically, we constructed the data to the current definition of MSAs using the crosswalk provided by the Bureau of Economic Analysis. We used the county-to-MSA crosswalk because that was the smallest geographic population designation reported by the U.S. Census for the 2006 American Community Survey.  In the event that a particular county was not reported for both time frames, that county was excluded from the analysis.

Loss of branches data were reported by the U.S. Federal Reserve and were matched at the constituted MSA level to 2016 (most recent available) and 2007 populations from the U.S. Census Bureau American Community Survey.  The results were limited to the 100 largest constituted MSAs, by population.

Statistics regarding the number of individual institutions was derived from “Statistics At A Glance,” as of Sept. 30, 2017 table and Table CB03 from the FDIC.

For the sake of clarity, we used the first city name and state name listed in the metropolitan statistical area designation, which we understand to be the most populated component (e.g., “St. Louis” for “St. Louis-St. Charles-Farmington, MO-IL”), except where a secondary city was deemed more familiar (e.g., “Fort Myers, Fla.” for “Cape Coral-Fort Myers, FL”).

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

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Survey: Millennials Are Underestimating Retirement Savings Needs

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone and is not intended to be a source of investment advice. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

For many savers, a cozy retirement can seem like a distant dream rather than a realistic future. Costs of living continue to rise, while it’s becoming harder for many to keep up with saving. More and more senior citizens are working into retirement, and millennials may be underestimating just how much they’d need to save for retirement in the first place.

MagnifyMoney commissioned a survey of 800 full-time workers to get a better look at their understanding of their own retirement savings needs. The results show that while millennials may be underestimating the real costs of retirement, so are baby boomers. Furthermore, some baby boomers indicated that no amount of money would make them comfortable enough to retire.

Key findings

  • 73% of full-time working Americans believe $1 million is enough to get them through retirement if they stop working at age 66. There was widespread agreement on this across all age groups.
    • $1 million in retirement savings is a general rule of thumb to follow, although an individual’s actual retirement savings should be more specific based on projected spending in retirement.

  • Meanwhile, nearly 1 in 5 millennials said having $500,000 in their retirement savings account would make them comfortable enough to stop working tomorrow. Another 14% of millennials would retire after amassing $750,000.
    • Millennials aren’t alone in believing less than $1 million is enough. Across all age groups, 20% of respondents said that $500,000 in retirement savings was enough. The next largest cohort — 17.4% of respondents — said $1 million in retirement savings was enough.
  • Interestingly, more than 1 in 5 baby boomers responded similarly to millennials, saying just $500,000 would get them through retirement if they stopped working tomorrow. Another 15% of boomers said $750,000 would be enough to retire.
  • Some baby boomer respondents offered a bleaker outlook: More than a quarter of Americans ages 54-73 reported that no amount of money would make them comfortable enough to retire.
    • Boomers were almost twice as likely to say that no amount of money would make them comfortable enough to stop working compared to younger Americans. 14.4% of millennials and 15.2% of Gen X-ers had the same sentiment.
    • Boomers may be less willing to stop working than other age cohorts because they believe they need to save more before they stop working, or because some feel you can never really have enough money saved for retirement.
  • More than 1 in 10 Americans have lofty goals for their retirement savings. Just under 12% of our respondents want to accumulate at least $3 million before ending their career.

How much should I save for retirement?

Saving for retirement is not an exact science. Shooting for a $1 million nest egg is a common rule of thumb — and most survey respondents agree that $1 million would be enough.

However, the amount of retirement savings you need depends on your estimated expenses in retirement. Your exact number could be more or less than $1 million, depending on how much you expect to spend on housing, discretionary costs or lingering debts.

For example, $1 million in savings would fund a 20-year retirement where you’re limited to $50,000 in annual spending. If you anticipate a 30-year retirement, $1 million in savings would only cover around $33,000 in annual spending.

How much you should have saved for retirement also depends largely on your age. For example, it’s unlikely that at 30 years old, you’ll already have $1 million set aside unless you’re extremely blessed. You’ll have to build up your savings as you go and as your income, hopefully, increases with age.

Fidelity offers a different take on savings guidelines by age. According to Fidelity, by age 30 you should have 1x your annual salary saved, growing to 3x your annual salary saved by age 40, 6x by 50, and 8x by 60.

How do I save for retirement?

If you think you’ve underestimated how much you truly need to save for retirement, there’s still time to get your savings on track.

A common retirement savings tool is the 25x rule, which dictates you need to have 25 times your annual retirement expenses saved. Core to this rule is the assumption that you’ll need to cover 25 years of retirement. So if you calculate an estimated $70,000 in annual spending in retirement, for example, following the 25x rule would indicate a nest egg goal of $1.75 million.

That’s a far cry from the mere $500,000 that 20% of our respondents indicated would be adequate for retirement. If you stuck to that goal, by the 25x rule, your annual spending in retirement would be cut down to $20,000.

It’s best to throw your retirement savings into an investment account, rather than a high-yield savings account. Over time, investing can post returns around 8%, well above the 2% savings APYs we see today. Retirement savings are more than just your 401(k), too: individual retirement accounts, or IRAs, allow you to save on your own, whether instead of or in addition to your 401(k).

If you’re an investing beginner, there are a ton of resources out there to help you get started. Robo-advisors and online brokerages offer an easily navigable investing experience that allow you to set your own goals and preferences.

Methodology

MagnifyMoney by LendingTree commissioned Qualtrics to conduct an online survey of 816 full-time American workers. The survey was fielded October 1-3, 2019.

We define millennials as those aged 23 to 38, Gen X as those 39 to 53 and Boomers as those aged 54 to 73. Members of Gen Z (ages 18 to 22) and the Silent Generation (ages 74 and up) were also surveyed, and their responses are included within the overall total percentages. However, they were excluded from the age breakdowns due to the lower sample size among respondents in those age groups.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

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Survey: For 36% of Americans, Economy Informs 2020 Presidential Preference

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

The presidential election will dominate headlines throughout 2020, with voters and pundits alike obsessively following polls, reading coverage and watching debates to get a feel for who’s leading in the race for the White House. In addition, they’ll be closely watching another key indicator for the race: the performance of the U.S. economy.

MagnifyMoney commissioned a survey of 1,000 Americans to gauge how people think about the relationship between the economy and the 2020 presidential election. Our survey found that nearly four in ten respondents said monitoring the economy helps them decide which candidate to support, and believe the results of an election can be at least somewhat predicted by the performance of the economy.

Key findings

  • About 41% of respondents believe the outcome of a presidential election can be predicted based on U.S. economic performance in the 12 months leading up to the election.
    • Around 36% said monitoring the stock market and the economy helps them decide which presidential candidate to support.
  • Republicans are more confident than Democrats about three key aspects of the economy over the next 12 months: that the stock market will continue to rise, jobs will continue to be added to the economy and the overall economy will continue to grow.
  • Nearly 1 in 3 respondents think the 2020 presidential campaign will positively impact the economy — while about 18% believe the economy will be negatively impacted.
    • Investors are almost twice as likely as non-investors to believe the campaign will positively benefit the economy, and six-figure earners are also more likely to agree with this proposition.
  • Like many topics in politics, the potential economic impact of re-electing Donald Trump is a polarizing subject.
    • When asked which 2020 presidential candidate made them most optimistic about the future of the U.S. economy, the most-cited candidate was Donald Trump, with 33% of respondents overall.
    • When asked which candidate made them most pessimistic about the future of the U.S. economy, Trump was yet again the most cited candidate, by 35% respondents overall.

How could the state of the U.S. economy impact the election?

Our survey found that about 4 in 10 respondents think you can at least somewhat predict the outcome of the presidential election based on U.S. economic performance in the year leading up to the election. Meanwhile, 37% say that they do not think that economic performance could predict the election’s outcome, while nearly 22% were not sure.

Republicans were more likely than Democrats to say that economic performance could at least somewhat predict the 2020 election, 53% versus 43%. Meanwhile, 50% of millennials think that the state of the economy could at least somewhat predict the 2020 election, compared to 40% of Gen Xers and 32% of baby boomers.

Our survey asked whether people monitor the stock market and economic performance when deciding which presidential candidate to support. We found that the majority of people (64%) do not track such metrics when deciding who to support, while approximately 21% do somewhat and 15% do a great deal. The results didn’t differ greatly when considering party affiliation: 40% of Democrats and 42% of Republicans follow these metrics at least somewhat when determining who to vote for.

How could the election impact the U.S. economy?

While our survey revealed that many people think that economic conditions can help predict the outcome of the 2020 election, we also asked respondents how they think the election will impact the economy once the polls close and the next president is selected.

Overall, people feel very differently about how the 2020 election results will impact the economy, with 31% of respondents saying it will positively affect it, 18% saying it will negatively affect it, 42% saying they are unsure how it will affect it and 9% saying it will not affect it at all.

Those results look somewhat different when party affiliation is taken into account: 41% of Republicans said the outcome of the election will positively impact the economy, compared to just 32% of Democrats. Meanwhile, Democrats were more likely to say that the election would have a negative impact on the economy, 19% compared to 14% of Republicans.

Different generations also had different thoughts on how the election’s results might affect the economy, with millennials (39%) most likely to say they think it will have a positive impact, followed by Gen Xers (28%) and baby boomers (24%). In contrast, Gen Xers were the generation most likely to say the election will have a negative economic impact (20%), followed by millennials (18%) and baby boomers (15%).

Our survey also revealed how people think the stock market will react to a President Trump re-election. Overall, 31% of respondents think that the stock market will fall if Trump is re-elected, 26% think the market would rise, 28% are unsure of how the market would react and 16% think it won’t change. Not surprisingly, 50% of Democrats think the stock market will fall with a Trump re-election, while 52% of Republicans think it will rise.

How could the election impact investor confidence?

Everything from a CEO’s tweets to global trade deals has the potential to rattle an investor’s confidence — and our survey found that the 2020 election is no exception.

Interestingly, we found that overall, 37% of people avoid investing their money during election years. That includes 41% of Democrats and 39% of Republicans, as well as a whopping 56% of millennials, 29% of Gen Xers and 13% of baby boomers.

One reason for the lack of investment during election years could be chalked up to overall uneasiness about the state of the economy in general. When looking at the 2020 election in particular, many respondents aren’t too confident in many metrics that measure the health of the economy.

Overall, 28% of those surveyed are at least somewhat unconfident that the stock market will continue to rise, 30% are at least somewhat unconfident that the U.S. will continue adding jobs in the next 12 months and 29% are at least somewhat unconfident that the overall U.S. economy will continue to grow over the next 12 months.

When looking at confidence levels regarding the overall future of the economy, our survey found that Democrats are much more pessimistic than their Republican counterparts: 38% of Democrats were at least somewhat unconfident that the overall U.S. economy will continue to grow over the next 12 months, compared to just 19% of Republicans who feel the same way.

When looking at how the economy is now versus how it was on the night of the election in 2016, different political parties have very different viewpoints. Only 16% of Democrats think that the economy is in a better position now, compared to a whopping 68% of Republicans.

When asked which presidential candidate made them the most optimistic about the future U.S. economy and which one made them the most pessimistic, the most popular candidate was the same for both: Donald Trump. Overall, 33% of respondents said that Trump was the candidate that made them the most optimistic about the economic future, followed by Joe Biden (17%), Bernie Sanders (14%) and Elizabeth Warren (12%).

Meanwhile, 35% of respondents said that Trump was the candidate that made them the most pessimistic about the future of the U.S. economy, followed by Sanders and Biden (both at 14%) and then Warren (11%).

Methodology

MagnifyMoney commissioned Qualtrics to conduct an online survey of 1,048 Americans, with the sample base proportioned to represent the general population. The survey was fielded October 1-3, 2019.

In the survey, generations are defined as:

  • Millennials are ages 23 to 38
  • Generation Xers are ages 39 to 54
  • Baby boomers are ages 55 to 73

Members of Generation Z (ages 18 to 22) and the Silent Generation (ages 74 and older) were also surveyed, and their responses are included within the total percentages among all respondents. However, their responses are excluded from the charts and age breakdowns due to the smaller population size among our survey sample.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.