The Time has Come for Some Frank Discussions with…

Presented by Leonard Berthelsen Over the last dozen or so years, the financial services industry has been focused on how well the baby-boom generation has prepared itself for retirement.  As it turns out, some have planned well, others not so well, and the remaining didn’t do anything.  I don’t think it is a generational issue, more so the result of our diverse backgrounds and beliefs that we have in America. As I was doing some research for this latest blog, it became abundantly clear to me that there may be a huge disconnect with the Gen Xers and Millennial generations when it comes to financial planning or even knowing what to expect with retirement.  As mentioned, one glaring issue is the number of people that have simply done nothing.  The Millennial generation consists of approximately 75 million adults between 18-34 years of age, and the Gen Xers represent about 41 million adults from age 34 to 54.  That is a combined total of 116 million adults, of which almost half have not had any meaningful conversations about retirement or how to save for it.  Are these going to be the “lost generations” for our industry? I certainly hope not, but our challenge lies ahead in connecting with these groups. A recent study revealed that 51% of Millennials were calculating their retirement based not on sound financial calculations, but rather, on what they called “an educated guess.” The Gen Xers didn’t respond any more favorably about this issue, with 55% of them saying that “they will somehow figure it out once they get there.”  Not real encouraging for the long term growth of our business. Is it too late for these two groups?  Of course not. There is still ample time to correct their misconceptions and get them on the right track to planning for retirement.  I like to use real life experiences in writing as it seems to hit home a little better. I have two sons that are Gen Xers and each has chosen very different paths in life.  Even though they are going through life on different paths, both have come to the same conclusion about saving for retirement.  My youngest son who is in our business took it to heart right away that he needed to plan for the future.  He is preparing for his future where he won’t be able to work or will want to stop working and needs to set aside funds for those circumstances.  He is on a good path, even though he has small children, college expenses and possibly weddings to pay for in the future.  He put a plan in place and has stuck with it. Not easy sometimes, but discipline won out. My oldest son, who became an educator, was never very interested in having discussions about their financial future or how they would get there.  I learned to not push too much with him about this issue as his take on things varies considerably from mine.  He recently changed careers and asked me to sit down with him and put a plan together for him to continue saving for their future.  I was amazed at what he had done on his own without any meaningful advice from me about saving for retirement.  I had always thought that this kind of “stuff” just wasn’t important to him.  Guess what, it is.  Different paths, but the end results come out close to the same for each of them. Sometimes it is the little off-the-cuff things we say that have the most meaning.  I did no formal push with either one of them about saving for retirement, but always made sure they knew what I was doing and why.  Sometimes I was more frank than other times, but they always got the message.  Maybe we have to do the same with our clients. Over time it might be the little frank things that we do or say that will make the difference. These are generations that have a much skewed view of Social Security and its health.  We need to make sure that they are getting the message, either formally or off-the-cuff.  Our industry’s future depends upon it.