When insurance firms launched social media initiatives, the results were rewarding.
By Cyril Tuohy
Financial advisors who choose to remain in the business for the next 20 years are living through a fascinating demographic transition marked by three generations with vastly diverging approaches to retirement, a new report has found.
Consider these facts. The 87 million baby boomers who are retiring in droves belong to a generation of Americans larger than any before it. Boomers, born between 1946 and 1964, are “pioneering a new retirement paradigm,” which melds work and play.
It is a retirement model far removed from the one followed by their parents who fought in World War II. That generation, the Greatest Generation as it is sometimes called, was thrifty, lived beneath its means and exhibited a financial discipline unheard of today.
“Times are changing so rapidly that the retirement of baby boomers, Generation X and millennials will not only be a radical departure from their parents’ generations but from each other as well,” Catherine Collinson, president of the Transamerica Institute and the Transamerica Center for Retirement Studies, said in a news release.
Facts comparing the three generations are contained in the 15th Annual Transamerica Retirement Survey published last month.
Hard on the boomer heels is Generation X. Born between 1965 and 1978, the 46 million members of Gen X are among the first to rely on the defined contribution retirement model embodied by 401(k)s, 403(b)s and individual retirement accounts (IRAs).
Gen X is also the first group of Americans to rack up significant college debt.
With 15 or 20 years left before they retire, members of Gen X have no illusions about their employers or the government helping workers through retirement. More than half expect to self-fund their retirement, Collinson said.
Gen Xers estimate they will need to save $1 million to retire, but the median retirement savings for a Gen Xer is only $70,000 and Gen Xers are in a race against time to boost their retirement savings as much as they can.
“Their clock is ticking but they still have time to substantially improve their retirement prospects,” Collinson said. “The future is now.”
Following Gen X is Generation Y, those born after 1978. Gen Yers are a “digital do-it-yourself generation of super savers,” Collinson said.
Demographers estimate there are 78 million Gen Yers in the U.S., nearly all of whom have heard the clarion call of saving early and often, and they’ve benefited from technology that has made defined contribution investing easy and convenient.
Employed Gen Yers are participating in employer-sponsored retirement plans in big numbers. Gen Yers expect to self-fund their retirement and to continue working in retirement, Collinson said.
“They heard and responded to the message that they need to start early and save as much as possible,” she said.
A majority of Gen Yers say apps, tools, calculators and social networks are helpful in managing their retirement accounts.
“Millennials take their retirement benefits very seriously,” Collinson said. “Our research found that two out of three Millennials say they would likely switch employers for a similar job that offered better retirement benefits.”
Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. Cyril may be reached at firstname.lastname@example.org.
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