What’s in a Generation?

There is much conversation in the Retirement Industry around the Millennial generation. We talk about who Millennials are, how they differ from Boomers and Gen X and what we need to do to prepare for them. However, we have not spent as much time identifying when Millennials will begin to impact our industry or what actions we could already be taking.

The reality is, many Millennials are already workforce decision makers. In 2015, already 15% of the workforce works for someone at least 10 years younger than them (source: Career Builder).   By 2017, Millennials will represent the largest population segment in the world. By 2020, Millennials will represent 50% of the workforce, and by 2030, 75% of the workforce (source: PwC’s Millennials at Work). There is an immediacy we should feel about Millennials in our industry; the time to just plan has passed, and it is time to act.

But how to best proceed? We know that there are no shortage of generational differences amongst Boomers, Gen X and Millennials, but before diving into the particulars of that data, we must understand why we must think differently about the Millennial generation—why we cannot just refresh a targeted marketing plan or update our websites. Millennials will impact the retirement industry, but we must be willing to think and work differently so that that we can impact Millennials.

We must look at patterns. A Millennial’s life pattern looks markedly different from previous generations. First, unlike previous generations, Millennials are entering the workforce in their 20’s with an average of $33,000 in student loan debt. Additionally, Millennials are putting off significant life milestones such as marriage and parenthood. In 2012, 23% of Millennials age 18-31 were married and living in their own household, as compared to 56% in 1968 (Source: Pew Research Center, Current Population Survey). Similarly, while in the 2010’s just over 55% of 30 year old women have children, in the 1970’s over 80% of women had children before age 25 (Source: IPUMS-CPS and Goldman Sachs Global Investment Research).

The thought patterns of Millennials as it relates to savings is also important to understand. Millennials are not planning for retirement; they do not think about retirement as a life stage. That is not to say, however, that Millennials do not save their money; they do. As of mid-2015, almost one-third of Millennial households owned mutual funds. The median age when Millennials, Gen X and Boomers first purchased mutual funds is 23, 26, and in their 30’s, respectively (Source: Investment Company Institute). Millennials are saving and investing, but not as a means to retirement so much as an alternative to spending.

Millennials are thinking and living very differently than previous generations about life stages, work and finances. Traditional patterns of messaging and conversations are not going to engage the Millennial generation effectively. To help them, we need to approach servicing the Millennials as a revolution, not an evolution. And we can begin by transforming how we address financial wellness, portability, trust, human experience and speed in retirement.