Several years back, a group of us were talking about the rising cost of gasoline, when I quite casually mentioned, “Well, at least we’re not having to wait in lines to buy it.” At which point it was obvious from the reaction of the group that I was the only one who had had that particular experience.
We are all the product of our personal experiences, of course – and those shape not only our view of the world as it is, but in many cases our sense of the way it will be. Despite what can be enormous experiential differences, it’s (too) easy to assume that our life experiences are common. And that can create communication gaps in everything from our everyday conversations to our efforts to help educate plan participants (and sponsors).
I’m reminded of those potential gaps each year when Beloit College publishes its “Mindset List.” This year, Beloit’s 20th annual list reminds us that for this incoming college class of 2021, Bill Clinton has always been Hillary Clinton’s husband, while their "Father (who) Knows Best" is Peter Griffin, not Jim Anderson. Not only that, for them Justin Timberlake has always been a solo act.
By the time the Class of 2021 entered school, laptops were outselling desktops, while on the technology front, in their lifetimes, Blackberry has gone from being a wild fruit… to being a communications device… to becoming a wild fruit again.
According to Beloit’s list, this year’s class – most born in 1999:
- have always been searching for Pokemon;
- have likely never experienced the whine of a dial-up modem;
- completely missed the whole Y2K furor;
- have always had emojis to help them express their feelings;
- have never known London without the London Eye; and
- have always been able to blog.
The Class of 2021 – Retirement Perspective
And yet, for all they may have “missed,” or never known, for the Class of 2021:
- There have always been 401(k)s.
- There has always been a Roth option available to them (401(k), 403(b) or IRA).
- They’ve always worried that Social Security wouldn’t be available to pay benefits. (In that, they’re much like their parents at their age.)
- Many have never had to wait to be eligible to start saving in their 401(k). (Their parents typically had to wait a full year.)
- They’ve never had to sign up for their 401(k) plan (since, particularly among larger employers, their 401(k) automatically enrolls new hires).
- They may never have to make an investment choice in their 401(k) plan. (Their 401(k) has long had a QDIA default option.)
- They’ve always had access to target-date funds, managed accounts, or some vehicle that automatically allocates (and, more significantly, re-allocates) their retirement investments.
- They’ve always had fee information available to them on their 401(k) statement. (It remains to be seen if they’ll understand it any better than their parents.)
- They’ve always known what their 401(k) balance would equal in monthly installment payments.
- They’ve always been able to figure out how much they need to save for a financially secure retirement (though they may not be any more inclined to do so than their parents).
- They’ve always been able to view and transfer their balances online and on a daily basis (and so, of course, they mostly won’t).
- And yes, they have never experienced tax reform, or its impact on their ability to save for retirement.
Despite those differences, the class of 2021 will one day soon be faced with the same challenges of preparing for retirement as the rest of us. They’ll have to work through how much to save, how to invest those savings, what role Social Security will play, and – eventually – how and how fast to draw down those savings.
But perhaps most importantly, they’ll have the advantage of time, a full career to save and build, to save at higher rates, and to invest more efficiently and effectively. And, with luck, probably had an advisor available to answer their questions along the way.
