Born in the immediate aftermath of 9/11, the Class of 2024 finished their senior year of high school—and began their college experience—during a global pandemic. How might that impact their retirement—and retirement planning?
Several years back, I was talking with a colleague about the then-current state of the U.S. economy—and as a comparison point, I reminded her of what I thought was a comparable point—the mid-1980s. But instead of an acknowledgement, I got a blank stare. “I wasn’t even born then,” she said. At which point I realized that what I considered to be a relevant point of comparison was, to my coworker ... ancient history.
That difference in perspective is brought home to me each year with the publication of the so-called Mindset List—now in its second year at Marist College (having relocated from Beloitt College where it had been published each August since 1998. Originally created as a reminder to faculty to be aware of dated references, the list provides a “look at the cultural touchstones that shape the lives of students entering college.”
Not to mention those who will go on to be workers and—eventually—well, at least their generation’s version of what we think of today as “retirees.”
For example, while the class of 2024 may view the idea of “banned books” as an artifact from the past, the authors of the list say that Harry Potter series has been banned somewhere in America for their entire lifetimes.
For this group, born in 2002, there have always been:
- Robot vacuums;
- Blu-ray movies;
- USB flash drives (though the original—the DiskOnKey—held just 8 MB of data); and
- a Department of Homeland Security.
Moreover, for them, Vladimir Putin has always been the leader of Russia—and the United States military has always been involved in Afghanistan.
As for the impact of COVID-19, the Mindset authors opine that the necessity of personal protection equipment (PPE) will drive fashion trends for the next couple of seasons—as young designers in the class of 2024 adapt face masks and other PPE into functional objects of personal expression.
And yet, when it comes to retirement, the Class of 2024 also stands to have a different perspective than their parents. Consider that, for them:
- 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 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—or reconsider—an investment choice in their 401(k) plan. (Their 401(k) has long had a QDIA default option to go with that auto-enroll feature—one that automatically allocates (and, more significantly, re-allocates) their retirement investments.
- They’ll get their plan information digitally (unless they opt otherwise).
- 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.)
Of course, it’s been well-chronicled that the notion of “retirement” is alien, if not abhorrent, to those still a generation away from its advent. However, it seems likely that, sooner or later, the class of 2024 will one day soon be faced with the same challenges of preparing for “retirement” as the rest of us, if only to be able to enjoy life with the independence of not being tied to a regular paycheck. 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.
When they do so, with any luck at all, they’ll have had 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, access to a trusted advisor to answer their questions along the way.
