Generation Grasp

Nevin E. Adams, JD

We deal with a lot of gaps in our lives — gaps because there is a difference between what we want and/or expect and reality.  

Among others, there are wealth gaps, communication gaps, generation gaps, and — when it comes to retirement — coverage gaps. But when it comes to helping people make good financial decisions, sometimes it can be a generation gap that creates — or widens — a communication gap.  

Indeed, I have for years enjoyed checking out what was once called the Beloit College Mindset List (a couple of years back it “moved” and was rebranded as the Marist Mindset List). The list was developed to help college faculty be aware of dated references — to help assure better communications with the incoming class of college freshman. In fact, the focus of the list (and it dates back to 1998) was to provide some perspective on the shifting generational perspectives — the mindset, if you will — of individuals just entering college.

I remember fondly the “can you believe it?” water cooler chats about some of the items on previous lists — kids entering college that had never actually seen a floppy disk (which, ironically, lives on in that “save” icon in Microsoft applications), who might have wondered what “cc” actually stands for in their email (because they have never actually had to deal with a “carbon copy”), who never had to dial a rotary phone, who might never have seen (much less used) a payphone, who never knew a world without the “world wide web” (much less a world in which you could connect to It — wirelessly) — and perhaps most notably of late, weren’t even alive on 9/11. Yes, we’re talking about a generation who can’t fully appreciate just how weird it seems to see people having video calls on their wristwatches — just like Dick Tracy did in comics of old.   

But, according to this Marist Mindset List[1], the Class of 2026:

Has always known LeBron James as the most recognizable sports icon on the planet (he entered the NBA in 2003 and in 2004, the year many of the Class of 2026 were born, his jersey topped the best-seller list for the first time; in 2022, James’ jersey still tops the list).

Think of Hillary, not Bill… Hillary Clinton has always had a more significant role in American politics than Bill Clinton (while “older” Americans may think of Hillary Clinton as primarily First Lady from the 1990s, incoming students born in 2004 only know her as a United States Senator, Secretary of State, and contemporary presidential candidate).

Is so over…Facebook — though it has been active for the entire lives of the Class of 2026 (it was “born” in 2004, but many (most?  all?) incoming students already see the social media platform as outdated, preferring newer platforms such as TikTok and Instagram).

For those of us who will be working with the Class of 2026 (once they graduate, if not sooner), well, for them (and those working with them), it might be good to keep in mind:

• There have always been 401(k)s.
• There has always been a Roth option available to them, whether 401(k), 403(b) or IRA (and, considering what future tax rates are likely to be, they should take advantage).
• There have always been plenty of free online calculators that allow them to figure out how much they need to save for a financially secure retirement/financial freedom (though they may not be any more inclined to do so than their parents).
• They’ve probably always had that savings account rebalanced on a regular basis by experts — since they’ve always had access to target-date funds, managed accounts or a similar vehicle that automatically allocates (and, more significantly, reallocates) their retirement investments.
• 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).
• 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.)
• And then, there are the things they’ve (likely) never had to deal with — things like:
• They’ve (likely) never had to sign up for their 401(k) plan (since, particularly among larger employers, their 401(k) likely 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 to go with that auto-enroll feature.)
• 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 to be eligible.)

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, access to a trusted advisor to answer their questions along the way...
 
Footnote

[1] This year’s list isn’t quite as much “fun” as previous lists have been (at least not to this Boomer) — and this year it comes with some political “commentary” that seems unnecessary (at least to this Boomer). The Marist crowd appears to take themselves more seriously than the Beloit College founders did (or perhaps it’s just the times we’re in).