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Drop the Generational Stereotypes, Says Survey

Practice Management

When it comes to financial planning and saving for retirement, it’s time to toss out those labels for categorizing workers, as generations aren’t determinative when it comes to predicting financial attitudes and behaviors. 

Instead, workers’ past experiences and personal backgrounds matter more in shaping individuals’ financial behaviors and attitudes, according to the survey and corresponding white paper, “It’s Not About Generations,” by the Empower Institute.  

And understanding these experiences and backgrounds can help employers evaluate the financial wellness tools they offer and create more targeted solutions that help workers take action to reach their financial goals—especially considering the uncertainty brought about by the global pandemic.

Key findings of the survey reveal that:

  • 80% of the employees surveyed said their views were shaped by experiences and personal characteristics—not by the generation in which they were born
  • 65% of respondents think generational differences are overstated
  • 53% say their ideas and feelings about money varied greatly from each life stage
  • 40% identify more with others who are going through the same life events, compared with those in their defined generations

As such, American savers want to talk about financial planning that matches where they are in life—like getting married, managing debt or taking on a mortgage. 

“It doesn’t make sense to lump an entire generation of millions of people into one group and assume they all have the same experiences or think about financial planning in the same way,” says Empower Retirement President and CEO Edmund Murphy III. “Financial planning and goals should meet people where they are in life, consider their life experiences and personal characteristics, and then lay out a strategy that helps get them to their savings goals.” 

Saving for retirement is a top financial goal across all generations, but, of course, not everyone will get there in the same way, the paper notes. Moreover, people take action with regard to their financial plan most often as a result of major life events. 

Events that involve unexpected loss—such as loss of a job, loss of housing or divorce—are especially likely to result in changes, including cutting back on spending and retirement contributions, and taking withdrawals on retirement savings before they planned to do so.

For example, nearly half (47%) of respondents said they have taken action with regard to their financial plans after an unexpected job loss and 41% said they took action after a loss in the 2008-2009 housing market crash. 

As one might expect, it appears likely that the global pandemic and its financial strain will shape financial attitudes and behaviors into the future, including changes in how retirement investors behave. But with so much uncertainty, the paper emphasizes that it is still too early to tell how behaviors will change.  

Tailored Advice

Still, even though many workers feel they have too much to manage to focus on retirement planning, respondents’ top goals for 2020 are financial—they want to tackle personal debt and save for retirement. Based on these findings, Empower suggests that workers want help when it comes to improving their financial wellness and plan sponsors can play a role. 

“Our data show that workers crave financial advice, but they want information that’s tailored to their specific characteristics and life experiences—not generation-based advice,” the paper notes. 

For Empower participants, amid the global pandemic, digital financial wellness tool usage has increased by 22% while reading content from the learning center has decreased 12%. And of those accessing digital tools, 47% took action with a majority requesting one-on-one advice.  

Yet, many tools apparently fail to deliver what people want. Empower found that, while an overwhelming 90% of those surveyed want a financial plan that’s personalized to them and adjusts to their needs, more than half (55%) say most financial products aren’t relevant to their stage in life. In addition, more than half (56%) also feel their goals and challenges are unique, which makes the planning tools available to them difficult to use.

The survey further shows that financial wellness resources need to integrate both digital tools and human advice. According to the findings, respondents were split over whether they prefer digital tools to assist with financial planning or trust only human advice. Empower participant behavior in response to the pandemic has shown this to be true. The paper notes that there has been a 109% increase in appointments for one-on-one advice for eligible participants.

The survey was conducted by the Harris Poll in January 2020 among a national sample of 2,001 U.S. citizens aged 18 years and older.