If The Shoe Fits...

For Generations, Labels Can Be Deceiving

The age may be the same, but it’s often more about the stages of life

by Cecilia Shiner

Ms. Shiner is assistant research director, LIMRA Secure Retirement Institute. Visit irionline.org/

Are you a Millennial, Generation X, Baby Boomer or Silent Generation consumer? Or, do none of those labels describe you?

LIMRA Secure Retirement Institute recently conducted a study examining popular generational labels and how they intersect with retirement attitudes. The Institute looked at Millennial (ages 18-35), Generation X (ages 36-51), Baby Boomer (ages 52-70) and Silent Generation (ages 71+) consumers and found two thirds of them think their generational label applies to them very or fairly well. However, this research shows not all consumers identify with their generational labels. Less than half of Millennials identify with that label, with just 56 percent of Millennials said they think the term describes them well.

In particular, half of Millennial women don’t think the label applies to them. This lack of a connection with the name could be related a broader low opinions of their generation. Only 1 in 5 Millennial women see their generation as responsible, loyal, or self-reliant.
Young Baby Boomers (ages 52-60) also do not strongly relate to their generation name and only 13 percent of the Silent Generation identifies with their label.

Refer to their peers, not their generations

It’s common to attribute certain traits based on a person’s generation but it’s also important to keep in mind people within the same generation may be at different life stages. As result of these dissimilarities, these consumers likely have very different financial priorities.

For example, the youngest of Millennials are likely single and in college or just starting their careers while the oldest may have well-established careers, married and starting families. Baby Boomers also range from those who plan to work for another 10-15 years and those who may already be retired. Developing a retirement plan to meet their current and eventual needs will require distinct approaches.

Prior LIMRA research finds that 70 percent of consumers determine whether they will trust their advisor at the end of their first meeting with the advisor. Being authentic while discussing issues relevant to them are key to instilling trust. If your client feels that you are applying broad assumptions based solely on their generation, they may not trust you. Using language related to “peer” clients or those at a similar life stage will likely be more successful than using generational labels, especially with Millennial women.

Change is coming—Help them navigate

One thing we have consistently found is Millennials tend to have a more positive outlook on their retirement prospects than older generations. Fifty-eight percent of Millennials have high expectations for their retirement lifestyles while only 39 percent of Gen X and 43 percent of non-retired Baby Boomers feel the same way.

not all consumers identify with their generational labels... Less than half of Millennials identify with that label

This optimism could be because they are as much as 40 years from retiring as well as an overconfidence in saving enough to cover their desired lifestyles. Given the challenges they face, advisors should encourage their Millennial clients to save for retirement while paying down potential debts.

When it comes to Baby Boomers, this study reveals younger Baby Boomers and older Baby Boomers (ages 61-70) have different retirement outlooks. This is similar to prior Institute research. Our current study shows that young Baby Boomers are less confident in retirement prospects than older Baby Boomers. Less than half (44 percent) of young Baby Boomers are confident they will be able to live their desired retirement lifestyle versus 61 percent of older Baby Boomers.
Will they run out of money before running out of breath?

LIMRA Secure Retirement Institute data shows that younger Baby Boomers are less likely than older Boomers to have or anticipate having a defined benefit plan (pension) as their primary source of retirement income (19% versus 31%). Since running out of money in retirement is the top financial concern for pre-retirees, the lack of guaranteed lifetime retirement income could undermining their confidence.

The good news is that 42 percent of pre-retirees think using an advisor minimizes the risk of running out of money. One way an advisor can help is by establishing a withdrawal plan strategy for their clients that takes into account the amount of income guaranteed for life.

Regardless of generation, most consumers anticipate significant changes in retirement for future generations. Eighty-three percent of retirees believe the retirement experience of their generation will look significantly different from those of future generations. Non-retirees agree: 7 in 10 believe their retirement will look significantly different from the retirement of current retirees. Advisors are key to helping consumers navigate these changes. With issues ranging from health and long-term care to housing and debt, professional financial advice can help find solutions to manage risks and increase client peace of mind.

While identifying generational attributes can offer a broad perspective on consumers’ common goals and concerns, this research indicates that understanding consumers’ life stages is a better indicator of where their financial priorities lie.
These results are based on a national survey of 1,686 U.S. adults completed in January 2017. LIMRA members can learn more about this topic and read the report, If the Shoe Fits: Generational Names and Retirement Attitudes. ◊

 

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