For the first time in history, five generations of Americans are working together in businesses across the country. Each of these groups have been influenced by the socio-cultural events that took place during the formative years of their lifetimes, including how each generation views their financial needs, goals and communication preferences.
This generational melting pot presents an interesting puzzle for retirement plan sponsors because a one-size-fits-all communication approach is no longer an effective way to engage all employees. In order for workers to be fully engaged and participate in their benefits, plan sponsors must understand and capitalize on generational preferences and individual motivations.
Modern technology has rapidly changed communication in the 21st century, but not all of the generations have equal levels of comfort or familiarity with modern technology.
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The television was introduced to American homes during the youth of the traditionalists, the oldest members of the labor force, while the iPhone characterized the youth of Gen Z, the newest generation to join the labor force. The youngest members of the traditionalist generation were in their 60s when Steve Jobs released the first iPhone in 2007.
Plan sponsors need to develop effective employee education and communication plans that:
· Target the specific financial questions and concerns of each generation.
· Personalize the messages to fit each generation’s communication style.
· Deliver the messages using each generation’s preferred method of communication.
Traditionalists/Maturists (born before 1945)
This generation is past normal retirement age and tends to shy away from technology. They prefer print communications and face-to-face meetings. They grew up in the shadow of the Great Depression and World War II when rationing was the norm and the future was uncertain. A combination of their upbringing and their retirement-age status, safety, security and capital preservation are of primary importance.
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Traditionalists want to know:
· How do I make my money last?
· How do I minimize my tax burden?
· How do I budget for long-term care and increased healthcare costs?
· How can I most effectively share my wealth with my children and grandchildren?
Traditionalists need:
· Information on retirement communities, long-term care facilities, and ongoing tax and estate planning advice.
Baby boomers (1946 to 1960)
Baby boomers were influenced by the Cold War, the Civil Rights movement, Neil Armstrong walking on the moon, rock ‘n’ roll and widespread adoption of the telephone.
Baby boomers want to know:
· How do I know if I have saved enough?
· What can I do if I don’t have enough?
· Is it too late to save more?
· When can I actually retire?
· How do I know how much I can spend in retirement and not run out of money?
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Baby boomers need:
· Email communications, supplemented by printed materials.
· Interactive group meetings that target overall retirement readiness, including tax and financial planning, budgeting, paying down debt, and navigating Medicare, Social Security and long-term healthcare.
· Guidance on how to balance retirement planning with helping their loved ones.
· Financial counseling on managing their investments after retirement.
Gen X (1961 to 1980)
Gen Xers grew up with personal computers and MTV. They are now the sandwich generation raising a family while helping their aging parents.
The Gen Xers want to know:
· Am I contributing enough for retirement? How do I contribute more? What should I invest in?
· How can I afford to contribute more when I have to save for my children’s education?
· Why shouldn’t I cash in my retirement fund when I change jobs?
· How do I manage my money?
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Gen Xers need:
· Interactive online communications, YouTube, email and retirement readiness websites that allow them to input other investment information.
· User-friendly online resources that can be accessed on demand to fit their busy schedules, as well as the ability to do their own research and receive feedback on their progress.
· Access to on-demand, one-on-one professional assistance used in conjunction with web-based tools.
· Assistance with managing multiple financial goals, including budgeting, reducing debt, and saving for college and retirement.
· Education on the time value of money and the importance of rollovers when changing jobs.
Millennials (1981 to 1995)
Millennials grew up during the development of the Internet, cellphones, and video games, so they expect instant messaging, instant gratification and instant answers to their questions. They use technology extensively in their daily lives.
Millennials want to know:
· Why should I care about retirement?
· How do I balance my short-term and long-term savings goals?
· Is it more important to pay off my student debt or save money?
Millennials need:
· Interactive group meetings that have an element of fun. “Gamification” (the application of game playing to other areas of activity) was invented for this group.
· Bite-size pieces of information delivered electronically via podcasts, chat platforms, YouTube and mobile apps; no 10-page booklets for this group.
· Ability to see results of their actions with financial wellness programs and competitions among peers.
· Emphasis on financial security rather than retirement, which is seen as too far in the future to be relatable.
· Education on the benefits of saving early and the power of compounding.
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Gen Z (Born after 1995)
Gen Z grew up as digital natives and has never known a world without technology. They are coming of age in the 24-hour news cycle broadcasting the latest scandals and cover-ups. The financial crisis, WikiLeaks, the Arab Spring and the rise of home-grown terrorism define their generation.
Gen Zers are just beginning to enter the workforce and so far appear to have similar needs and wants as their millennial counterparts.
Despite their extensive differences, all five generations are united in their desire to retire with enough money to live comfortably. Plan sponsors can help employees in these groups attain that goal by providing answers to their questions, and giving them customized tools and resources they need to make their retirement dreams a reality.
