Failure(s) to Communicate

There’s an oft-repeated line from that 1967 classic movie “Cool Hand Luke” about a “failure to communicate.”

Now, most of us aren’t trying to convey the consequences of violating prison rules, but there are messages where mere words sometimes fall short of their purpose. There are literal barriers in terms of language, of course—but all too often also barriers built of different life experiences, of cultural references, and certainly of age. Indeed, we frequently use words, or employ metaphors to enhance, or at least provide some flavor to our explanations/instructions—only to have it fall on ears that may hear the words, but lack—or in some cases, confuse—the necessary context (I’m routinely forced to reference the Urban Dictionary to make sure certain words haven’t taken on an unintended meaning).   

Mind ‘Set’

In that spirit, several years back I stumbled across something called the Beloit College Mindset List (a couple of years back it “moved” and was rebranded as the Marist Mindset List). It was a list 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 (talk about your dated references!).  

Class of 2027

But, according to this year’s Marist Mindset List,[1] the Class of 2027:

• Are just as likely to be listening to Led Zeppelin as Lana del Rey or Lil’ Baby on their phones (with access to music services like Pandora launched in 2005, the year many of these future graduates were born).
• Will get their news primarily from social media sites like YouTube, Instagram and TikTok (Dan Rather & Ted Koppel both retired in 2005, “effectively ending the reign of network news programs as the primary way younger Americans get their news”).
• Have always lived in a world visibly affected by climate change (harkening back to Hurricane Katrina and Rita—though they wouldn’t be old enough to remember either).
• Will almost exclusively watch their video content on YouTube (which launched in 2005) and similar sites online.
• Will be the first to fully integrate ChatGPT or “Generative Pre-trained Transformer” into their college learning experience (one can’t help but see “fully integrate” as a disarming euphemism for more insidious applications).
• Often quote the TV show “The Office,” although the program ended its run in 2013. The characters are omnipresent in today's college culture and the show is now a cultural phenomenon thanks to its rebirth via Netflix and short-form streaming services (OK—I don’t get the fixation on The Office, either. But who am I to question generational fixations?)
  

Retirement (Re)Set

That said, for those of us who will be working (or living) with the Class of 2027 (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 (even if everyone hasn’t had access to them at work).
• They may never have to actually sign up for their 401(k) (thanks to automatic enrollment).
• They may never have had to think about the investments in their 401(k) (due to QDIA/target-date fund defaults).
• 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).
• 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…even today).

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...

  - Nevin E. Adams, JD

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[1] Sadly, 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).

How Gen Z's Retirement Will Be Different

Those “kids” who were just dropped off at college for the first time? By their sophomore year, their generation will constitute one-quarter of the U.S. population. How will their retirement be different?

That’s according to the authors of the so-called Mindset List – now housed at Marist College, having relocated from Beloitt College – has 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 – retirees.

This fall’s college class of 2023 is the first class born in the 21st Century (2001) – and thus lack a personal memory of the September 11 attacks. According to the authors of the Mindset List:

• This group has never used a floppy disk (heck, they’ve probably never even seen one, except at that “save” icon).
• Their phone has always been able to take pictures.
• They’ve always had Wikipedia as a resource.
• Oklahoma City has always had a national memorial at its center.
• As air travelers they’ve have always had to take off their shoes to get through security (well, unless they have TSA pre-check).
• PayPal has always been an online option for purchasers.
• There’s always been a headlines scrawl on TV.
• They have always been able to fly Jet Blue.
• Troy Aikman’s play calling has always been limited to the press booth.
• They’ve never been able to watch Pittsburgh’s Steelers or Pirates play at Three Rivers Stadium.
• Monica and Chandler from “Friends” have always been married (May 17, 2001).

Despite those differences, the class of 2023 will one day soon be faced with the same challenges of preparing for retirement as the rest of us. 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.

And yet, when it comes to retirement, the Class of 2023 also stands to have a different perspective. 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 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.)
• They’ve always had access to target-date funds, managed accounts, or similar vehicle that automatically allocates (and, more significantly, re-allocates) their retirement investments.
• They’ve always had fee information available to them about their 401(k). (It remains to be seen if they’ll understand it any better than their parents.)
• 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 (though they may not be any more inclined to do so than their parents).
• 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.)
• 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.)

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...

- Nevin E. Adams, JD

Reference ‘Points’

Several years back, I was talking with a colleague about the current state of the U.S. economy – and as a comparison point, I pointed to the mid-1980s. “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 memory comes back to me every year with the release of Beloit College’s annual “Mindset List.” As that coworker discussion reminds me, a lot can change in (just) 18 years, but these same 18 years also make up the mindset – or “event horizon” ­– of today’s entering college students.

The kids many of you just dropped off at college – the Class of 2022 – were (for the most part), born in 2000, the first year of the new millennium. The folks that compile this list know that those differences in experience and points of reference have an impact on the (perceived) relevance of the points we might try to make in college teaching – and even in terms of financial matters, saving, and, yes – retirement.

For example, those students that were just dropped off at college:

• Have always been able to refer to Wikipedia.
• Have always known a world where U.S. troops were stationed in Afghanistan.
• Will never fly TWA or Swissair airlines (much less Eastern Airlines or Piedmont Airlines).
• Have always seen Priuses on the highways.
• Have never used a spit bowl in a dentist’s office.
• Have never had to deal with “chads,” be they dimpled, hanging or pregnant.
• Have always used lightbulbs that were shatterproof.

When it comes to retirement, the Class of 2022 also stands to have a different perspective. 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 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.)
• They’ve always had access to target-date funds, managed accounts, or similar vehicle that automatically allocates (and, more significantly, re-allocates) their retirement investments.
• They’ve always had fee information available to them on their 401(k) statement. (It remains to be seen if they’ll understand it any better than their parents.)
• They’ve always been able to figure out how much they need to save for a financially secure retirement (though they may not be any more inclined to do so than their parents).
• 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.)
• 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.)

Despite those differences, the class of 2022 will one day soon be faced with the same challenges of preparing for retirement as the rest of us. 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.

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, have an advisor available to answer their questions along the way.

- Nevin E. Adams, JD

How the Class of 2020’s Retirement Plans Will Be Different

Each year the good folks at Beloit College produce a “Mindset List” providing a look at the cultural touchstones that shape the lives of students about to enter college. So, in what ways will their retirement plans differ from those of their parents?

In the most recent list (they’ve been doing it since 1998), the Beloit Mindset List notes that for the class of 2020 (among other things):

• There has always been a digital swap meet called eBay.
• They never heard Harry Caray try to sing during the seventh inning at Wrigley Field.
• Vladimir Putin has always been calling the shots at the Kremlin.
• Elian Gonzalez, who would like to visit the U.S. again someday, has always been back in Cuba.
• The Ali/Frazier boxing match for their generation was between the daughters of Muhammad and Joe.
• NFL coaches have always had the opportunity to throw a red flag and question the ref.
• Snowboarding has always been an Olympic sport.
• John Elway and Wayne Gretzky have always been retired.

So, what about their retirement plans? Well, for the Class of 2020:

• There have always been 401(k)s.
• They’ve always had a Roth option available to them (401(k) or IRA).
• 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).
• They’ve always had a call center to reach out to with questions about their retirement plan.
• They’ve never had to wait to be eligible to start saving in their 401(k) (their parents generally had to wait a year).
• They’ve never had to sign up for their 401(k) plan (their 401(k) automatically enrolls new hires).
• They’ve never had to make an investment choice in their 401(k) plan (their 401(k) has long had a QDIA default option).
• They’ve always had fee information available to them on their 401(k) statement (it remains to be seen if they’ll understand it any better than their parents).
• They’ve always known what their 401(k) balance would equal in monthly installment payments.
• They’ve always had an advisor available to answer their questions.

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.

- Nevin E. Adams, JD

10 Ways the Class of 2019’s 401(k) Will Be Different

Time marches on, and each generation comes to the workplace with its own unique set of experiences and expectations.

Each August since 1998, Beloit University has published the Beloit College Mindset List, providing a look at the cultural touchstones that shape the lives of students entering college in the fall. For example, the class of 2019, who were for the most part were born in 1997, have never licked a postage stamp, never known a world without Google or Splenda, and have grown up in a world where wi-fi is an entitlement.

Despite those differences, the class of 2019 will one day soon be faced with the same challenges of preparing for retirement as the rest of us. They’ll have to work through how much to save, how to invest those savings, what role (if any) Social Security will play, and — eventually — how and how fast to draw down those savings in retirement — whatever, and whenever, that turns out to be.

Here are 10 things I think we’ll be able to say about most of the Class of 2019 when it enters the workforce:

• They’ve never had to wait to be eligible to start saving in their 401(k) (their parents generally had to wait a year).
• They’ve never had to sign up for their 401(k) plan (their 401(k) automatically enrolls new hires).
  They’ve never had to make an investment choice in their 401(k) plan (their 401(k) has long had a QDIA default option).
• They’ve never had to rebalance their 401(k) account (their 401(k) default option was an asset allocation fund or managed account, automatically rebalanced by professionals).
• They’ve always had fee information available to them on their 401(k) statement (it remains to be seen if they’ll understand it any better than their parents).
• They’ve always known what their 401(k) balance would equal in monthly installment payments.
• They’ve always been able to figure out how much they need to save for a financially secure retirement (though they may not be any more inclined to do so than their parents).
• They’ve always been able to transfer their balances online and on a daily basis (and so, of course, they mostly don’t).
• They’ve always had an advisor available to answer their questions.

And perhaps most importantly, they’ll have the advantage of time, a full career to save and build, to save at better rates, to invest more efficiently and effectively.

- Nevin E. Adams, JD

Different Mindsets

Last week Beloit College released the Beloit College Mindset List, as it has 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.”

For example, this year’s freshman class, born in 1994, have never known a time when history didn’t have its own channel, when there were tan M&Ms (or when there weren’t blue ones), or when “It’s A Wonderful Life” was shown more than twice during the holidays. They grew up talking about “who shot Mr. Burns?” not “Who Shot J.R.?” and while for them there’s always been an NFL franchise in Jacksonville, they’ve never known one in Los Angeles. That floppy disk icon for “save” in the word processing document is as anachronistic to them as the “CC” reference to “carbon copy” likely was to their parents’ email. And, perhaps most significantly, they have never lived in a world without the World Wide Web.¹

Despite those differences, the class of 2016 will one day soon be faced with the same challenges of preparing for retirement as the rest of us. 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.

Those fortunate enough to have access to a work place retirement savings plan at least stand to have some advantages their parents didn’t. They’ll have a better shot at joining those programs immediately, rather than waiting a year, as was once the norm. There’s a growing chance that they will be enrolled in those plans automatically,¹and with the option to increase that initial contribution automatically as well. The expanding availability of qualified default investment alternatives, like target-date funds, should make their investment choices easier and better diversified, and some will likely benefit from the counsel of a growing number of expert advisors. As for help in figuring out how best to draw down those savings in retirement, more choices and alternatives come to market every year.

However, they also have another big advantage (and one that helps make all those other advantages all the better): They’ll have the advantage of time, a full career to save and build, to save at better rates, to invest more efficiently and effectively.

It’s more than just a shift in mindset—and it could give retirement saving a whole new perspective.

- Nevin E. Adams, JD

¹ The full 2016 Mindset List (and links to prior years’ lists) is online here.

² EBRI has recently quantified the impact of eligibility for participation in a 401(k) plan on retirement readiness for Gen Xers. See this report online here. See also “Retirement Income Adequacy for Boomers and Gen Xers: Evidence from the 2012 EBRI Retirement Security Projection Model,” online here.