Boomers will look to us as their financial mentors, educators and life diagnosticians.
Recently I received a booklet in the mail from a
fourth grader in Ottumwa, Iowa. His picture adorned the cover. Inside
was a letter explaining that his class project was to send this
"travelogue journal" to someone in another city. There were several
pages in the booklet that allowed people to write about their city: the
climate, industry, landmarks and special information. Each person who
received the book was asked to send a postcard to the boy, complete a
page in the book, and then send it on to someone else in another part
of the country. The last person to fill out the book was asked to send
it back to the boy in time for his May 22nd deadline. The idea is not
only for him to find out about as many cities as he can, but to see
where the book travels from person to person.
I was the sixth person to receive the book. It was sent by a friend in Phoenix. It had already been to Rancho Cucamonga (California), Chicago, Wasilla (Alaska), Phoenix and Boston before it came to me. As I read the entries from the others, I imagined being a fourth grader in Iowa, anxiously awaiting his journal to see where it had been the past few months. I also thought about all the amazing things that kids learn today and what a responsibility it is to teach them important stuff that will help them thrive in this world.
Of course, it has occurred to me that knowing where Cucamonga is may not be as important to kids as knowing how to save money and invest for later years, but that's just a die-hard planner's perspective.
Despite this reminder, I wasn't surprised to learn that in a survey conducted recently by Dr. Ken Dychtwald, (celebrity futurist and author of Age Wave,) most baby boomers think they haven't taught their kids much about fiscal responsibility. In fact, most boomers indicated that they would like more information and educational opportunities for their 20- and 30-year-old "kids." Let's face it, as important as we think personal financial planning is, most people learn little or nothing about it in formal education unless it's related to their educational discipline in post-high school years.
We boomers haven't exactly been sterling role models for our kids either. We've been in debt for most of our adult lives, and as we reach age 60, consumer debt in this country is a whopping $2.8 trillion. Last year, our savings rate was in negative territory, (-.05%.) It looks like we are dipping into savings to pay for our current lifestyles. Our parents bought a refrigerator when they needed it; we buy a 50" flat screen TV when we want it. (Praise the credit card.) As a result, we know that we're going to have to work to fund our "next phase" life, but we don't like the prospect of working to fund our children's "next phase" too.
Anecdotally, boomers tell me that the two things they want most as they move into their next phase life (I really can't identify with the term "retirement") is to be debt-free and dependent-free. It's not clear, however, which of these has the highest priority. In any case, finding ways to educate our adult children about their own financial lives seems to be a step in the right direction.
Dychtwald's study, The New Retirement Mindscape, (for Ameriprise Financial) seems to reinforce this conclusion. One survey participant put it succinctly: "We've spoiled them by giving them new cars and credit cards. We haven't made them know how to get out in the world and make money."
Recently our firm held free workshops for "kids 18 to 80 who'd like to learn more about the financial stuff we didn't learn in school." Our first seminar had 38 attendees, including parents and adult children who wanted to get back to basics. Most of the parents wanted to ensure that their kids continue to become self-reliant, and most kids wanted to know if they'd be able to count on an inheritance someday. While getting these generations together to hold meaningful discussions about fiscal responsibility, we also firmly planted ourselves in the role of advisor to all of them.
These "win-win" opportunities should be part of our marketing and retention initiatives as we partner with boomers in their "productive aging" process, assisting them in their cycle of learning, teaching, working and playing. As advisors we need to be acutely aware of emerging boomer trends in order to meet the needs of our transitioning clients.
Although 76% of boomers indicate they will work in retirement, a recent survey by the Associated Press found that 43% will work to stay busy, while 27% will work to make ends meet and 19% will work to be able to afford "extras."
These boomers are exploring working alternatives to stay mentally and physically active, and earn an income. As it turns out, older workers are suddenly in demand, too. More than one worker out of four will reach retirement age by the end of the decade and corporations are scrambling to entice older workers to stay in the workforce. Recently, the Society for Human Resource Management (SHRM) indicated that their members were instituting flexible work arrangements to accommodate "next phase" plans of older workers.
These plans include part-time working hours and flexible telecommuting schedules. Employers are also designing new training programs for older workers with access to coaching, strategy development and research programs to avoid losing their brain trusts to retirement. According to SHRM, over 41% of its corporate members are keeping retired employees on as consultants. Knowing this, our advisors have suggested work alternatives for our clients who have, in turn, creatively designed their own "next phase" bridge jobs.
The turning point for boomers is fast approaching. Their future life decisions will affect families, communities, social policy and certainly our own advisory practices. Boomers will look to us as their financial mentors, educators and life diagnosticians. They'll want us to be experts in distribution options, "decumulation" strategies and next- career alternatives. They'll want us to teach their kids to be financially savvy and more importantly, financially independent. Consequently, we'll need to do some practice retooling to meet the new requirements of our boomer clients. But our advice will never be more in demand.
Deena Katz is president of Evensky & Katz Wealth Management in Coral Gables, Fla.