It’s not a case of wanting what cannot be attained, but younger clients – for the purposes of this piece, those in the 18-34 age range – have laudable retirement objectives, but they’re not yet doing what it takes to accomplish those goals.
Give today’s younger generations – millennials and Gen Z – some credit. They’re quite optimistic regarding cobbling together wealth. That’s saying a lot because, like other generations, millennials and Gen Z are enduring their share of challenges and economic strife.
Optimism is good. So is ambition. However, there comes a point when the rubber needs to meet the road and that’s true for everyone, not just younger investors. Point is, many youthful clients have big dreams when it comes to retirement, but they’re not taking action to that effect today. Even when granting to a “pass” to those still in college and those that just entered the workforce, the older segment of the 18-34 group aren’t yet doing what it takes to realize their ambitious retirement dreams.
Early Retirement, Late to Saving
Here’s the retirement quagmire in which the 18-34 set finds itself. They want to retire earlier than their older peers, but they’re not on course regarding retirement savings.
“According to new research from Edward Jones and Morning Consult, financial advisors across the industry report their emerging adult clients (ages 18-34) want to retire at 61, three years ahead of clients 35 to 64 years old,” notes the asset manager. “Despite this earlier age, emerging adults, known as GenNext for being the next generation of workers, heads of households, consumers, and investors, haven't started planning for retirement just yet.”
Something for advisors to note is that simply because the 18-34 isn’t flush with retirement savings, that doesn’t mean they’re spending frivolously. In any regard, that’s a positive, but it also shows that they’re pliable and receptive to advice on retirement planning.
“Instead of focusing on retirement, financial advisors report that GenNext clients are prioritizing other aspects of their lives including planning for a family (30%), being responsible with everyday expenses (28%) and investing (23%),” adds Edward Jones.
Room for Growth for Advisors
The 18-34 demographic represents fertile territory for advisors because, as noted by the Edward Jones survey, just 12% of those folks currently work with advisors. Add to that, nearly 70% of them think they don’t make enough money to work with an advisor.
The good news for advisors is that more than 40% of the 18-34 cohort that aren’t currently working with advisors said they will eventually change that.
“With many GenNext clients experiencing or aspiring to experience traditional life events such as marriage, home ownership, or eight in 10 who have or want children, there is an opportunity for financial advisors to help clients set long-term goals as they juggle jobs, school, gig work and more,” concludes Edward Jones.