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Episode 1.08 Joelle Saad-Lessler on Gen X, “The Forgotten Generation” of future retirees
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Dr. Joelle Saad-Lessler is an Industry Professor and Associate Dean of Undergraduate Studies in the School of Business at Stevens Institute of Technology, New Jersey. With a specialty in the economics of retirement, she’s researched the American retirement savings system and the shortfall in American workers’ savings.
Dr. Saad-Lessler talks about why Gen Xers are falling behind on retirement readiness, how their situation differs from boomers and millennials, and what financial professionals can do to help them make up the difference.
Go to Saad-Lessler’s academic profile page
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Transcript
Gen X Retirement Concerns
00:00:01
Speaker
As their retirement years approach, our Gen Xers feeling excited or exasperated about the state of their finances. My guest today, who has examined the data, is here to explain what she's discovered and help us explore a way forward for this underexposed cohort.
00:00:18
Speaker
Welcome again to Rebuilding Retirement, Navigating a New Reality with Your Clients, a podcast series from Allianz Life Insurance Company of North America.
Introduction of Dr. Joelle Saad-Lesler
00:00:26
Speaker
I'm Travis Walker. Joining me today is labor economist Dr. Joelle Saad-Lesler. As an industry professor at Stevens Institute of Technology's School of Business, Joelle has researched the American retirement savings system and the shortfall in American workers' savings.
00:00:42
Speaker
So there's no better person to help us understand why Gen Xers are falling behind on retirement readiness, how their situation differs from boomers and millennials, and what financial professionals can do to help them make up the difference. And if that's not enough, Joelle has a particular interest in cultural differences and how we approach retirement, and that will be eye-opening. So here's my conversation with Dr. Joelle Saad-Lesler.
00:01:08
Speaker
Thanks for joining us and welcome Joelle. Now, and I want to dive into some research that I know that you've done and start talking about Generation X. You recently were a part of a research group on what you called the forgotten generation.
Pensions vs 401ks
00:01:24
Speaker
And um when I asked, why did you all want to look into the retirement readiness of Gen X?
00:01:30
Speaker
So basically there's been a lot of research on the baby boomers. There's been talk about the millennials and really nobody's talking or looking at Gen X and Gen X, they're sort of on the cusp of retirement. ah As of in 2024, you're talking about people who are 44 to 59 years old, right?
00:01:51
Speaker
ah the earliest time that you can The earliest age that you can draw Social Security is 62. So essentially, this is the generation that's soon about, like in the next 10 years or so, they're going to start getting into retirement. And the question is, how are they doing? And what's special about this generation also is that you know the the pension system that our parents had, where you used to work in a company, basically your all career, and you've got you you were offered a pension through that company, and that set you up for life. That was it. You didn't have to worry about it. That whole system so sort of fell apart in the early 80s. Because for various reasons, you know I think the old system had a lot of risk for the company. because the companies had to basically ah you know offer the pensions to their workers, save enough for the workers, invest it for the workers, make sure they had enough for the whole worker's retirement. So there's a lot of risk for the companies. And as companies had to
00:02:53
Speaker
essentially compete you know globally. They had to reduce their costs. So um in the early 80s, a lot of companies realized, oh, instead of offering pensions to their workers, they could take advantage of ah you know something in the tax code, which allows the workers to save tax free for retirement. And that's the 401k system.
00:03:15
Speaker
And the 401k system is like the direct opposite of a pension. Instead of the company having the risk and the worker having very little risk, the 401k system puts all the risk on the worker because it basically says it's up to the worker to save enough for retirement to know where to invest their money. And then when it's time for them to retire to figure out how to draw down that money and have it last until they die.
Savings Struggles for Gen X
00:03:39
Speaker
So really, you've literally gone from one extreme to the other extreme. So the workers are taking on the whole risk, including, by the way, market risk. And so the thought process is that Gen X is the generation that started working around this time.
00:03:54
Speaker
ted ah They were working in the 1990s, so they they entered the workforce under this new regime where there's 401Ks. So you know the typical Gen Xer didn't really have pensions, right? I mean, in our sample, we looked and it was something like 14% have a traditional pension.
00:04:11
Speaker
And probably these are the people who are pretty much government employees. That's going to be much more, you know, teachers, right? They work for government, essentially. um And then with government employees. So the thought process is, okay, if you have a whole generation that entered the workforce,
00:04:28
Speaker
under this 401k regime, well, did they wisen up to the fact that they have to save more because they're basically on their own? It's kind of like, you know, it's like, it's like, you know, you're you're taking swim lessons and the Gen Xers were the ones who were thrown in the water and let's see how they did. Did they do better than the Boomers? Because the Boomers, you could argue, you know what, things kind of, you know, somebody pulled the rug out from on them, but Gen X, really, they should have known better. And unfortunately, what they're finding is no, they they're not doing much better.
00:04:55
Speaker
Well, it's very on brand that and they were forgotten about. And the fact that you're doing this research, the point that you did make ah that I... identified with almost immediately was there is so much research on the boomers and even Gen Z and the millennials. And it's kind of par for the course. Gen Xers are a little forgotten about. So if nothing else, thank you for actually taking up ah the mantle on that because it is something that goes unnoticed and is not talked about nearly enough. So what did you all find out about Gen X and retirement savings?
00:05:35
Speaker
So basically, the bad news that we had from the boomers is similar bad news for the Gen X. Having that extra information that they were screwed from the outset didn't help. you know ah Essentially, they just they haven't saved enough.
00:05:52
Speaker
you know You could talk about average amounts saved, but those are misleading because the median amounts is what the typical person saves, and the median amount is about $10,000. $10,000 is an absurdly low amount because if you go by how much are you supposed to save? so We used like a very simple rule of thumb that Fidelity um put out, which basically says by the time you're ready to retire, you should have saved about 10 times how much your income is. right so Let's say if you're making $100,000,
00:06:20
Speaker
you could have saved a million dollars. So to think that the median person, the typical person, saved $10,000, you're not even near it, right? And then we even cut the numbers by household, thinking, oh, maybe the individual level isn't really telling us. Maybe if we look at the household level, there's more, right? And it turns out it's not much better. At the household level, it's closer to about 40 grand.
00:06:42
Speaker
So it's not happening. It's not happening at all, right? People are just not saving enough to be able to retire at the level that they need to maintain their lifestyle.
00:06:53
Speaker
So how does it vary when you talk about retirement savings within Generation X? I know we talked about some at the 10,000, some at the 40,000. But what are the differences? Because obviously, within that big generation, there are going to be some variances. Right. So first of all, if you look at why people saved so little, first of all, you have to take into account that not everybody even has access to a 401k plan.
00:07:18
Speaker
right on I think about 55% have a retirement plan, and a lot of times it's because the employer doesn't offer. right If you think about smaller employers,
00:07:32
Speaker
um The cost of running the plan is expensive for a small company. So small firms are just not going to bother. okay They don't want to deal with it. It's too much of a headache for companies. Yeah, they'll do it. Government will do it. Self-employed, chances are you're just not going to do it. You have too many things going on. So sponsorship is the first hurdle.
Barriers to Saving
00:07:52
Speaker
Second hurdle is, once you've sponsored it, is the person going to participate? Part of the reason you wouldn't participate is if you're part-time, you might not be eligible to participate. Maybe you haven't worked long enough to participate.
00:08:06
Speaker
um and Then the bigger issue is, do you have enough money to participate? For a lot of people, they're they're liquidity constrained, which is fancy speak for they don't make enough money.
00:08:18
Speaker
right um If you think about, like there's a Fed report a couple of years ago which found that something like the majority of people don't even have enough money for a $500 emergency. i mean so If that's the case, right if your car breaks down, you you don't even know how you're going to you know deal with that, then are you really going to be also putting away money for retirement? Retirement seems a little bit far. So those are many reasons. Interestingly, in our data we found that the the the participation rate when you are offered a plan at work is pretty high. It's closer to about 80%.
00:08:54
Speaker
So it seems that even, albeit that yes, you're part-timers, albeit have you worked long enough, albeit your liquidity constraint, it seems that workers are thirsty for this. They want the plan so that they can participate. Now the thing is that if you participate, how much are you putting in?
00:09:16
Speaker
Right. You're supposed to be putting in probably between six to nine percent a year when people are automatically enrolled. A lot of them are enrolled at three percent. Now, thankfully, we're finding, you know, that's been ramped up a little bit. I think, of you know, the I think it was the Obama administration put out the auto IRA proposal.
00:09:41
Speaker
And that had an automatic enrollment feature also at 3% but the original plan was to have that ramp up, eventually, to go up to close to the center, right. but the point is it's not We're not there yet. right um So I'm just laying out to you the different hurdles, right sponsorship. Can you participate? Do you participate? How much do you put into the account? And then even if you do everything wonderfully, you know here you have the Great Recession, you have COVID that kills you in the market. Right now we have Social Security, which is a wonderful system, but Social Security was never meant to be 100% of your retirement income. It was supposed to be supplementary to
00:10:21
Speaker
ah a pension type of situation. Well, yeah, when it came about, it wasn't even designed for everyone to participate in it. He wasn't even supposed to do that. And when thinking about Gen X and the reasons why some don't save or put into the 401k, really quickly, I know you said six to nine percent. Are you saying that with a company match or just all in or? um I think your portion should be six to nine percent.
00:10:49
Speaker
And then the company should be patching. I mean, at the end of the day, again, it depends on, you know, how much are you making by the time you're retiring? You need to have about 10 times, right? Yeah. and But it's, it's to your point, a lot of people. And I know that, you know, I work in a pretty big company myself and I've talked to people over the years and I've worked at other companies and some say, look, I need all of my paycheck. Whatever is coming home to me, I need as much as possible because I have to, well, just pay for my life. And if that's the case, you're only going to be able to put so much. And then the other thing people don't necessarily talk about is not everyone got into corporate America or they may be even a first generation person to be in corporate America. So even the idea of a 401k and funding that and setting money aside and the company matching and all of that.
00:11:38
Speaker
um Not that they're necessarily foreign concepts, but they're not ones that everyone has just taken up and gotten really comfortable with, let alone us Gen Xers.
00:11:50
Speaker
Right. And I would argue, by the way, that this is where financial professionals can really step up, right? because Because it's up to the financial professionals to wake people up and say, you need to start saving. The minute you get your first job, you graduated college, good for you. Set up that account. Don't leave any money on the table. Invest it in XYZ to reduce your costs, right? So because, unfortunately, the financial literacy that kids or you know, adults or whatever you want to call it, they're just not getting the right type of financial literacy at school, at home, anywhere. And that's where the financial professionals really can make a difference.
00:12:29
Speaker
Yeah, I've seen some programs, especially for the younger kids, and they, you know, it comes across as a little bit fun. And it's it's something that get them at least a little bit aware of it. But when you talk about financial literacy, um oftentimes I know the people are going into the schools and trying to get them started early. But again, for the sake of this research,
00:12:50
Speaker
We're talking about Gen X, and are we assuming that they already know? um Because I can tell you a lot of them us can use some of that financial literacy ourselves, not just, hey, kids, listen up. um We can't assume that that they know any better. So when thinking about um saving and in this generation, it it sounds like it's been a problem since time immemorial, but is it a little different for Gen X? And how does it ah vary from generation to generation?
00:13:20
Speaker
So the thing is that for Gen X, to some extent, you know, because they're almost up to retirement, they don't have that much time to catch up, right? So it's almost like a bit late. I mean, they can get some advice on where to invest the money. ah I think for Gen X, they need to learn, first of all, more about Social Security. I found something very interesting, not just with Gen X, but in general. People have just a very low level of understanding of Social Security system and how to better understand when is the best time to retire, how to how to gain that, right? Especially when you have couples.
00:13:57
Speaker
ah you know There's a whole industry that is around who should retire first to maximize you know what you're going to get, how much can you work so you don't lose too much, how long can you work as much as you can, et cetera, all this stuff. Because at this point, you know yes, it's wonderful to invest in the 401k system and to try to save as much as possible, but really for them, they should have much more understanding of Social Security and the intricacies of the program and how it best take advantage of it. It's not surprising that it's a little bit confusing and that no not everyone knows a ton about it.
Economic Downturns Impact
00:14:32
Speaker
You mentioned just briefly about the 2008 financial crisis and things like COVID. What effect did the Great Recession have on Gen Xers, how they recovered, and has that recovery varied within the generation? Right. Actually, we did see when we looked at the retirement savings,
00:14:52
Speaker
you You know, you look at, you know, the chart and you find right after the great recession, boom, it's a good dip. And they catch up in COVID boom, then take it. up Right. So every time you're hit by this, you know, market shop, really, you're taking a hit and it takes longer for you to catch up. And again, if you're young,
00:15:11
Speaker
you have time to catch up. When you're older, you don't have time to catch up. So you're you're basically taking that penalty for life. Similarly, when we looked at net worth. um And the the ones who were older in that cohort, because like I said, it's between 44 and 59. So those on the upper end, the 55 to 59, they took a much bigger hit to their net worth right after the Great Recession than the younger ones.
00:15:37
Speaker
And again, forget about the fact that they took a bigger hit, they have less time to catch up as a younger one, more time to catch up. Yeah, the yeah the time horizon is definitely something I think we don't pay enough attention to. And you mentioned it, um just the time to catch up. And if you weren't really too keen on some of this stuff, even if you know what, now you're, you know, in some cases going to be left scrambling because And I think we'll get into it a little bit later. Some people kind of assume they'll work till 70 or 75, and it may not actually be up to them. yeah it's It's not always actually up to them. um But there are some bright spots. We don't want to talk about it as though it's ah gloom and doom. We have found that more employers, ah like you said, are offering the automatic enrollment into 401k. So can you tell us more about that and then touch on again the role of a financial professional within that?
00:16:30
Speaker
Right, so I actually looked up the stats and according to the Bureau of Labor Statistics, in 2020 it said about 20% of people had automatic
Automatic Enrollment Benefits
00:16:42
Speaker
enrollment. By 2023, it went up to 42% have automatic enrollment. And I know I read a headline somewhere that the automatic enrollment is now enrolling at a higher rate instead of 3%, it's closer to 6%. So that is very good news. That tells you more and more people are and getting retirement accounts, so hopefully we're going to crack that 55% and get a lot more participation. It also tells you, you know and and those, by the way, are going to range between young and old. It's not just going to be older folks.
00:17:12
Speaker
um If you think about a young person who just graduated college who ended up being automatically enrolled into 401k account, this is again where the financial professionals can come in and provide some needed literacy. Where should you invest?
00:17:29
Speaker
ah you know How much risk should you take on? um Maybe you should you know to the extent you can, save even more than what you're automatically enrolled for. These are things that you know people need to understand. And unfortunately, even like again, the literature seems to indicate that even for those who are business majors or finance majors or whatever,
00:17:53
Speaker
ah It's just that somehow learning it in theory doesn't translate into what you should do in your own savings. And in fact, it seems to indicate that people who ah graduate and think they know, they end up doing a lot more risky things and they end up doing worse. ah That's where professionals who do this for a living, they can really guide people and provide the needed support.
00:18:16
Speaker
No, I think you're absolutely correct on that. It's when you're talking about, um again, financial literacy, or trying to even help someone facilitate a dream, or ah come up with a plan, um or really stress the importance of things like this, or know about the research and the history, and and why this stuff is so prescient. It's like, that's the role of a financial professional. One line that stood out in the study was, if current trends continue, many Gen Xers will experience a decline and their standard of living during retirement. So where do we go from here? What are the lessons that these FIN pros can take away from that state of Gen X retirement savings if they don't want to experience a ah decline in standard of living? I mean, the unfortunate thing is that, again, there's not that much time to correct course. ah I would really, really emphasize Social is Security and understanding how you can get the most out of Social Security.
00:19:15
Speaker
um Because I don't think people realize that when you take, you know, earlier than your full retirement age, your monthly benefits are permanently reduced,
Social Security Misunderstandings
00:19:29
Speaker
right?
00:19:29
Speaker
So so that's something so you know if if you get 10% less ah monthly benefit, that's something you're going to live with for the rest of your life. So to the extent that you can work as long as possible, for sure. And you know if you can hold out until you are full retirement age, that's huge. That's huge. That's something that can make an enormous difference.
00:19:49
Speaker
So in many ways, the lack of saving and fear of running out of money, that's nothing new. um But there do seem to be some realities that are limiting the amount that people can put toward their retirement. You touched on it just a little bit, but I'd love for you to expand on that if you can. um Again, some of the things that limit them and why they may feel the need to take Social Security right away when it's available.
00:20:14
Speaker
I mean, to be fair, right, depending on what kind of occupation you have, right, we do find, for example, if you're a teacher, you're exhausted. I mean,
00:20:25
Speaker
you know You're literally hanging on. you know Imagine teaching high school kids. I mean, if you're working any kind of physical labor, there's only so much you could do. um Very easy for me to preach. I work a desk job. I'm in front of a computer. So it's very easy for me to say, I'm going to work as long as I can. I think it's important for people to recognize this difference between reality and and what they think, because surveys have shown whenever you ask people, how are you going to get ready for retirement the week on or till I'm like 75 years old? And if you can just even make them aware that, look, dude, that's not what it seems to show. It seems to show most people basically stop when they're 62. So making people aware as much as possible so that they at least make the best choices that they can. Unexpected health conditions really
00:21:20
Speaker
can mess with your plan for life because all of a sudden you're continuing. So there's so many things that can happen that can cause, and then you know we do find some certain groups do worse than others, right? We find, for example, among Hispanics, the the retirement savings levels are a lot lower. On the other hand, also among Hispanic women, it's the highest rate of hard time work, which also might explain that. um So there there are quite a bit of differences by ethnicity, by income obviously,
00:21:50
Speaker
Um, by occupation. We're talking about, you know, these unexpected events that come up. And, you know, I can kind of think of them in theory, but I know you actually did specific research on that. um Is that something you want to drill down on a little bit more?
Job Loss and Savings
00:22:09
Speaker
Sure. So basically, um,
00:22:12
Speaker
There had been research about you know divorce, its impact on retirement readiness, other types of life events, maybe health events. What we looked at specifically is we looked at when you lose your job. We looked at unemployment spells, and we actually were able to partner with somebody in the Social Security Administration, which gave us access to people in the data for their whole working career, their whole Social Security record. So we had this privileged data set. And um what we identified is we looked at whenever they had any kind of unemployment spell, how much of an impact it had on their retirement savings and whether the impact was temporary or longer lasting. And unfortunately, what we found is that it was a permanent impact. In other words, if you lost your job,
00:23:05
Speaker
the impact on your retirement savings was permanent because typically what ends up happening is you lose your job, you get another job, oftentimes at a lower wage. So your whole wage profile is kind of affected for the rest of your life. And your ability to save is impacted for the rest of your life. Certainly you can't control if you end up getting divorced, you cannot control if you end up having a health condition. But on top of it, if you have an unemployment spell, which is happening more and more now,
00:23:34
Speaker
um This is something that can permanently impact your ability to save for retirement. So, yeah, it I'm trying to i I'm not going to have my voice sound scared, but that is pretty alarming when you say it because I know that that's the reality and that absolutely can and does happen. um If you're sitting in the adviser's chair, how can you help with that? I mean, you know, within the parameters you have as an adviser, you want to make sure that you, you know, make people aware of the unforeseen risks they face so that it emphasizes the importance of trying to put away as much as people can. Because people tend to also be a little bit cavalier. That's funny, because actually my daughter just graduated college. She's going to be working. And I said to her, you have to start saving for retirement. She's like, no, I don't, Ma. Come on. and And as much as I tell her, she's not going to. She's like, I want to live my life right
Role of Advisors
00:24:27
Speaker
now. right But again, at the end of the day, if you're an employer,
00:24:33
Speaker
automatically enrolls you, and you have this financial advisor that financial advisor can kind of wake people up to the fact that there are so many risks they face. In addition to the fact that unexpected things can happen, on top of it, you have the risk of, did you yeahjet did you invest properly? All these different things to kind of impress upon people the importance of trying to save as much as possible.
00:24:57
Speaker
oh I think that's the best you could do. And then, of course, you know you you're you're offering advice about where to invest so that you can minimize the risk that you can really take a hit. Yeah, I would look at it like as an opportunity for the financial professional to say, hey, this is the reality. That's not changing. The model has changed. It's now on you.
00:25:18
Speaker
Here I am and trying to educate you to your point, get in this early, get in this early as possible. And if I can help you with power, where to invest, things like that, sure. But even from your point, like just coaching and encouraging and spelling it out for them to say, you don't have the luxury of a profit sharing plan or a pension. This is your reality. And I guess I was speaking more to that opportunity to say it's an opportunity to educate, to say,
00:25:47
Speaker
this is This is your retirement reality and um let's let's take full advantage of what the the facts on the ground actually are instead of looking at a past generation and saying, hey, we don't have it like that anymore um because that's gone away. Right. It's actually interesting because for the older folks, say for the Gen X generation,
00:26:10
Speaker
ah There is definitely an opportunity to have better understanding of annuity products. Annuity products are just underappreciated, I think, in this country, but they can really be a very important part of the conversation because with annuity products, you try to resolve the whole problem of how fast do you draw down your savings. So I think there has to be a little bit more understanding of you know the risks involved in the annuity products, but also the the potential you know benefits that they bring to the table. This GenX research brought up the idea of the sandwich generation. One, you you can tell us what exactly that means and then how being a part of that sandwich generation affects retirement savings. So the idea here is that the GenX generation, their
00:27:01
Speaker
On the one hand, taking care of aging parents, and on the other hand, paying for kids. You know, it was really hurt in the same generation of women in particular because the burden of taking care of elderly parents typically falls on women more than it does
Financial Strain from Family Responsibilities
00:27:14
Speaker
for men. So a lot of these women, they end up having to quit their job to take care of an aging parent.
00:27:19
Speaker
And of course, if they quit their job, now they have less time to accumulate money, to accumulate so many credits, to accumulate enough savings through their retirement accounts. They're probably relying on their spouse to take care of them. If they get divorced, they're up the creek. Then of course you have, because of the college costs are out of control, the parents are supporting their kids. Some of them are actually taking the student loans for their kids. They're taking them on themselves.
00:27:46
Speaker
um so you know They're not getting a break, really. you know and That's a big problem. and You've looked at the reliance on family and friends outside of just Generation X. i mean How did you get interested in that topic? That's been my baby's tell you the truth for a while. um I come from an immigrant background. I'm actually an immigrant myself.
00:28:08
Speaker
I came from at the age of 12 from ah Lebanon. And if you are an immigrant, if you're familiar with immigrant communities, there is much more of what we call a collectivist outlook. People kind of take care of each other.
00:28:23
Speaker
um And the American um outlook is more individualistic. The implication of that is that in the US, ah is you know if if you succeed, it's because of you. If you fail, it's because of you. Whereas you know in a collectivist outlook, when you succeed, it's because you came from a... youre you know It's like it takes a village, right? every Everybody around you helped you succeed. And if you fail, everybody around you is going to take care of you. So it's a much more collectivist attitude.
00:28:56
Speaker
And so having come from that viewpoint, one of the things we were thinking about is we were trying to have, this is research with Dr. Karen Richmond at the University of Notre Dame. um She's a cultural anthropologist and she works quite a bit with the Haitian community and with the Latino community. And she also knew this very collectivist attitude. And the idea was we were trying to figure out why is it that people don't save enough for retirement? Are they acting irrational?
00:29:21
Speaker
right And our thought process was maybe they're not acting irrationally, maybe they are rationally taking into account other sources of support that we're not counting. In other words, we're counting how much do you have in your 401k account, how much is in your bank. But maybe there's like you know a level of support from community that we don't put a dollar sign in front of.
00:29:43
Speaker
But it's there, right? um So we were actually able to track some of that because the data does follow how much money you give to family and friends and how much money you get from family and friends, which turned out not big numbers, not huge. But the bigger thing was we know where you live.
00:30:02
Speaker
And we can tell who's in a household. And so therefore, we can tell if you own the house or if you're living by somebody. right So we could show, for example, instances where elderly parents are living by their kids. And then we could put a dollar sign on that, because if you look at the average you know cost of renting, right what what would it have cost you if you weren't living by your family and friends? So those turns out to be very, very important. The housing, in-kind housing assistance turns out to be pivotal.
00:30:30
Speaker
So yeah, so we found actually that Gen Xers prove retirees really, they give a substantial, I think it was like 23% offer housing to somebody else, and 9% receive housing from somebody else. That's pretty good. That's huge, especially in some cases where housing is very expensive. The monetary support, smaller levels.
00:30:53
Speaker
today you know not nothing huge. yeah And actually, the you know when you put the dollar amount or the value of this collectivist support, this informal support, it turns out to be almost as important as Social Security and its magnitude.
00:31:12
Speaker
okay So it's kind of huge. um And interestingly, if you think about how much money, not the housing, but how much money you give to others, because if they're not huge amounts, it doesn't ding your ability to retire, which is important because a lot of people say, oh, if you're helping others, you're going to end up hurt yourself. It's just not the case. but If you're helping others by giving them money, it's not enough to set you back significantly.
00:31:38
Speaker
Yeah, yeah, no, i I get that we're talking about, you know, people maybe not acting in their own best interest. But to your point, if you're looking at the dollar amounts and they're relatively low, what you're you're giving to that other person who would otherwise have to pay for you know, housing and food and everything else. it's you're you're You're saving them at kind of a low cost to you. I know that in my own experience, our great grandfather came to live with us. He was amputated from the knee down. He had his money in a coffee can, Hills Brothers. And um yeah, he came to live with us and until the the time of his death. And
00:32:16
Speaker
It didn't cost us much, but the thought of having you know a long-term care planner, putting him in a home was just not a reality. It was never going to happen, and especially within our family, within our culture, even if we could, I don't think we would have done it. um He was going to live with us, and he did. He did until ah the day he died. That's right, and I'm glad you said that, because the reality is, again,
00:32:39
Speaker
From this individualistic outlook, we always think in dollars and cents, but let's think about when your grandfather lived with you, how much that enriched your lives. Let's not think of negative, yeah at least in my family, that's that's a value we want to teach our children to to value their elders.
00:32:59
Speaker
One point that we've been really driving home here is the educating of of clients um and the role of a financial professional in that. So I want to spend some of our last moments on that. How does increasing that amount of information available to consumers make the role of the financial professional lawyer easier? and Or how does it make it more difficult um actually for actually doing their job?
00:33:23
Speaker
I think that the biggest value that the financial professional brings to the table is being there and starting the conversation. A lot of times people don't even have the conversation, so even just having this person and setting up the time to talk about it think, setting up the time to think about retirement, setting up a time to have those difficult conversations with family also of what are your expectations about? Are you planning to take care of your parents? Are you saving for that? Are you planning for your family to take care of you? You know, maybe they're on, they're not on the same page, right? So a lot of times
00:33:59
Speaker
no It's actually a very big problem. Some of my research
Cultural Influences on Savings
00:34:04
Speaker
with Dr. Richmond showed that um this has actually been a very big problem with immigrant communities where the parents who are foreign born, they come to this country thinking their kids are going to take care of them.
00:34:15
Speaker
their kids grow up in American culture, and the kids are like, bye bye. And all of a sudden, they're like, wait, what what would just happened? so So I think having those conversations is very important. Once you start that conversation, everything kind of falls into place. So even just setting up the time to say we need to talk about retirement, you know, oh I think that's the biggest thing. Yeah, no, I mean, there's longevity. Obviously, that's changing. We talked about, you know, retirement plans being funded and But that was also a time when they didn't really expect people to live that long. And now it's not out of the question that you could be in retirement for 25, 30 years. Then we talk about things that are unexpected life events. How can financial professionals educate clients about those unknowns? What what message do you think they would be giving them? Again, I think having that conversation, people know a lot more than they purport to them. For example, if you talk about longevity, you know,
00:35:10
Speaker
I mean, you kind of know your family's longevity, right? It's not as known as, you know what I'm saying? Like you could talk about in general, oh, the average person lives still about 83, right? But you know your family, you know how long your parents lived, you know how long your grandparents lived. So you have some idea of your longevity, which is actually important because that means you have more information than then what your advisor came to you with, right? So I think starting that conversation, you can give them better idea and hopefully that can help them kind of you know, zero and better on what are the plans you need to have. We talked about this trend of, you know, within the financial industry about holistic planning, right? And I think it all falls into that. So I guess the final thing is like, what what lessons can financial professionals take about holistic financial planning from this work?
00:36:01
Speaker
Again, asking the clients what their expectations are, what their support network looks like ah so that they understand not just, you're not just looking at an individual as if they're like every other individual out there. Every person has their own conditions, has their own situation. So if you meet with that person and you find out that person expect expect support from family and friends or maybe expects to care for somebody else. That's something you need to take into account. You meet with that person and you find out what their expected longevity is. You think about you know what kind of work they do, how likely is it that they're going to be able to work past a certain amount, right?
Personalized Planning
00:36:43
Speaker
I think you need to learn more and more about who you're advising and what their individual situation is so you can make better plans.
00:36:50
Speaker
I'm going to ask you a couple of questions that we have for all of our guests, the final couple of questions. and One being, what's something you wish you would have known about retirement when you first started working? um I was lucky enough to always have worked for an employer where I always had a 401k, so I actually privileged in that way.
00:37:11
Speaker
um I guess, I really can't speak for that because i like I said, I was privileged enough to always, I was always working and in academia. And in academia, we always had a 401k plan, there was always a company match. So I speak from a position of privilege for sure.
00:37:29
Speaker
Well, that's okay. It sounds like you're going to be okay. And you know, you just keep on pressing that upon your daughter and she says, okay, I've done enough living. I'll start socking some of it away now. what What have you learned through your work that you wish everyone knew about preparing for retirement? Again, the importance of saving early, the importance of saving often, the importance of saving not just for retirement, but for an emergency. So, so important. I find it absolutely shocking how little people have just for an emergency. And it's heartbreaking. Yeah, I think that's important. That's important. So for listeners who have enjoyed today's conversation, where can they find you online? You can find me at Stevens Institute of Technology. That's the university I work at. You can find my profile. um A lot of the work I've done on retirement is in reports in the National Institute for Retirement Security. NetNurs did that Gen X report.
00:38:25
Speaker
ah We're working on a number of other reports. National Institute for Retirement Security has tons of research reports relevant to retirement, so if you're interested, I would definitely point you in that direction. Gotcha. Fantastic. Thank you so much for your time. Okay. Thank you.
00:38:41
Speaker
That was Dr. Joelle Saad-Lesler sharing her insights on the impending retirement crisis facing Gen Xers and how financial professionals really need to step up and help them navigate this new reality. They're facing a situation unique among generations and that may call for a different approach to how you address their needs.
00:39:00
Speaker
Thanks for listening to Rebuilding Retirement. Remember, all our past episodes are still available. And the more you listen to, the more you'll get a wide angle view of the issues surrounding retirement readiness. And most importantly, how you as a financial professional can respond. If you're enjoying these conversations, please subscribe and consider giving us a review on the Apple Podcast and Spotify app. See you back here next time. I'm Travis Walker.