[Travis] As their retirement years approach, are 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. Welcome again to "Rebuilding Retirement," navigating a new reality with your clients, a podcast series from Allianz Life Insurance Company of North America. I'm Travis Walker. Joining me today is Labor economist, Dr. Joelle Saad-Lessler. As an industry professor at Stevens Institute of Technology School of Business, Joelle has researched the American Retirement Saving System and the shortfall in American workers' savings. 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-Lessler. 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. And wanna ask, why did you all want to look into the retirement readiness of Gen X?
[Joelle] 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. As of in 2024, you're talking about people who are 44 to 59 years old, right? 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 gonna 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 pension system that our parents had where you used to work at a company, basically your whole career, and you got, you were offered 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 sort of fell apart in the early 80s, okay? Because, for various reasons, you know, I think the old system had a lot of risk for the companies because the companies had to basically, 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 workers' retirement. So there's a lot of risk for the companies. And as companies had to essentially compete, you know, globally, they had to reduce their costs. So in the early 80s, a lot of companies realized, oh, instead of offering pensions to their workers, they could take advantage of, you know, something in the tax code, which allows the workers to save tax free for retirement. And that's the 401k system. 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. 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. Okay, and so the thought process is that Gen X is the generation that started working around this time, okay? They were working in the 1990s, so 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. And probably these are the people who are pretty much government employees. That's gonna be much more, you know, teachers, right? They work for government essentially, and then government employees. So the thought process is, okay, if you have a whole generation that entered the workforce 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, you know, 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 under them, but Gen X really, they should have known better. And unfortunately, what we're finding is no, they're not doing much better.
[Travis] Well, it's very on brand that they were forgotten about. And the fact that you're doing this research, the point that you did make 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 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?
[Joelle] So basically the bad news that we had from the Boomers is similar bad news for the Gen X. Okay, having that extra information that they were screwed from the outset didn't help. You know, essentially they just, they haven't saved enough. 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 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 a hundred thousand dollars, you shoulda 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 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. 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.
[Travis] 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? 'cause obviously within that big generation there are gonna be some variances.
[Joelle] Right, so first of all, if you look at why people saved so little, right? Personally, you have to take into account that not everybody even has access to a 401k plan, right? I think about 55% have a retirement plan. And a lot of times it's because the employer doesn't offer it, right? If you think about smaller employers, just the cost of running the plan is expensive for a small company. So small firms are just not gonna bother, okay? They don't wanna deal with it. It's too much of a headache. Larger companies, yeah, they'll do it. Government will do it. Self-employed, chances are you're just not gonna do it. You have too many things going on. So sponsorship is the first hurdle. Second hurdle is once you've sponsored it is the person gonna participate. So 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. And then the bigger issue is, do you have enough money to participate, right? So for a lot of people, they're liquidity constrained, which is fancy speak for they don't make enough money, right? If you think about, like, there's a Fed report a couple years ago, which found that something like the majority of people don't even have enough money for a $500 emergency. So I mean, so if that's the case, right? If your car breaks down, you don't even know how you're gonna, you know, deal with that, then are you really gonna 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 participation rate when you are offered a plan at work, it's pretty high. It's closer to about 80%. So it seems that even, you know, albeit that yes, you know, your 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. Okay, now the thing, yeah. Now the thing is that if you participate, how much are you putting in, right? You're supposed to be putting in probably between six to 9% a year. When people are automatically enrolled, a lot of them are enrolled at 3%. Now thankfully, we're finding, you know, that's been ramped up a little bit. I think a, you know, the, I think it was the Obama administration put out the auto IRA proposal 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 9%, right? But the point is, it's not, we're not there yet, right? 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 a pension type of situation.
[Travis] Well, yeah, and when it came about, it wasn't even designed for everyone to participate in it. You weren'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 9%, are you saying that with a company match or just all in, or?
[Joelle] I think your portion should be six to 9% and then the company should be matching. 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?
[Travis] Yeah, but 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's 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 gonna 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, 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.
[Joelle] Right. And I would argue by the way, that this is where financial professionals can really step up, right? 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 X, Y, Z to reduce your costs, right? So because unfortunately the financial literacy that kids or, you know, adults or whatever you wanna 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.
[Travis] 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 something that get them at least a little bit aware of it. But when you talk about financial literacy, 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, we're talking about Gen X, and are we assuming that they already know? Because I can tell you a lot of them, us can use some of that financial literacy ourselves. Not just, hey, kids listen up. We can't assume that they know any better. So when thinking about saving and in this generation, it sounds like it's been a problem since time immemorial, but is it a little different for Gen X? And how does it vary from generation to generation?
[Joelle] 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 it's a bit late. I mean, they can get some advice on where to invest the money. 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 game that, right? Especially when you have couples. You know, there's a whole industry that is around who should retire first to maximize, you know, what you're gonna 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. So, 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 to best take advantage of it.
[Travis] It's not surprising that it's a little bit confusing and that not everyone knows a ton about it. You mentioned just briefly about the like 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?
[Joelle] Right, so actually we did see, when we looked at the retirement savings, you know, you look at, you know, the chart, and you find right after the Great Recession, boom, they took a dip, then they catch up, then Covid, boom, then take a dip, right? So every time you're hit by this, you know, market shock really, you're taking a hit, and it takes longer for you to catch up. And again, if you're young, you have time to catch up. When you're older, you don't have time to catch up. So you're basically taking that penalty for life, right? Similarly, when we looked at net worth, and the ones who were older in that cohort, 'cause like I said, it's between 44 and 59. So those on the upper end, the top, you know, the 55 to 59, they took a much bigger hit to their net worth right after the great recession than the younger ones. And again, forget about the fact that they took a bigger hit, they have less time to catch up as the younger ones, more time to catch up.
[Travis] Yeah, the time horizon is definitely something I think we don't pay enough attention to. And you mentioned it, just the time to catch up, and if you weren't really too keen on some of the stuff, even if you know it now, you're, you know, in some cases gonna 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 not always actually up to them. But there are some bright spots, we don't wanna talk about it as though it's gloom and doom. We have found that more employers, 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?
[Joelle] Right, so I actually looked up the stats, and according to the Bureau of Labor statistics in I think 2020, it said about 20% of people had automatic 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 getting retirement accounts. So hopefully we're gonna crack that 55% and get a lot more participation. It also tells you, you know, and those by the way are gonna range between young and old. It's not just gonna be older folks. If you think about a young person who just graduated college who ended up being automatically enrolled into a 401k account, this is again where the financial professionals can come in and provide some needed literacy. Where should you invest? You know, how much risk should you take on? Maybe you should, you know, to the extent you can save even more than what you are 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, it just doesn't, 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 graduate and think they know, they end up doing a lot more risky things, and they end up doing worse. But that's where professionals who do this for a living, they can really guide people and provide the needed support.
[Travis] No, I think you're absolutely correct on that. It's when you're talking about, again, financial literacy or trying to even help someone facilitate a dream or come up with a plan or really stress the importance of things like this, or know about the research and the history 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 in 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 wanna experience a decline in standard of living?
[Joelle] I mean, the unfortunate thing is that, again, there's not that much time to correct course. I would really, really emphasize Social Security and understanding how you can get the most outta Social Security 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, right? So that's something. So, you know, if you get 10% less monthly benefit, that's something that you're gonna live with for the rest of your life. So to the extent that you can work as long as possible, for sure, 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.
[Travis] So in many ways, the lack of saving and fear of running outta money, that's nothing new, 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. 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.
[Joelle] 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, 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. 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 gonna work as long as I can. I think it's important for people to recognize this difference between reality and what they think because surveys have shown, whenever you ask people how are you gonna get ready for retirement? They'll like, oh, I'm gonna work till I'm like 75 years old, right? And if you can just even make them aware that, look dude, you know, that's not what it seems to show. It seems to show most people, you know, basically stop when they're 62. So when people, making people aware as much as possible so that they at least make the best choices that they can. Unexpected health conditions really can mess with your plan for life because all of a sudden you're not 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 retirement savings levels are a lot lower. On the other hand also among, you know, Hispanic women is the highest rate of part-time work, which also might explain that. So there are quite a bit of differences by ethnicity, by income, obviously, by occupation.
[Travis] 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. Is that something you wanna drill down on a little bit more?
[Joelle] Sure, so basically 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, right? 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. You know, their whole Social Security record. So we had this, you know, privileged data set, and 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, 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, this is something that can permanently impact your ability to save for retirement.
[Travis] So yeah, I'm trying to, I'm not gonna have my voice sound scared, but that is pretty alarming when you say it 'cause I know that that's the reality, and that absolutely can and does happen. If you're sitting in the advisor's chair, how can you help with that?
[Joelle] I mean, you know, within the parameters you have as an advisor, you wanna 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, right? It's funny, 'cause actually my daughter just graduated college. She's gonna 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 as much as I tell her, she's not gonna. She's like, I wanna live my life right now, right? But then at the end of the day, if your employer 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 invest properly? All these different things to kind of impress upon people the importance of trying to save as much as possible. I think that's the best you could do. And then of course, you know, you're offering advice about where to invest so that you can minimize the risk that you can really take a hit.
[Travis] Yeah, I would look at it like as a 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. Here I am trying to educate you. To your point, get in this early, get in this early as possible, and if I can help you with how or where to invest, things like that, sure. But even from your point, like just coaching and encouraging and spelling it out for 'em 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 this is your retirement reality, and let's take full advantage of what 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 'cause that's gone away,
[Joelle] Right, I mean, it's actually, it's actually interesting because for the older folks, save for the Gen X generation, 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 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 potential, you know, benefits that they bring to the table.
[Travis] This Gen X research brought up the idea of the sandwich generation. One, you can tell us what exactly that means and then how being a part of that sandwich generation affects retirement savings.
[Joelle] So the idea here is that the Gen X generation, they're on the one hand taking care of aging parents, and on the other hand, paying for kids. You know who's really hurt in the sandwich generation? Women in particular, because the burden of taking care of elderly parents typically falls on women more than it does for men. So a lot of these women, they end up having to quit their jobs to take care of an aging parent. And of course, if they quit their job, now they have less time to accumulate money, to accumulate Social Security 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. And of course you have, because of the college costs are outta 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. So, you know, they're not getting a break really, you know, and that's a big problem.
[Travis] No, 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?
[Joelle] So that's been my baby, to tell you the truth for awhile. I come from an immigrant background. I'm actually an immigrant myself. I came from, at the age of 12, from 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. And the American outlook is more individualistic. The implication of that is that in the US, if, you know, 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, you know, it's like it takes a village, right? Everybody around you helped you succeed, and if you fail, everybody around you is gonna take care of you. So it's a much more collectivist attitude. And so having come from that viewpoint, one of the things we were thinking about is we were trying, I have, this is research with Dr. Karen Richmond at the University of Notre Dame. 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 irrationally, 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, right? But maybe there's like, you know, a level of support from community that we don't put a dollar sign in front of, but it's there, right? 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 to be big numbers, not huge, but the bigger thing was we know where you live, 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 would it have cost you if you weren't living by your family and friends? So those turned out to be very, very important. The housing, in kind housing assistance, turns out to be pivotal. So yeah, so we found actually that Gen Xers, pre-retirees really, they give a substantial, I think it was like 23%, you know, 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, okay. You know, nothing huge, okay. 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 in its magnitude. Okay, so it's kind of huge. And interestingly, you know, if you think about how much money, not the housing, but how much money you give to others, because they're not huge amounts, it doesn't ding your ability to retire, right? Which is important because a lot of people say, oh, if you're helping others, you're gonna end up hurt yourself. It's just not the case, right? If you're helping others by giving them money, it's not enough to set you back significantly.
[Travis] Yeah, yeah, no, 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 giving to that other person who would otherwise have to pay for, you know, housing and food and everything else. It's, 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 yeah, he came to live with us until the time of his death, and it didn't cost us much, but the thought of having, you know, a long-term care plan or putting him in a home was just not a reality. It was never gonna happen. And especially within our family, within our culture, even if we could, I don't think we would've done it. He was gonna live with us, and he. He did until the day he died.
[Joelle] That's right, and I'm glad you said that because the reality is, again, 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, right? Let's not think of negative, you know, at least in my family, that's a value we wanna teach our children to value their elders.
[Travis] One point that we've been really driving home here is the educating of clients and the role of a financial professional in that. So I wanna 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 easier? Or how does it make it more difficult for actually doing their job?
[Joelle] I think that the biggest value that the financial professional brings to the table is being there and starting a conversation. A lot of times people don't even have the conversation. So even just having this person, and setting up a time to talk about it, setting up a 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 not on the same page, right? So a lot of times it's actually a very big problem. Some of my research with Dr. Richmond showed that 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 gonna take care of them. 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 just happened? 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, I think that's the biggest thing.
[Travis] Yeah, no, I mean, there's longevity, obviously that's changing. We talked about, you know, retirement plans being funded, but that was also a time when they didn't really expect people to live that long. And now it's not outta 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 message do you think they would be giving them?
[Joelle] Again, I think having that conversation, people know a lot more than they purport to know. For example, if you talk about longevity, you know, I mean, you kind of know your family's longevity, right? It's not as unknown as, you know what I'm saying? Like, you could talk about in general, oh, the average person lives till 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 what your advisor came to you with, right? So I think starting that conversation, you can give them a better idea. And hopefully that can help them kind of, you know, zero in better on what are the plans you need to have.
[Travis] And 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 lessons can financial professionals take about holistic financial planning from this work?
[Joelle] Again, asking the clients what their expectations are, what their support network looks like, 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 expects 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 gonna be able to work past a certain amount, right? So, 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.
[Travis] I'm gonna 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've known about retirement when you first started working?
[Joelle] I was lucky enough to always have worked for an employer where I always had a 401k. So I actually am privileged in that way. I guess I really can't speak to that because, like I said, I was privileged enough to always, I was always working 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.
[Travis] Well, that's okay. It sounds like you're gonna be okay. And you know, you can just keep impressing that upon your daughter, and she says, okay, I've done enough living. I'll start socking some of it away now. What have you learned through your work that you wish everyone knew about preparing for retirement?
[Joelle] 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 important. That's important.
[Travis] So for listeners who have enjoyed today's conversation, where can they find you online?
[Joelle] You can find me at Stevens Institute of Technology, that's the university I work at. You can find my profile. A lot of the work I've done on retirement is in reports in the National Institute for Retirement Security. NIRS did that Gen X report. 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.
[Travis] Gotcha, fantastic. Thank you so much for your time.
[Joelle] Okay, thank you.
[Travis] That was Dr. Joelle Saad-Lessler 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. 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.
