Bridging the gaps: generational attitudes
toward money, investments, and retirement
Bob Baur, Chief Global Economist
New words come along exactly when we need them, or they take on a new
meaning and importance when the appropriate situation arises. The term
“generation gap” describes the difference in attitudes and values between
different generations.
It broadly entered the lexicon in the early 1960s,
1
within a few dozen miles of where they were born.
which isn’t a coincidence. The young people of the
They stayed at relatively the same social and
day – whom we now call ‘Baby Boomers’ – held
economic levels that practically every previous
drastically different attitudes about the world than
generation of their family had occupied. Their views
their parents had. Parents at the time wondered
about things didn’t change because their view of
why their children saw the world so differently than
things didn’t change. But if you’re reading this,
they did, and society needed a term to describe
you stand at a point in history where education,
this gulf that had seemingly appeared between the
technology, and global economic growth have
older generation and the younger.
combined to make progress possible.
And while generational gaps have probably existed
So, we’re going to talk about something that 94%
since the first generation gave birth to the second
of all the people who have ever existed2 couldn’t
generation, those gaps have widened dramatically
discuss: changing attitudes. Specifically, we’ll be
over the last hundred years. As widespread and
looking at changing attitudes in the United States
as quickly as change occurs today, it’s difficult
about financial matters. How have views about
to understand how rare and exceptional change
money, investment, and retirement changed in the
has been for the bulk of human history. There
most recent generations? How have the virtually
have always been explorers, but until the last two
static perspectives on our relationships with these
hundred years, the vast majority of people lived
concepts adjusted over the last hundred years?
1
Oxford English Dictionary, 3rd Edition, Sept. 2009, s.v. “generation”
2
Ciara Curtin, “Fact or Fiction?” Scientific American, March 1, 2007
Bridging the gaps: generational attitudes toward money, investments, and retirement 1
This is the story of five generations in the United States,
the times that shaped them, and how they adapted to
each other and the changing financial landscape.
We’ll be looking at how attitudes towards financial matters in the United States have changed
through these most recent generations: the Silent Generation, the Baby Boomers,
Generation X, Generation Y, and Generation Z.
Silent
Baby
Generation Boomers
Gen X
Gen Y
Gen Z
1928 - 1945
1965 - 1980
1981 - 1997
1998 - 2015
1946 - 1964
Before we get to the generations, we’ll first examine the concepts of money,
investment, and retirement to set the stage for our story. We’ll look at the
factors that affect our relationships with these concepts, so that we can
explore those relationships within and across each generation.
Bridging the gaps: generational attitudes toward money, investments, and retirement 2
Money
Money is and always has been an abstract concept.
Along with the concept of employers came the idea
This abstraction is one of the key fundamental factors
of money as a reward mechanism. In the English
that affect our relationship with it. Money is something
language, the phrase “making money” didn’t pop
that has no inherent value, but we imbue it with a
up until around the mid-1400s. Money as a reward
value that everyone accepts. Money makes value
mechanism is something that is highly variable across
storable, transportable, and transferable. Metal coins
people. Some of us enjoy work for its own sake, while
are probably about 2,600 years old, and paper money
others are concerned only with the paycheck.
can be found as far back as 1,400 years ago in China;
however, the idea of earning money, or performing
The amount of money we have also affects
work in return for a payment of money, is a relatively
our views about it. As British writer Katharine
recent development.
Whitehorn glibly observed, “The easiest way for
your children to learn about money is for you not to
As such, we are still developing our attitudes
have any.” Money is also only as valuable as what
towards earning money. Before there were
it can purchase, so attitudes towards consumerism
employers, the majority of people worked on farms,
also factor into our views. The Industrial Revolution
not out of any burning desire to be a farmer, but
and the vast middle class it created filled the world
because this is what a family had to do to survive.
with two symbiotic things: more money, and more
We grew crops and raised livestock to support the
things to buy.
family, and we bartered or sold any excess to obtain
the things that we couldn’t produce ourselves.
Metal coins are probably about 2,600 years old, and paper money can
be found as far back as 1,400 years ago in China; however, the idea of
earning money, or performing work in return for a payment of money,
is a relatively recent development.
Bridging the gaps: generational attitudes toward money, investments, and retirement 3
Investment
Stepping up one level from money, we find the
the Industrial Revolution and globalization were
concept of investing. Investing is simply putting money
prime movers for growth. They allowed companies to
into a business or some sort of financial instrument
expand their reach beyond a neighborhood or a city.
with the expectation of gain. That gain can come
That expansion requires investment.
through either regular income or an increase in the
amount received back. To invest, we need money; in
Our attitudes towards investment also depend on
fact, we need a surplus of money – more than required
what other options are available for that money.
to suit our immediate needs.
A consumption-driven economy has televisions,
and cars, and vacations to sop up all of that extra
Throughout history, a surplus of money hasn’t been
common for most people. The rise of the middle class
after the Industrial Revolution, though, has given more
and more people access to employment. Since then,
a larger proportion of the population now has access
to more money than they need. And this has laid the
groundwork for a larger global culture of investment.
cash, so investment must compete with our other
wants and needs. Culture also plays a factor in our
attitudes, with dividing lines between preferences
for instant gratification or long-term satisfaction.
On a very practical level, especially in the modern
world, investment requires access to functioning
Another very basic requirement for investment is
capital markets and liquid, fungible assets. Without
growth: new businesses, companies that want to
these, investment is impossible because buyers and
expand, inventors who need capital to create. Without
sellers wouldn’t be able to find each other or agree
a culture of growth, investment is unnecessary. Again,
on terms of trade.
Retirement
Retirement is the most recently created of our
Life expectancy and trends in health directly impact
three themes. In fact, the idea of retirement, or
our attitudes towards retirement. Being able to
withdrawing from an active working life, is a concept
retire from a job means living to an age where we
that’s existed for less than 200 years.
can’t or don’t want to work, but are still healthy
enough to carry out a normal life.
For the vast majority of human history, if we were
alive and drew breath, we worked. Farmers labored
This brings up the new concept of a “retirement age.”
to ensure their families’ survival; they kept working to
At what point should the older workers retire and
continue surviving. Maybe their children took over more
“make way” for the younger generation? Our views
of the work as they got older, but everyone continued
on retirement change as we age, and depend greatly
to contribute until they breathed their last. With the
on the difference between the retirement age and
fairly recent concept of at-will employment, people now
how long we could expect to live beyond that age.
could contemplate a “job” that could be retired from.
Bridging the gaps: generational attitudes toward money, investments, and retirement 4
The Generations
Now that we have the themes of our story, we can begin introducing the characters. All
of our characters, the five generations, are related. And that relationship will affect how
they compare to each other and how they engage with financial concepts.
The thing to understand with generational perspectives is that they are a mix of “nurture” and “nature.” Our
parents and previous generations influence our attitudes; this is the “nurture” aspect. We also develop our
own attitudes through experiences unique to our generation; this is the “nature” aspect. The nature of one
generation becomes the nurture of the following ones.
So, we cannot begin our discussion of the differing attitudes towards these financial topics by merely starting
with the Silent Generation. We need to very briefly look at the previous generation to set the context.
Silent Generation
Baby Boomers
Gen Y
Gen X
Gen Z
Bridging the gaps: generational attitudes toward money, investments, and retirement 5
Prologue
The G.I. Generation
1901 - 1928
The G.I. Generation
Taking its designation from the nickname of U.S. enlisted soldiers in World War II, the G.I. Generation was born
at the dawn of the 1900s and set the tone for the century to follow. Living through the merciless austerity of
the Great Depression, the G.I. Generation only grudgingly accepted assistance. They stood in bread lines for
food because they had no choice, but they preferred work relief to handouts. Through programs like the Work
Projects Administration, the government employed millions of people on public works and infrastructure
projects. This first generation of the twentieth century wasn’t proud of needing help, but they took pride in
their work, even though they made only enough to take care of essentials.
When the call came, the G.I. Generation uprooted itself from what little it had and crossed the oceans to fight
World War II. Overcoming the horrors of poverty and war was a lot for a single generation, but a steadfast
resolve helped them learn hard lessons and make a place for the next generation.
This first generation of the
twentieth century wasn’t proud
of needing help, but they took
pride in their work, even though
they made only enough to take
care of essentials.
The G.I. Generation 7
Silent Generation
1928 - 1945
Silent Generation
The Silent Generation was born during the
the first generation in history to be able to pass
traumatic times of the Great Depression and
on much wealth to the next generation en masse.
World War II, but didn’t participate in any of it.
Similarly, they were one of the first generations
They were taught the lessons of the crises that the
who could rightfully expect their children to have a
G.I. Generation faced and overcame. This had a
better life than they did. And the next generation,
tremendous influence over the Silent Generation’s
who we would eventually call the Baby Boomers,
relationship with money. They were raised to
grew up protected and optimistic, experiencing a
be protective and cautious with their money,
post-crisis affluence the world had never seen.
understanding that hard times could be just around
the corner. The Depression destroyed trust in
the banking system. Bank runs were a common
occurrence in the early 1900s, and a penny saved
Having grown up risk-averse,
could be a penny lost. It wasn’t until 1933, with
the Silent Generation was
the creation of the Federal Deposit Insurance
Corporation (FDIC) to insure bank deposits against
loss, that the nation began to rebuild this trust.
By the time they came of age, the United States
never fully able to shake
off their wariness. They
were corporation workers,
had turned a corner. World War II was over, and
expecting to work for a single
the Silent Generation stepped cautiously into a
company for their entire lives.
tremendous time of peace and prosperity: the
American economic boom of the 1950s and ‘60s.
Like the previous generation,
Having grown up risk-averse, the Silent Generation
they were savers. And that
was never fully able to shake off their wariness.
savings amassed during the
They were corporation workers, expecting to work
for a single company for their entire lives. Like the
boom of the ‘50s and ‘60s,
previous generation, they were savers. And that
giving them a substantial sum
savings amassed during the boom of the ‘50s and
to pass along to their children.
‘60s, giving them a substantial sum to pass along
to their children. The Silent Generation was likely
Silent Generation 9
When it came to investment, the Silent Generation
was a conservative generation. Stories of stock
market collapses and robber barons were still fresh
in their ears, and distrust of capital markets was rife.
That said, part of this conservativism was driven
by a general lack of options. The first mutual fund
had only been created in 1924, at the dawn of the
Silent Generation. So, U.S. Treasury bills, stocks, and
bonds were the main alternatives to a simple bank
account. Safety and income were investors’ primary
targets as part of a buy-and-hold strategy. Assets
were held in brokerage accounts, where trading was
relatively expensive.
Retirement was a new concept to the Silent
Generation. In fact, the world hadn’t known the idea
of widespread financial support for the elderly until
German chancellor Otto von Bismarck proposed an
old-age social insurance program in 1881. Certain
companies and the military had pensions, which
provided some support, but they were not typically
replacements for a full wage. In the United States,
Social Security passed in 1935, providing retirement
benefits to the elderly. However, Social Security may
not have been the pervasive safety net it appeared
to be. When the Social Security Act passed, the
retirement age was set at 65. At the time, however,
the life expectancy for American men, who made up
the majority of the workforce at the time, was only
58. So the economics of the program were set in
favor of the system.
Silent Generation 10
Baby Boomers
1946 - 1964
Baby Boomers
Booms filled the decades following World War II.
the 1970s pushed up interest rates. To buy a house,
In 1947, a sonic boom marked the shattering of the
Boomers needed to borrow, but this generation had
sound barrier and heralded an era of technological
a different relationship with money. Having grown
progress. An economic boom spread across the globe,
up in an era of prosperity, Boomers had lost the
with growth bolstering even economies that the war
instinctual aversion to debt that had marked the
had decimated. And the new sense of optimism led to
previous two generations.
an unprecedented population explosion. This ‘baby
boom’ lent its name to the next generation.
After the war, many returning soldiers attended
college, with the G.I. Bill paying their tuition. By the
Baby Boomers grew up in the relative affluence of
later part of the 1940s, veterans made up about
an unparalleled economic expansion from the 1950s
50% of college graduates. This firmly established
through the early 1970s. Confidence and birth rates
the idea of college as a path to prosperity, a cultural
soared, making Boomers the largest generation the
trait that they would pass along to their children.
United States had yet seen.
A college education became more common for
Boomers were the generation of the suburbs, which
Boomers than for any previous generation. Colleges
ballooned to house all the returning soldiers and
across the country were expanding as classrooms
their new families. The American Dream was now
filled to overflowing. Tuition prices were rising too,
firmly set around home ownership. Though, by the
but the first government-backed student loans
time that many Boomers were looking for their own
appeared in the 1950s to help prospective students
section of the suburban utopia, rising inflation in
pay the tab.
To buy a house, Boomers needed to borrow, but this generation had
a different relationship with money. Having grown up in an era of
prosperity, Boomers had lost the instinctual aversion to debt that
had marked the previous two generations.
Baby Boomers 12
Jobs were plentiful when Boomers entered
first modern residential mortgage-backed securities
the workforce. Strengthened by numbers,
(MBS) in 1968, creating a market for all those home
education, and well-paying jobs, the Baby
loans Boomers would be taking out.
Boomers became a rich generation. Boomers,
though, were fundamentally different than their
parents. Boomers got married later than previous
generations. With the newly available birth-control
pill and unfamiliar feelings of inflation-induced
pessimism, Boomers were also having fewer
children. Author and journalist Tom Wolfe called
them “the me generation.”
The Baby Boomers’ formative years gave them a
drastically different relationship with money. Unlike
the G.I. Generation and the Silent Generation,
Boomers weren’t worried about making ends meet.
They had a surplus of money, and were willing to
spend it…and more.
For those with the means, discount brokerages
appeared in the mid-1970s to drastically reduce the
cost of buying and selling financial securities. But
even the less financially sophisticated Boomers had
options. The early 1970s also gave birth to the index
fund, a way of obtaining passive exposure to a broad
base of stocks.
For most Boomers though, retirement saving
became a gateway to investment. Baby Boomers
solidified the concept of retirement. With the
creation of the individual retirement account (IRA)
in 1974 and the 401K in 1978, retirement saving
became even more commonplace. Baby Boomers
experienced a shift in retirement investing during
The world’s first automated teller machine (ATM)
their working lives. In 1950, about a quarter of all
debuted in 1967, and the first general credit
private-sector employees participated in a pension
card appeared in 1958. Boomers now lived in a
plan. That surged to around 41% a decade later.
world where a lack of immediate funds didn’t
Then, growth in defined-benefit plans began to
stand between them and the things they wanted:
dwindle, moving to 45% by 1970, 46% in 1980. By
education, cars, clothes, etc.
1990, defined-benefit plans covered 43% of private
sector workers in the United States. By this time,
Innovation became quite prevalent in the realm
the growth in retirement savings shifted to defined-
of investment as well. By the time Boomers were
contribution plans like the 401K. At the dawning of
entering the working world, more and more
the twenty-first century, 40.1 million U.S. private-
investment options became available to put their
sector workers were in defined-benefit plans, while
surplus of money to work. Ginnie Mae issued the
60.4 million were in defined-contribution plans.3
3
Employee Benefit Research Institute, “History of Pension Plans.” https://www.ebri.org/publications/facts/index.cfm?fa=0398afact
Baby Boomers 13
Gen X
1965 - 1980
Gen X
Generation X didn’t have a name until about a
this increase in processing power and resulting
decade after the last of them had been born.
decrease in the size of computers held massive sway
In 1991, author Douglas Coupland released his
over Gen Xers. The first generation to grow up with
novel Generation X: Tales for an Accelerated
a computer in the home, they were a generation
Culture, defining the generation that followed the
of programmers and video game players. These
Baby Boomers. His book popularized the term
children of Moore’s law would nurture a relationship
as a descriptor for the seemingly disaffected and
with technology that future generations would
alienated culture that was their hallmark. “X”
solidify and build upon, weaving it into the fabric of
stood for an unknown quantity, a metaphor for a
their everyday lives.
4
generation that didn’t want a label.
As this generation matured and entered the
This feeling of disenfranchisement wasn’t an
workforce, the U.S. economy was changing.
illusion. Gen Xers grew up in the 1970s and early
Manufacturing was giving way to a knowledge-
1980s, which were relatively tough times in the
based economy. That meant that globalization was
United States. Ultra-high inflation, commodity price
beginning to move jobs to other countries. People
surges, and oil price spikes battered the economy.
lost their faith that they could keep working for one
Crime rates surged. Generation X grew up with
company their whole lives. This generation began
war, live and in color. As children, it was a lost war
to lose faith in institutions and wondered if their
in Vietnam, and as they came of age, it was Kuwait
children would have a better life than they did, a
and Iraq. But it was the Cold War that defined
departure from recent attitudes.
the political climate for the entirety of a Gen X
childhood. Back at home, falling real wages and
dramatically increasing divorce rates spawned a
generation of “latchkey” kids. This instilled a sense
of self-dependence in Gen X and a feeling that “you
can’t rely on anyone but yourself.”
For Generation X, their relationship with money
became more theoretical. With the advent of the
general credit card in their childhood years, Gen
Xers were solidly entrenched in the idea that you
didn’t have to have money to spend money. New
technological developments meant that the idea
Generation X was dramatically influenced by
of money began to decouple from physical reality.
the progress in digital technology. In 1975, the
Advancements like direct deposits meant that this
phrase “Moore’s law” was coined to describe how
generation didn’t get to hold their wages in their
the processing power of computers was likely to
hands. And as they came of age, electronic bill
double every two years for the foreseeable future.
payment meant than they didn’t need to hold cash
Named after Gordon Moore, the founder of Intel,
in their wallets.
4
Samantha Raphelson, “From GIs to Gen Z (Or Is It iGen?): How Generations Get Nicknames,” NPR, October 6, 2014. http://www.npr.
org/2014/10/06/349316543/don-t-label-me-origins-of-generational-names-and-why-we-use-them
Gen X 15
Which of the
following have
you owned?
Have Owned
Boomers
Gen X
Millennials
Mutual funds
78%
55%
38%
Index funds
33%
18%
12%
Corporate bonds
23%
7%
6%
Stocks
81%
62%
50%
Source: The Center for Generational Kinetics.
This generation arrived at college to find their
But debt and a partiality towards instant
dormitories papered with credit card applications,
gratification left Generation X without much
beginning what often became a lifelong problem
appetite for investment when they entered their
with debt. Speaking of college, higher education
prime earning years. This shows in research
took on even more importance for this generation
commissioned by Principal. When asked about their
because of a shift to knowledge work. This led to
experience owning different types of financial and
an increase in student loan debt. And because of a
investment instruments, Gen Xers (who are now in
quirk in the U.S. tax code, if things went from bad
their 40s and 50s) were closer to Millennials than
to worse, student loan debt couldn’t be discharged
to Boomers, hinting at a lack of comfort with even
through bankruptcy. And this brought them to where
fairly basic investment tools.
they are today; in recent research from the Center
for Generational Kinetics, Gen X was most likely to
spend “unexpected money” on paying off debt.5
As if to further their mistrust, Gen X was the first
generation to witness the “breakdown” of the
compact between employer and employee. Even
While two significant stock market collapses left
though there were more options available than
them distrustful and cautious, Generation X came
ever, employers were shifting en masse to defined-
into a heyday of investment culture. New types of
contribution plans, which put the onus on employees.
securities were invented virtually every day. In 1985,
This attitude of mistrust touched on the pact with
auto loans were pooled together and securitized
the government as well, with a tacit understanding
into the first asset-backed securities (ABS). The first
that Social Security’s “pay-as-you-go” setup wouldn’t
major credit card securitization followed in 1986. By
make it a viable option for their retirement years.
the late 1990s, investors could even find securitized
All of this, though, fit nicely with the self-dependent
celebrities. Bowie Bonds debuted in 1997, pooling
attitude of Generation X. Defined-contribution plans
future revenues from singer David Bowie’s albums.
put them in charge of their own destinies, exactly
From the 24-hour news cycle that started in 1980
what they wanted from childhood.
with CNN, emerged non-stop business and investing
news with CNBC’s launch in 1989.
5
The Center for Generational Kinetics, “The Ins and Outs of Financial Advice.” February 2016
Gen X 16
Gen Y
1981 - 1997
Gen Y
Initially, the next generation was presumed to
jobs, and opportunity all seemingly evaporated.
be an extension of their Gen X predecessors, so
Retirement savings dried up, homes went into
alphabetical order spurred the first name for those
foreclosure, and dreams had to be deferred.
born between 1981 and 1997: Generation Y. But this
generation quickly felt different than Gen X, and
it seemed odd to refer to this new generation by a
And all this…just as Millennials began to enter
the workforce.
name that referenced a generation that didn’t want
During the financial crisis, Millennials began to
to be classified. Since their generation was born at
display some of their Boomer parents’ tendencies for
the close of the twentieth century, popular culture
protest and social change. The 99-percent movement
called them “Millennials.”
emerged as a reaction to poor labor market prospects,
The Boomer parents of Millennials endured
the surging inflation and social upheaval of the
late ‘60s, ‘70s, and early ‘80s, yet maintained
financial turmoil, and economic hardship. They turned
it into a technology-enabled protest movement, using
social media to organize and activate.
an optimistic attitude. And though the typical
childhood of a Millennial began with a tinge of this
turmoil, some of that optimism was passed along.
The technology boom of the 1990s and the surge
in housing prices in the first years of the 2000s
Wealth, jobs, and opportunity
seemed certain to put Millennials on a brighter
all seemingly evaporated.
path than their Gen X cohorts.
Retirement savings dried up,
Then, in 2008, a decade’s worth of hopefulness
homes went into foreclosure, and
and bull markets disappeared. The red-hot housing
dreams had to be deferred. And
market rapidly turned into so much steam, appearing
all this...just as Millennials began
to have been fueled by nothing but optimism for
several years. This set loose the largest global
to enter the workforce.
financial crisis since the Great Depression. Wealth,
Gen Y 18
Unemployment jumped during the financial crisis,
When it comes to money, Millennials look for
disproportionately affecting young people looking
safety. With student loans and limited employment
to start their careers. Shouldering unprecedented
opportunities after the financial crisis of 2008,
amounts of student loan debt and holding college
Millennials found a way to cope. They didn’t spend their
degrees that didn’t seem to guarantee jobs
money on cars or houses. Rather, they pooled their
anymore, many Millennials were forced to move
money and shared. When this sense of community
back in with their parents. By the time of the 2014
combined with their love for technology, a sharing-
census, living with parents was the most likely living
economy concept based on mutual trust came to
arrangement for 18 to 34-year olds for the first time
light. Sharing became a buzzword for this generation:
since 1880. This provided some benefits, though;
sharing time, sharing knowledge, sharing opinions,
returning children were able to help with finances in
and sharing resources. Perhaps, the most notable
struggling households.
example of this is the model of crowdsourcing,
where individuals donate small amounts of money to
Social and economic circumstances forced
financially back ideas that they like.
Millennials to deal with rapid, often negative,
change. This has made them risk averse, desiring
savings and stability. Shifting political sands also
pushed Millennials toward populist movements set
in motion by Gen Xers. And similar to their Gen X
predecessors, Millennials have little faith in elites
When it comes to money,
or institutions.
Millennials look for safety.
Rapid change has affected Millennials in a
With student loans and
different way. Moore’s law had been governing
limited employment
the technological world for decades. Computers
opportunities after the
that could fit in the palm of the hand now had
more processing power than the room-sized
financial crisis of 2008,
supercomputers of only a few decades past.
Millennials found a way to
Millennials followed the rapid changes in technology
cope. They didn’t spend their
very closely, making them incredibly savvy and highly
connected. Mobile phones and the advent of text
money on cars or houses.
messaging gave this generation a sense of always
Rather, they pooled their
being in touch. In turn, Millennials put more focus on
money and shared.
the group than the individual. Their generation would
emphasize participation over achievement.
Gen Y 19
Investment options grew exponentially when
Millennials’ attitudes towards retirement reflect
Millennials were born. Asset-backed securities
their circumstances. With student loan payments
began to gather and parcel the income from
taking up swaths of their now-digital wallets,
student loans, home equity loans, equipment and
Millennials are finding it hard to invest for their
aircraft leases. Eventually, packages of collateralized
retirement. They’re willing to invest and looking for
securities were themselves repackaged and
advice. Though, this technology-enabled generation
securitized. But it was these securities, specifically
does its own research, and seeks input from the
those backed by mortgages, which directly
social circle. This puts the onus on their financial
influenced Millennials’ attitude towards investing.
partners to develop technology that is both
After watching the financial crisis unfold, they crave
empowering and engaging.
safety and transparency in their investments.
As Millennials have come of age, investing has taken
on new dimensions for them and their financial
partners. Thematic investing and impact investing
are popular targets for this generation. Their affinity
for community has broadened their investment
philosophy, fostering the ideas of a double or triple
bottom line. These measures focus on both fiscal
performance and positive social impact (double),
and environmental factors (triple). Exchangetraded funds (ETFs) have become a common way
of easily accessing specific areas of the market
or investment ideas. Online wealth management
tools, or so-called “robo-advisors,” have appealed
to this technologically savvy generation, who look
for control and ease of use. This do-it-yourself
generation has gravitated towards investment
options that let them pick the ideas they like the
best and combine them efficiently and effortlessly.
Gen Y 20
Gen Z
1998-2015
Gen Z
This latest generation is in the process of defining
For this generation, money is now completely
itself, to the point that they haven’t really found a
abstract. They will pay for things with their phones and
moniker. Generation Z or the iGeneration are the
watches. It’s possible that there are some people in
current placeholder names for this group. More
this generation who will never hold physical currency
connected than even Millennials, this generation
in their hands. A cautious attitude may make this a
knows computers with touchscreens more than with
generation of savers, but guarded investors looking
keyboards. They have had smartphones since an
for safe and predictable investments. In that, there
early age, putting the collected knowledge of the
is a strong parallel to see with the Silent Generation,
world literally at their fingertips. Because of this,
who had limited investment options and yet garnered
Gen Z will likely be well-suited for the rigors of the
a great deal of wealth to pass along to their children.
global business environment. But the technological
A generation used to start-up companies and crowd-
and social differences between the late ‘90s and
funded projects may adopt an entirely different
2015 may make it difficult to define this generation
attitude towards investing, less centered on buying
as a whole. It could be that older Gen Zers will
stocks and more on supporting great ideas.
adhere to their Millennial elders very closely, while
younger members of this generational cohort could
be entirely different.
This generation may also see retirement in a
totally different light than previous generations.
An entrepreneurial spirit could push Generation Z
The leading edge of Gen Z is now 18 years old,
to take charge of their retirement or build a new
and they’re entering the workforce. Growing up
retirement platform for themselves.
during the worst financial crisis since the Great
Depression may put them in a similar mindset to
the Silent generation, wary and risk averse. The
Gen Z vanguard has likely assimilated lessons from
A cautious attitude may make this
their Millennial neighbors and Gen X parents: lack
a generation of savers, but guarded
of good jobs, too much debt, no safe investments,
investors looking for safe and
and not much return for the investments they can
find. But the working world that Gen Z exists in
predictable investments. In that,
could be different from what previous generations
there is a strong parallel to see with
experienced. With sharing economy business
the Silent Generation, who had
models like Uber and Airbnb, and online labor
markets like Handy and Taskrabbit, Gen Z workers
limited investment options and yet
may increasingly drift away from companies as
garnered a great deal of wealth to
employers and toward a technology-enabled
pass along to their children.
assemblage of jobs.
Gen Z 22
Conclusion
Whatever generation we belong to, it’s important to understand that, over time, we adapt
to the world that surrounds us. As that world changes, our individual and generational
preferences and attitudes adjust to compensate and react. And our attitudes are filters
that can either make it easier or more difficult to deal with the truths of the world.
It’s completely fine for me to be optimistic or
investment, there are any number of ways to combine
pessimistic when it comes to saving for retirement,
those variables to arrive at a successful retirement.
but my attitude doesn’t change the fact that I need
to save for retirement. It only affects how I go about
pursuing that necessary goal.
We will continue to see innovation and progress as
the tastes and preferences of Gen Z become more
and more apparent. However, Generation Z, like
Our attitudes also affect how your financial partners
those before it in this modern era will have to solve
interact with us. Because, it’s equally important to
the retirement equation using a calculus that is
note that the world, in some ways, adjusts to our
unique to their generation.
generations as well. Our attitudes towards money,
investing, and retirement affect how our financial
And in 2016, we have now technically entered a new,
partners provide us with solutions that not only help
yet-to-be-named generation, who will come of age
us make progress towards our financial goals, but
around the year 2030. It’s incredibly exciting to think
also fit nicely with our personal preferences. We see
about what possibilities and opportunities will emerge
this in the growing popularity of thematic investing,
for this youngest generation. This could be a generation
ETFs, and robo-advisors; all tailored to appeal to
who will never need a driver’s license because driverless
the thoughtful, motivated, and savvy Millennial
cars will become the norm. This could be the generation
generation – potentially the largest generation of
that tackles environmental and social issues that we’ve
savers and investors the world has ever seen.
collectively grappled with for decades.
In this paper, we have looked at the themes of
Children born into this yet-unnamed generation will
money, investment, and retirement as somewhat
likely see opportunities and challenges arise that
distinct elements. But, just as the generations are
we cannot even imagine. And those experiences
connected, so are our three themes. Rather than
will shape their attitudes towards money, investing,
being discrete ideas, they form an equation:
and retirement. But, despite how they are raised
Money × Investment = Retirement
and what they experience during their lifetimes, this
newest generation will need to combine money with
It’s an equation that is both simple and complex,
investment to arrive at a prosperous retirement.
because while the retirement equation cannot
Whatever those opportunities and challenges, this next
be solved without the variables of money and
generation, like those before it, will make progress.
Conclusion 23
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Conclusion 24