It can be difficult for Millennials to envision a better future (financial or otherwise) because they have never really experienced it; after being told it’ll get better time and time again, Millennials have only been disappointed, so now some may not see a point in long-term savings.
What makes a Millennial? Usually there are a few major characteristics that define a generation, like the post-war baby boom, for example. According to the Pew Research Center, Millennials were alive and old enough to understand the historical significance of 9/11 (they were 5 – 20 years old), grew up with the wars in Iraq and Afghanistan, and were part of the political conversation surrounding the 2008 election, which was heavily powered by young voters. They also “came of age and entered the workforce facing the height of an economic recession” and have a “slow start” into their financial adulthood. Add to that the devastating blow of student debt, longer work hours, wage stagnation, climate change, growing socioeconomic inequality, and now the current viral and economic crises, and you have a generation steeped in fear, economic insecurity, and a sense of hopelessness. It’s no wonder then, that Millennials have embraced nihilism in droves.
In a sentence, existential nihilism posits that life has no inherent meaning or value. While at face value that appears to be a fairly bleak outlook, it can also be extremely freeing to an overworked, underpaid, and generally stressed-out generation that has experienced one crisis after another and knows financial turmoil almost exclusively. Many Millennials are harangued by the need to catch up to their elders and more privileged peers in terms of life milestones, general knowledge about navigating adulthood, and financial savings. Knowing that in a thousand years none of the minutiae of everyday life will matter can take off some of the pressure these constant day-to-day worries often generate. If there’s no singular meaning to life, it also means that everyone can create their own meaning, which can be a truly beautiful and uplifting approach. While it may puzzle Gen X (1965 – 1980), Boomers (1946 – 1964), and the Silent Generation (1928 – 1945), Millennials’ (1981 – 1996) notoriously dark sense of humor and nihilistic outlook is often derived from constant socioeconomic anxiety and, yes, is also wryly uplifting.
For example, it’s not uncommon for college students, fully aware of the student loan crisis, to joke about stepping in front of a college bus for the payout— what’s the price of a few months of healing and broken bones when it can save you a quarter of a million dollars in tuition payments? When one freshman student was hit by a college bus in her first semester, she took to Twitter to jokingly “brag” about the experience, tweeting, “Yesterday, I finally achieved what every single college student in America has dreamed of, yet can only hope will happen to them. That's right. I got run over by a bus on campus.” In response, thousands of students and recent grads expressed both sympathy, support, and envy. The replies were succinctly summarized by one user who replied, “Glad you're okay. And jealous.”
As indicated above, Millennials don’t see much cause for optimism when it comes to the economic future. In a recent 9,000 person study conducted by Age Wave and Edward Jones, Millennials (32%) and Gen Z (31%) were twice as likelyto respond that they experienced an “extremely/very negative impact on personal financial security due to COVID-19” than Boomers (16%). The long-term doesn’t look better, according to the 19th Annual Transamerica Retirement Survey conducted in December 2019. In this study, 80% of Millennials testified that they are “concerned that Social Security will not be there for them when they are ready to retire.” Based on these responses, Millennials need to emphasize smart investments and retirement savings more than ever, and they need to start as soon as possible.
When working with Millennial clients, advisors may find it helpful to keep this nihilistic perspective in mind so they can better understand and work with their client’s needs. Though it can be frustrating to see financial potential being lost to seemingly-unnecessarily short-term spending, remember that it can be difficult for Millennials to envision a better future (financial or otherwise) because they have never really experienced it; after being told that it will get better time and time again, Millennials have only been disappointed, so now some may not see a point in long-term savings.
In this case, Millennials may want to know that investments must not inherently be structured in the same ways in which our parents’ and grandparents’ were (or used for the same purposes)—clients may not realize the financial flexibility they have. Advisors can help Millennials achieve the freedom financial security brings, which is something that many can only dream of right now. Additionally, those with savings tend to do better in weathering both expected and unexpected events (like pandemics, emergencies, sudden job loss, natural disaster, etc.) than those without. The last few months illustrate this point with painful accuracy; many Americans are using retirement funds to pay for necessary expenses they otherwise would not be able to afford. While this is, of course, not an ideal situation, it is a very concrete, real example of another benefit of financial planning and investment that may resonate. Millennial clients likely already know the devastating financial impacts of these crises from personal experiences; now, advisors can help them plan on how to avoid these pitfalls next time.
These articles are prepared for general purposes and are not intended to provide advice or encourage specific behavior. Before taking any action, Advisors and Plan Sponsors should consult with their compliance, finance and legal teams.
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