How young is too young to start retirement planning? – Michele Levine

How young is too young to start retirement planning? – Michele Levine

With an ageing population you would think that Baby Boomers would be most likely to be concerned about retirement planning but it seems that it is a much younger generation.  Generation Z – those in their late 20’s and early 30’s are the ones who focused on that.  What we can learn from them is the subject of our conversation with Michele Levine from Roy Morgan Research.

Transcripts:

Kevin:   Well, the Morrison government announced in September that Australia’s pension age will be set at 67 from July 1, 2023, and not continue increasing to 70 as originally envisaged. The change in policy means that Australians can now plan for maybe a longer retirement and increases the importance of putting time into planning for your retirement, but who do you trust? Who do you talk to? Michele Levine, who is the CEO for Roy Morgan says retirement planning is an important consideration for Australian workers looking to get the most of out of their post-work stage of life. Michele, thank you very much for your time.

Michele:   My pleasure.

Kevin:   Now, I understand in your release, you’re talking about Gen Z and how they’re most likely to seek advice. Tell me, who are Gen Z? Who falls into that category?

Michele:   So Gen Z are the youngsters, so these people were born 1991 to 2005, so they’re sort of the youngest of our young adults.

Kevin:   Who are they turning to for advice?

Michele:   Well, this is really interesting. The very fact that they’re even thinking about getting advice about retirement planning I think was one of the really interesting things that I found, so we find these people generally are turning to friends and family, and asking for advice about retirement planning, and in fact 30% of them. I have to say that was so surprising. As I think about young people, are they really thinking about planning, and clearly they are. And the group that are most likely to be asked their opinion, what you might call trusted advisors, they’re actually the Baby Boomers, you know, people born 1946 to 1960. Now, that’s not surprising.

Kevin:   Well, why is that, because are they seen as the most successful to give that kind of advice? Do you think that they’re perceived as having a really good retirement?

Michele:   Well, I think if you ask anyone other than a Baby Boomer, they all think the Baby Boomers have just done it well every step of the way, so there might be a little bit of that in it, but I tend to think that it’s more really about their age, their life stage, and their experience, because basically if we look at who people are most likely to seek advice from, as you get older, as people get older, they’re more likely to be seen to understand financial things, so you ask your parents or you ask people your parents’ age, and the Baby Boomers is where it peaks. And, I guess once you get post-retirement, it’s interesting. You would think that we would ask very old people because they’ve been through it all, they’re retired, they’ve looked back, but it would seem that people think okay, you’ve already retired, things have changed. Whereas the Baby Boomers are right at that stage where they’re most likely to be exploring issues, thinking about taxation, and really checking out what it’s all about, how to get the most out of your retirement, so who better to ask?

Kevin:   Yeah. Well, a couple of things sort of make me wonder then because things have changed. I mean, I’m at the stage now … well, I am a Baby Boomer, and I do think we had a good, but I think it’s a bit tougher for kids nowadays, and I’m just wondering the advice that I would give, is it all that relevant for someone who is maybe just still studying, but they’re not looking at retiring for another 40 years.

Michele:   Absolutely. Well, I would say stay at home with your mother as long a possible. That would be my advice.

Kevin:   That’s good advice, too.

Michele:   But you’re absolutely right. Things have changed so much, and we’ve grown up. Baby Boomers have grown up in a period when superannuation was introduced and has become … it was introduced as a requirement, mandatory super, and it’s just grown. So clearly that’s very different than the people that went before us. And then, where the young people fit now. Because is super actually going to continue, is it going to grow, is it going to go lower? What we would probably have been advising, even five years ago, three years ago, would be – stick with property. It was seen as really safe. So, yes, I think it is really hard to give guidance to anyone, and, yet, what our research shows is that it is the Baby Boomers that people tend to turn to for advice.

Kevin:   Also interesting, I think, to note that a lot of younger generations are active on social media and we’ve heard that social media is their go-to place for getting information. Is it that they don’t trust social media to give them the right information about finance and retirement?

Michele:   Oh, I think that social media is … it’s very interesting when you talk to younger people. Social media is the place where they go, and they really like to know what people are thinking and saying and doing when it comes to gossip, when it comes to friends, when it comes to fashion, and trends and things like that. But they have actually grown up in a time when they’re taught to treat social media with the kind of scepticism that it perhaps deserves.

Michele:   So what young people are doing, and I think will increasingly do, is look for the places on the internet as opposed to social media, but they’ll look for the places that they trust their advice. And, I think if you look at the growth of things like Acorns, or any of these other online services: online banking, online engagement with money, where young people can actually start to monitor their savings and their spending, I think you’ll find that there will be a real growth in that area, which will encourage people, young people, to think about money, to think about saving, spending, interest rates, taxation from an early age with little bits of money.

Kevin:   Is it an indication, do you think, that Gen Z are probably going to be more disciplined than, say, the Baby Boomers, who, really in a lot of ways, did have it lucky?

Michele:   Gee, I don’t know. It’s very hard to look at these things and think that these young people will be more disciplined. Who knows. Let’s say there’s a major catastrophe with the superannuation funds and nobody actually gets their super. The Gen Z’s are likely to go, “Well, why bother?”. I mean, this is the whole thing about so much, so much can change and so much will change. Of course the Gen Z’s and the Millennials, the younger and not quite so young, are actually looking at the rise of people who’ve done really well out of technology companies. And the fact that more and more of them are actually having to work for themselves in kind of different kinds of roles. That changes the nature of the way you that think about saving, spending, preparing for retirement or preparing for maybe not even retirement. Preparing for life in a different work environment. It’s not that they expect perhaps to work until they’re 67 if that remains the age, and then stop working and being retired. They will actually have in their minds the notion that they will be supporting themselves in various different guises over time. There’s a lot of different things happening in people’s lives, in society, and in their minds about the way they think about these things.

Kevin:   Wonderful, wonderful insight there, Michele, thank you so much. Michele is from Roy Morgan, the research house. And I really appreciate your time. Thanks, Michele.

Michele:   Pleasure, thanks.

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Kevin Turner
kevin@realestatetalk.com.au
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