The current and future you

Transcription

1 The current and future you What you can learn from those at other life stages What advice could the future you give the current you? A 2015 Forbes Insights and Northwestern Mutual survey was designed to offer some suggestions. The survey examines four specific generations of women: Millennials (ages 18-34); Generation Xers (35-49); Baby Boomers (50-68); and mature women (69 or older). And it found that as women go through different stages of life young adulthood, career building, parenthood and beyond their priorities drastically shift. It should be noted, however, that even within these groupings stark divisions occur. Women are empowered by the satisfaction they derive from career, money and family, to name a few influences. But no matter what age they are, life events can change their priorities. When there s a new mouth to feed, a promotion, a divorce or the death of a spouse, for example, the concerns that motivate them understandably evolve. So what do you need to know today to prepare for the future? The following analysis is meant to give you a glimpse of what may occur down the road. It shows how women s choices and preferences may transform over time and demonstrates how real women have maneuvered their way through the turning points of their lives. It also reveals how you can avoid bumps along the path by planning carefully now. Women are Empowered by Financial Stability of women surveyed by Forbes Insights and Northwestern Mutual say they feel empowered when they are comfortable 60 % with their financial situation. in association with:

2 The Journey Begins: The Multi-Goal Millennial Not surprisingly, young women dream big. Millennials (ages 18-34) say they aspire to every career goal included in the survey more frequently than do their counterparts in other age brackets. Of the four generations polled, Millennial women put the most emphasis on earning. As well, they are more likely to identify seeking a certain skill level or advanced degree in their top two career priorities (36% compared with 28% overall). This indicates that Millennial women are open to a myriad of possibilities. Of the four generations polled, Millennial women put the most emphasis on earning. INSIGHT 1 Dream big, but plan pragmatically. Life is about to change. Millennials are focused on their education and their careers a good foundation for personal growth. But as you read on, you ll see that with time your priorities may shift. You may not be focused on those future priorities now, but it pays to think about them. Some considerations that seem important today may not be in the future. And some matters you aren t thinking about at the moment will become more important. This is the time to start financial planning and saving for your future. The sooner you begin, the better position you ll be in when you get to the next stages. 2 THE CURRENT AND FUTURE YOU: What you can learn from those at other life stages

3 Partnering Up: Women s First Shift in Priorities About 43% of Millennial women who took the survey have never married. By contrast, only 12% of Gen Xers, 10% of Boomers and 4% of mature women have never tied the knot. However, Millennial women are at an age when they are most likely to find partners. Partnering up is often the first step in family formation and has a major impact on women s priorities. As you can see in the chart below, women seem to shift focus to family when they do find a partner. They may be anticipating having children, which could mean moving away from idealized goals, such as pursuing intellectual growth or making a living doing work they enjoy. Instead, they may be inclined to favor more practical, financially structured objectives, such as making enough money to support a family lifestyle. The figures in this chart also illustrate how much divergence there can be within one generation. While earning an advanced degree appears more important to single Millennials, this may be because Millennials in college are by and large at the younger end of the generation s age range: the average age of single Millennial women in the survey is 24. That fact perhaps also explains why more single Millennials are concerned with paying off student debt during a period when they are still learning the basics about managing money. Yet just 14% of them work with a financial advisor, even though they are also the most likely generation to classify themselves as novices with respect to financial knowledge. Impact of Finding a Partner on Selected Millennial Goals % of Millennial women identifying goal as one of their top priorites Living debt-free Paying off student debt 24 % 21 % 19 % 24 % 13 % 42 % 37 % 43 % 26 % 39 % 53 % 61 % 60 % 70 % Achieving a certain skill level or advanced degree Being able to make a living doing work I enjoy Making enough money to support my family s lifestyle Paying off my mortagage/owning my own home Pursuing intellectual growth/knowledge Single and never married Married or living with partner INSIGHT 2 it s not about you anymore. When you partner up, your priorities begin to become more pragmatic. You re more focused on your partner and/or family than you are on self-fulfillment or growing your career. Work becomes more about making money than enjoying what you do. Perhaps you both contribute to the household income, but your expenses are going up, too. You and your partner may be considering buying a home or renting a bigger place. You re likely to have more money coming in now, allowing you to improve your lifestyle. But don t lose sight of the future. This phase of life also presents an opportunity to increase your savings and to build a financial plan that s designed to weather the unexpected. If you haven t already, this is a good time to grow an emergency fund, as well as to address your life insurance and supplemental disability income insurance needs. Copyright 2015 Forbes Insights 3

4 Parenthood: The Laser-Beam Focus of Gen X Mothers Most Gen Xers (ages 35-49) have paid off their student loans, yet living debt-free has proven elusive as they now focus on saving for retirement on top of other living expenses. Compared with Millennials, the goal of being worry free financially has increased along with a desire for continuing good health. Gen Xers have reached the life stage in which they are beginning to have children. Whereas nearly half (48%) of Millennials say that they plan to have children, 71% of Gen Xers polled have children now. Within Gen Xers, there is significant divergence between Gen X women who have children and those who do not in terms of goals that they are currently pursuing or would like to pursue in the future. Members of this generation are about average in their tendency to list making enough money to support their family s lifestyle (56%), but those with children place greater importance on altruistic goals such as inspiring/influencing others (31% vs. 21%), serving others (27% vs. 14%) and leaving an inheritance for their children and grandchildren (37% vs. 5%). Effect of Starting a Family on Selected Gen X Goals % of Gen X women who are pursuing or would like to pursue each goal Having close, fulfilling relationships with others 33 % 42 % 56 % 66 % Making enough money to support my family s lifestyle 49 % 59 % Pursuing social values, doing the right things Being able to leave wealth for future generations 5 % 21 % 31 % 14 % 27 % 37 % Inspiring/influencing others Serving others No children Children 3INSIGHT your goals may shift but not your desire to make the right choices. Having children is a major life change. Your priorities will shift to your children and to supporting them. Many other goals get minimized or put on hold entirely. Others come to the forefront. For example, people with children are inclined to place greater importance on pursuing social values; having close, fulfilling relationships with others; and inspiring and influencing others all likely reflections of family bonding. You will probably be surprised by the day-to-day cost of having children. If you re thinking about becoming a mom, for instance, you ll need to consider whether you ll want to leave your job to stay at home. If so, how will your growing family compensate for the lost income? On the other hand, if you both continue to work outside the home, you ll have childcare costs to consider. How will you handle this new expense? If your significant other stays home, you will have the stress of being the sole breadwinner. And what about saving for your children s education? You ll also need to consider how you would provide for your children financially if you got hurt, were ill or worse if you died. These are critical considerations as you evolve your financial plan to include children. 4 THE CURRENT AND FUTURE YOU: What you can learn from those at other life stages

5 Boomers: Heading for the Off-Ramp The goals of Baby Boomers (ages 50-68) reflect the fact that people s values have begun to change. Interest in close, fulfilling relationships rises compared with Gen X but is still lower than for those in the mature generation. Aspirations regarding money and wealth continue to fall off as the reality of life up to that point sets in. Expectations of making a living doing work they enjoy also drops with age, and raising children is no longer a top priority. Career goals are all less significant relative to younger generations, in part because many are retired or nearing retirement. Specifically, when Boomer women retire, their goals shift dramatically away from career, raising children and money. Close, fulfilling relationships (68% vs. 54% not retired) and life balance (40% vs. 31%) are the key remaining objectives. Among this group, saving for retirement or for their children s or grandchildren s education diminishes sharply, presumably because they have already accomplished these goals. For 22% of retired Boomer women, however, paying off a mortgage and fully owning a home are still targets yet to be achieved. Living debt-free is also an important goal for retired Boomers, with this goal cited by 65% compared with 56% of those who are still employed. As for those Boomers still working, they appear to recognize that they have presumably reached a peak in their careers. They are less likely than others to cite achieving the salary I desire as an aspiration. Still, nearly half (49%) rate the salary factor in their top two goals, compared with only 41% of the general population and only 33% of Gen Xers. Boomers are also less likely than average (4% vs. 11%) to say they want to lead a successful team, but they are twice as likely as average (20% vs. 10%) to say they want to reach a certain level of tenure within an organization. When Boomer women retire, their goals shift dramatically away from career, raising children and money. Impact of Retirement on Selected Boomer Goals % of Boomer women identifying goal as one of their top priorites Having close, fulfilling relationships 54 % 68 % Living debt-free is an important goal for Being financially worry-free Having balance in my life Being able to make a living doing work I enjoy 2 % 30 % Raising happy children 2 % 18 % 38 % 46 % 31 % 40 % Not retired Retired 65 % vs. 56 % of retired Boomers of those who are still employed. Copyright 2015 Forbes Insights 5

6 Mature Women: Finding Balance Mature women (69 or older) are mostly retired or semi-retired; only 4% of them are employed full time. Still, although more than three-quarters (79%) say they are retired and not working, 6% work part time, and 3% are self-employed or own businesses. Generally speaking, however, at this stage, they ve traded career goals for aspirations of close, fulfilling relationships, along with a desire for life balance that may entail mentoring younger people or giving back to their communities through volunteering, for example. Because their children have likely moved on, they are less concerned about money and wealth, doing work they enjoy and raising families, whereas staying healthy takes precedence. Career aspirations are now a thing of the past. Many have met their financial commitments such as mortgages or saving for children s education and have long since retired student debt. However, the desire to leave an inheritance peaks during this life stage. Some retirement goals fade, perhaps because concern about well-being is sharply higher than for other generations, while there is an increase in volunteerism. The desire to leave an inheritance peaks during this life stage. Life Goals of Mature women % of mature women identifying goal as one of their top priorites Having close, fulfilling relationships with others Remaining in good health 24 % 11 % 20 % 43 % Being financially worry free 40 % Having balance in my life 40 % 30 % Having money/wealth 55 % 74 % 71 % Mature All INSIGHT 4 The older you are, the less important achieving wealth becomes but living on what you have is easier if you ve reached your financial goals. When you reach retirement, living a healthy, comfortable lifestyle is what s important. And while retirement may seem a long way off for some, the sooner you start planning and saving, the more likely you are to achieve these goals. Financial advisors can help you envision goals today, help you build a financial plan to get there and adjust it accordingly as your life and priorities change. They will encourage you to think through questions such as: How much traveling would you like to do? How much money do you want to leave to your heirs? To charity? How will you pay for assisted living should you need to do so later on? If your future self could give you one piece of advice, it would be to devise a plan that can help you find the answers. 6 THE CURRENT AND FUTURE YOU: What you can learn from those at other life stages

7 The Big Takeaway As human beings, women naturally crave the kind of security that sound finances can provide. That means having enough money to pursue your dreams and goals whether you re just starting out, raising a family, moving up the work ladder or looking forward to a well-deserved retirement. To achieve that security, it pays to be prepared. A solid financial plan can soften the blow when unexpected expenses arise. It can help you establish your priorities. Most important, it can lay the groundwork for a fulfilling life one in which you achieve your aspirations, no matter what they are. 60 % vs. 34 % Working with a Financial Advisor of women who work with a financial advisor say they re confident about reaching retirement goals of women who don t have a financial advisor. Copyright 2015 Forbes Insights 7

8 ABOUT FORBES INSIGHTS Forbes Insights is the strategic research and thought leadership practice of Forbes Media, publisher of Forbes magazine and Forbes.com, whose combined media properties reach nearly 75 million business decision makers worldwide on a monthly basis. Taking advantage of a proprietary database of senior-level executives in the Forbes community, Forbes Insights conducts research on a host of topics of interest to C-level executives, senior marketing professionals, small business owners and those who aspire to positions of leadership, as well as providing deep insights into issues and trends surrounding wealth creation and wealth management. FORBES INSIGHTS Bruce Rogers Chief Insights Officer Erika Maguire Project Manager EDITORIAL Kasia Wandycz Moreno, Director Hugo S. Moreno, Director Rosa Harris, Briefing Author Dianne Athey, Designer SALES North America Brian McLeod, Commercial Director bmcleod@forbes.com Matthew Muszala, Manager William Thompson, Manager EMEA Tibor Fuchsel, Manager APAC Serene Lee, Executive Director RESEARCH Ross Gagnon, Director Kimberly Kurata, Research Analyst Northwestern Mutual is the marketing name for The Northwestern Mutual Life Insurance Company, Milwaukee, WI and its subsidiaries. 499 Washington Blvd., Jersey City, NJ