Financial Services and Reimagining the American Dream

Very few elements of our lives take a completely linear path. No one family is alike. No one’s journey is alike. Such is the case with younger generations — the so-called digital natives — as well as the older generations.

The complexity is further exacerbated by the increase in longevity: as a human race, we have added an extra 30 years of healthy living since the early 1900s. It is increasingly common to have four, if not five, generations living and working alongside each other. Not only are we working longer, we are also reskilling and upskilling along our life journey, and redefining the concept of retirement.

It may be hard to imagine — the 50-plus population now represents four generations, from the Greatest Generation to Generation X; by 2031 it will include millions of Millennials. Collectively, the economic contributions of this 50-plus cohort are expected to grow from $8.3 trillion in 2018 to $28.2 trillion by 2050.

So what does this mean to the financial services industry — both incumbents and fintech startups? How can the financial services ecosystem best cater to the changing needs of the diverse demographics, while capturing the opportunities that these changes present?

The changing nature of work, wealth creation, and retirement

According to the latest research by MBO Partners, there are over 38 million adult Americans who work independently; more than a quarter (26%) of whom are boomers. 

While contract or short-term work is not new, the gig economy has become more prominent across all age groups, largely due to the proliferation of digital platforms from DoorDash to Task Rabbit to Uber Eats. Workers are increasingly choosing the flexibility of gig work over the steady paycheck of traditional employment opportunities, while others are supplementing their income with more contingent work.

However, such flexibility comes with a tradeoff: The majority of these gig workers are not offered any form of healthcare insurance, nor other workplace benefits such as retirement savings plans.

Can the financial services industry help consumers cope with increasing income volatility, while maintaining long term financial security?

The pandemic and rising economic inequality

Along with the changing nature of work, the U.S. has faced historical unemployment in the past year due to the pandemic driven economic downturn; the impact to older adults is particularly concerning. According to a recent report from the Retirement Equity Lab at the New School, not only are older workers facing a higher unemployment rate compared to their younger colleagues, they are also recovering at a slower pace.

This gap in employment can also cause older workers to lose their access to healthcare and their ability to earn income in later years, making them more susceptible to financial security challenges in later life. To make matters worse, such disparities are exacerbated by gender, race, age, income, and education. 

It is expensive to be poor — and fees can further exacerbate the impact of economic challenges within poorer communities. How might we reimagine a future where the entire financial services ecosystem plays a larger role in enabling consumer financial well-being for all members of our communities?

Helping more people gain greater financial independence  

It is time for the industry to consider a more holistic approach that spans across a wider range of financial needs, from planning and budgeting to financial caregiving, healthcare, and debt management. The ability to meet everyone’s unique needs — especially as we age — should be the focal point of building financial products and services that help throughout our lifetime. There are more considerations beyond just developing user-friendly navigation for older adults.

We need tools that can help us better understand savings opportunities and manage credit and investments. We need more personal financial and proactive advice to address our diverse needs based on our life stages, not our biological age. We don’t plan our financial lives in a vacuum — so neither should our tools. Ample opportunities exist to harness technology innovation — such as artificial intelligence — to help caregivers and older adults anticipate future financial needs, cope with complex financial burdens, and plan better with an aggregated view of a household’s finances over time. Aside from asset accumulation, how can we better leverage technology to drive better financial outcomes with asset decumulation, and safeguard older adults from fraud and financial exploitation?

The financial services ecosystem can be part of normalizing these solutions geared to better serve the forgotten demographics and re-imagine a future with hope and dignity for all older adults. We must become more intentional in designing our products and services, digital or otherwise, and be more inclusive in our practices, so that no individual and no community is systematically left behind.

There is a better way.

What we can all do next

The way we live has changed. The way we make a living has changed. The way we save money and plan for the future must change as well. This is a societal challenge that impacts everyone and every generation to come — not only those close to “retirement” — not only those who are banked — but also those who are unbanked and underbanked.

Whether you are an incumbent or a fintech startup, a community bank or a credit union, our industry’s goals should ensure that there are better financial outcomes throughout the lives of every customer and every community — beyond those already privileged and already profitable.

As Ramsey Alwin, President and CEO of the National Council on Aging (NCOA), said in her heartfelt article, “aging with dignity shouldn’t be a stroke of luck.” We all have a role to play in making economic security a reality for older Americans and beyond.

We have the technology and the capacity — to design a more inclusive future for every person and every community — now we just need the will to do so. It is not only the right thing to do, it is also a smart business decision.

With the launch of Age Well Planner and a new suite of tools, the NCOA team is ready to take its mission of serving older adults to the next level.

So what are you waiting for?

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In this episode of our #OneVision podcast, Theo and Bradley chat with Ramsey Alwin, CEO of National Council on Aging, on the role the financial services industry can play in making economic security a reality for older Americans and beyond.

You can find this conversation on Apple Podcast, Spotify, and other players.