Me, my (new reality) life, my wallet: Generational surfing

We introduced the concept of “Generational Surfing” in our first edition of Me, my life, my wallet to explore the effects of big life events on generational cohorts, and how they impact behaviors and decision making. We explained that with extending life stages, drifting life events, and new life events emerging, generational behavior wasn’t as predictable as it once was. If you think about each life stage as a wave, companies used to be able to “surf” relatively easily, making assumptions from previous generations’ patterns and triggering life events. Then they could identify when and how people would be in the market for certain products or services. Although the life stages may be enduring, the way the generations approach and move through them is changing now more than ever. 

Certain macro events can shape a wave or even change its direction or trajectory – like an economic downturn delaying retirements or home buying. But over the last six months, we have experienced multiple macro events across the social, tech, economic, and political spheres, which have knocked many of us out of autopilot and triggered a reevaluation of life decisions. We see three different models of change playing out across the generations:

 -      Faster currents (accelerating) -- The pandemic accelerates a life event shift that was already in play—a job change, a move out of the city, adopting a quarantine pet, committing to that special someone.

 -      Trying to stay afloat in the storm (maintaining day-to-day) – Not set to face any major life event shifts (e.g. Gen Xer who already has a family and not planning on retiring soon), many find themselves in a mode of simply trying to get by on a day-to-day basis.

-      Under-tow (slowing down) – Others are stuck in a life stage unable to move forward, or find themselves regressing to a previous life stage, e.g., loss of a job, finding themselves living with their parents again.

 While all generations are experiencing the impacts of COVID-19, how they are impacted and what that means, varies.

 Gen Z…The age of anxiety – Gen Z was born and raised after September 11th, with school years marred by shootings, increased anxiety around climate change, and now coming of age during a global pandemic and social unrest. While feeling safe is critical to a healthy upbringing, some struggle with mental health, with 58% reporting living with anxiety (APA). The typical college experience, a major life event and initiation into adulthood for many, has been drastically changed. If your college experience is just more time in your childhood bedroom watching a professor on a screen or confined to your dorm room, is the cost and time worth it? Do you put off getting a degree or go a different route all together? Future employers should consider these factors as they bring Gen Z into their workforce. As this group becomes employees, they may need more coaching, support, and training to fill in gaps created by missed traditional rites of passage.

 Millennials…Homeward bound – Millennials continue to make headlines with their habits as they cope with the pandemic. A generation already known for delaying “adulting”, COVID has forced many Millennials into motion, although for some, it may feel like the under-tow is unrelenting. Over 39% of young Millennials (under 30) are planning or have moved back in with their parents (TD Ameritrade). Over half of this group also said that COVID-19 derailed plans for financial independence. So, stuck in childhood bedrooms, unable to catch their next wave and plenty of time for soul-searching, it will be very interesting to see where this group lands.

 Gen X… Stuck in the middle – Gen X, sometimes overlooked, is also referred to as the sandwich generation as many find themselves caring for both parents and children. In the middle of life event waves of starting a family and retiring, the water was already choppy. Now, these duties have only intensified as virtual learning becomes the norm and the high-risk elderly parents struggle with isolation and can require more special care. Finding ways to attend to both children and parents, while coping themselves requires an enormous amount of energy. In a recent focus group of working parents with school-age children, we heard over and over about how impossible it feels to give adequate attention to these competing roles. This group is having to make big changes just to make their lives work, ones that could have significant wallet impacts going forward.

 Boomers…Not so golden years – COVID-19 is impacting retirement in multiple ways. According to the Nationwide Retirement Institute, about a quarter of Boomers report that COVID-19 has caused them to delay their planned retirement, while almost 3 million older workers have lost their jobs since March 2020 (The New School). Complicating an already difficult situation, many Boomers find themselves in the high-risk health category, resulting in daily decisions about where they can go – for errands, work, exercise, social and travel. Boomers want to be catching that last wave of retirement into the sandy shores of their golden years but are being thwarted by a relentless swell of macro events. Retirement wallets will be impacted differently depending on circumstances, but all will face ongoing uncertainty.  For example, affluent retirees, this could mean significant shifts in spend from travel to vacation homes and all of the trappings that go with them. For less affluent, finding part-time work, tightening belts, and even a move to less costly locations.

 Silent generation…Wings clipped – Aged 75-92, the Silent Generation is facing their own challenges from the pandemic. The generation at the highest risk, about 40% percent of COVID-19 deaths in the U.S. are linked to nursing homes (NYTimes), a staggering statistic. Isolation, something that can already be a struggle for the elderly, has now become essential for safety. Those in senior living facilities are dealing with restrictions on visits from family and friends, and stringent quarantine requirements, which can feel like prison life. Without being able to see family and friends, physical and psychological effects could be profound and long-lasting.  We believe that the resulting experience  will impact how the following generations will approach their later years. Senior living may end up being another service that moves “in house”.

What does this mean for businesses?

These generational shifts matter to businesses because 70% of GDP is made up of consumer spending. COVID-19 has thrown out a plethora of new challenges to everyone, regardless of age.  

 What could missed college experiences, delayed household formation, or pre-mature retirement mean for customers’ needs — and where could it create new opportunities? How might consumers adapt allocation of spend, and where will they make sacrifices?  If growing concern about uncertainty and retirements leads to an increased allocation of today’s income towards savings or debt repayment, which categories will suffer and which will stand to gain?

 Consumer attitudes and behaviors about planning for the future have potential implications for all industries — resulting in the need to deepen and broaden our understanding of:

• the totality of our customers’ wallets, not just income and spending patterns but also wealth accumulation (or net deficits)
• the interrelationship between consumption today and planning for tomorrow, and how this changes the shape and size of the customer wallet — including what’s left in the wallet
• how consumption patterns change across these life stages, and what are the new unmet needs
•  the interdependence between generations, and how the financial position of one cohort impacts another, from extending financial support across generations to diminishing wealth transfer as life spans extend and rising healthcare costs erode assets
• the opportunity to play an active part in helping our customers to better plan for their futures and navigate uncertainty

 Even after the pandemic is in our rearview mirror, the impacts on generations will likely be long lasting and the businesses serving them need to consider the large customer behavior and wallet shifts to be better prepared to weather the next waves of change.

 Next in our series, we will share findings from our consumer pulse survey, and breakdown why home has become the “everything hub.”