00:00What does the projection of Social Security running out earlier than anticipated mean for how someone manages their personal finances?
00:06I guess it depends on whether you're a baby boomer, you're Gen X, or you're a millennial.
00:09Yeah, absolutely. I mean, I'm Gen X, and I remember my parents telling me when I was younger, don't count
00:14on Social Security.
00:16And, I mean, the way costs are going in this economy, maybe my Social Security would help pay for a
00:21few groceries by the time I can collect.
00:24But, anyhow, you know, I have just come off a marketing trip to see a lot of our clients on
00:33the West Coast.
00:34There's not one meeting that goes by where they don't ask about Social Security, about the sustainability of our federal
00:39debt.
00:40These are things that families are really concerned about.
00:43And as an economist, for Social Security, you know, we have an aging population.
00:48We know this. We've got a lot of aging baby boomers aging out of the labor market.
00:53We need a very robust replacement rate, meaning bodies coming into the labor market and paying into the Social Security
01:00system.
01:00And, of course, that is waning. We heard Catherine talk about possibly AI taking jobs.
01:06We don't have population growth in this economy.
01:09Immigration has been cut off.
01:10Right. And we just had the slowest growth in our country's history in population.
01:14Birth rates are falling.
01:15And so just for, like, conversation starter, just to get people, like, saying what, I'll say things like, thank God
01:24for AI because we don't have the bodies that we need.
01:28And so you unit economic tax.
01:32Wow.
01:33The robotics, humanoids, all of these things that are replacing labor, and that's what's paying into the system.
01:40And I think that's where we're headed because that's what fills the coffers of Social Security.
01:45This feels very dystopian.
01:46Well, you constantly have to have, well, right, but, well, look at the world that we're living in and look
01:52at the technological advancements that we're going through.
01:54So we have to think outside of the box of how do you continue to fill those coffers of Social
01:58Security.
01:58It's a revenue problem.
02:00And that would bring in more revenues.
02:03So you've done a lot of proprietary work on longevity, and this is kind of some of what you think
02:08about as well.
02:09You point out that fertility rates are declining, having kids, super expensive, so fewer people are doing that, and people
02:15are living longer.
02:16Are we going to end up with a lot more older adults who are driving the economy?
02:20Their spending is the engine of this economy?
02:23Not necessarily.
02:23I would think of it as with each generation that comes along, they've got different priorities and they do spend
02:29differently.
02:30I think what I would do is focus on more the aging of the population.
02:35And people that are, the demographers believe that people that are 65 today in developed countries with good access to
02:41health care are going to live into their 90s.
02:47That's not even, you know, children that are born today where they believe more than 50% of children born
02:52today will live to be 100.
02:54We have more clients than I can count that are in their 90s, that are over 100.
03:01And so what we've been focused on is when we are living longer, which is a great thing, what do
03:08we do when people that would normally inherit in their 40s, in their 50s,
03:14and use that to buy a home or pay off their mortgage or put their kids through college, what do
03:19they do when they're inheriting in their 60s and their 70s?
03:22So we have to think about wealth and transferring wealth in a different way.
03:27Because as we live longer, we might have different chapters of ourselves in the labor force.
03:33We might pass on money beforehand.
03:36We might do a lot more generation skipping.
03:38Planning, financial planning has to change overall.
03:41That's, it's become a lot more complex, hasn't it, to plan for your finances, to plan for a transfer of
03:47wealth,
03:48especially since you're saying different stages, it might happen early on and then it might have to happen again.
03:53Yeah.
03:53And what I've been telling clients that I've been meeting with, because on the wealth side of the business is
03:59very personal conversations,
04:00and they're very hyper-personalized.
04:03And so, you know, as an economist, yes, the equity market is going like gangbusters, everybody's seen their financial wealth
04:13increase,
04:13but it's still the case that the bulk of wealth creation in the U.S. is generally through home ownership.
04:21And you've got a generation that is just shut out of home ownership.
04:25So we talk about it taking a village to raise a child.
04:27It takes a village to buy a home.
04:29And so just helping the next generation, you're sitting on the wealth, it's compounding.
04:36A lot of people don't even realize how much it's compounding.
04:39By the time they retire, they think they're retiring with a few million dollars, and they find out they're retiring
04:44with 10 million.
04:45And they had no idea that that was coming.
04:46And they had no idea.
04:47And so give it to your children.
04:49Help them buy a home, that first home.
04:51Help them start to create wealth that way.
04:53So the other thing about the people who figure out that they actually have a lot of money,
04:56oftentimes that's women because they tend to outlive men.
05:00What do we know about how women approach saving and spending that's different than men?
05:05It is different than men.
05:06So we have more than $130 trillion in wealth transfer that's coming.
05:11More than $50 trillion of that will go to women first.
05:14Exactly what you said.
05:16It's not our fault.
05:16We live longer.
05:17So, and they behave differently.
05:22We find that they are much more apt to invest in philanthropic activities and impact investing.
05:29And they just move through the world differently.
05:32They are more involved in education and health care.
05:36Oftentimes the oldest, and it happens to be female in the family, the oldest child, is the caregiver for the
05:44aging parents.
05:44And so they've got different priorities.
05:46And so we try to do deep dives into understanding how women invest differently so we can prepare our financial
05:53advisors for that coming wealth transfer.
05:56And we're starting to see that already take place.
05:58And it's only going to accelerate in the next 20, 30 years.
06:01It is.
06:02And I'll tell you what's really interesting that's coming up in conversations as well is that in 2008 with the
06:07financial crisis,
06:10economists were really worried about millennials because in social economics, we believe that your entire lifetime earnings is determined by
06:20where we are in the business cycle when you graduate.
06:22And it took them so long to get jobs.
06:25But you look today at new data from the Fed, and if you take the median age of a millennial
06:30today,
06:30they are very much better off than baby boomers were at that age, than Gen X, my generation, was at
06:38that age.
06:38Because of the stock market.
06:39Because of the stock market and the accumulation of wealth.
06:41So they've caught up.
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