Playing It Safe

Feeling old? Risk-averse? You’re not alone.

It’s been 46 years since Woodstock, which drew 400,000 young people to upstate New York for three days of free music and art in 1969. It was a defining moment for the Baby Boom generation, according to some media, and was all about challenging the status quo and pushing the limits of expression.

That sentiment may seem a long way off to today’s Baby Boomers (Americans aged 50-68) who, according to the 2015 Northwestern Mutual Planning & Progress Study, are playing it safe across just about every aspect of their lives.

The study shows that while they are just shy of being as conservative as Matures (aged 69+), Baby Boomers are considerably more risk-averse than Gen X and Millennials in areas such as their social lives and career choices; where they choose to live and how they manage their money.

Across all generations, Americans are uncomfortable with taking risk, and have gotten even more risk-averse since the financial crisis. Compared with the fall of 2008, one-third (32%) of Americans are less comfortable today taking risks with their finances; one-fifth (20%) are less comfortable taking risks in their careers; and more than one-fourth (28%) are less comfortable taking risks with their healthcare coverage.

“The findings from our study show just how sensitive Americans are to risk – which, as a financial instinct – is a good thing,” says Rebekah Barsch, vice president of planning and sales at Northwestern Mutual.

She said that what sometimes is overlooked is how to build risk protection into a financial and insurance plan to help navigate the unexpected.

The Northwestern study found Americans are risk-averse in their social relationships, preferring to stick close to friends they know. They are also like the idea of working for one employer all their life and living in the same home long-term, even if moving might bring career and/or financial growth.

While people are playing it safe with their money, careers, relationships and home lives, there are two parts of their lives where they are throwing some caution to the wind: in their diets and driving. They are more inclined to eat what they want, even if unhealthy, and live (or die) with the consequences. And one in 10 admit to driving too fast.

Baby Boomers’ aversion to risk stands out against the attitudes of their kids and younger colleagues from the Gen X and Millennial generations.

“While the idealism of youth is fantastic, so too is the pragmatism and practicality that often come with the experience of getting older,” says Nationwide’s Barsch. She favors playing it safe.

Where do you, or your clients, stand on the risk scale?