An Epidemic of Anxiety, Part 1
I’m Andy Temte and welcome to the Saturday Morning Muse! Start to your weekend with me by exploring topics that span leadership, business management, education, and other musings designed to support your journey of personal and professional continuous improvement. Today is October 5, 2024.
Last week, I asked the question Do You Believe in Yourself and Your Team? This week, I want to talk about what’s holding us back—what’s preventing growth in self-confidence and our ability to believe in ourselves and our teams—especially in younger generations. You guessed it, today we’re going to talk about self-doubt driven by Anxiety. Up front, I want to be clear that I am not a medical doctor and we’re not going to be addressing any of the medical drivers and contributors to anxiety. Instead, we’re going to be focusing on external contributors to stress and anxiety. We’re going to focus on the things that most of us have the ability control to reduce stress and anxiety.
The American Psychological Association’s (APA) 2023 Stress in America report shows clearly that young adults ages 18-34 rate their stress levels much higher than individuals who are 65 and older. The younger generation reports that their stress is a 6 out of 10 whereas the older group’s average is a 3.4 out of 10.
As a coincidental side note, my wife Linda and I finally got around to watching Inside Out 2 earlier this week when I was in the depths of a bout with Covid. If you haven’t seen the movie or it’s predecessor, Inside Out (2015), I strongly recommend that you do so. Yes, they’re incredibly cute Pixar films, but under the amazing animation is an instructive storyline that we can all learn from regarding our relationship with our emotions.
As Riley, the main character in the films, reaches puberty, new emotions arrive on the scene and the primary focal point of Inside Out 2 is, you guessed it, anxiety. Engaging with these films for both entertainment and as a tool to think more deeply about the relationship you have with your own emotions is time well spent.
Why does my opinion matter in this debate? I’m seeing these statistics playing out first-hand in my role as lecturer at my undergraduate alma mater, The University of Wisconsin at La Crosse.
One of the first things I ask my students, who are primarily graduating seniors, is to engage with my Personal Planning Guidebook. When class participants go through the A3 exercise outlined in the Guidebook, in many cases, it represents the first time that they’ve ever asked themselves about things like their purpose in life, their current state, their desired future state, a vision for their future, who their mentors and coaches are, what makes up their asset inventory, and their personal blockers.
For many of the early twenty-somethings in my class, stress and anxiety were highlighted as blockers to their ability to achieve their desired future state. They frequently find themselves spinning and, as some characterized it, paralyzed, by their anxiety. My heart breaks when I hear their stories, but I also know that we can do something about the current state.
So what are some potential causes and solutions to the generational gap in anxiety levels beyond the fact that Gen Z and Millenials haven’t had the benefit of hindsight and experience that baby boomers like me have? Well, since this is such a complicated and important subject, we’re going to explore it in a multi-part series—so tune in next week for more.
Today, we’re going to focus on money and finance as this topic is (a) a stressor we have control over, and (b) financial insecurity is typically listed as a top stressor for many people in our society. I also hold a PhD in finance, so I know a bit about the subject.
On the surface it looks like the wealth gap between generations is daunting with average wealth for 35 and under at ~$180,000 versus those 65 and older at about $1.8 million. However, given the 30 year gap between the groups, there is plenty of time for a 35 year old starting with a $180,000 base to grow their wealth to a future value equivalent of $1.8 million. The real question is this. Is the future value equivalent of $1.8 million enough to retire on—especially when the life expectancy of today’s 35 year old will almost assuredly exceed that of today’s 65 year old? The answer is complicated and depends a lot on your expectations of spending patterns in retirement, future rates of return, portfolio composition, your risk tolerance, etc.
The good news is that the S&P 500 has risen an average of 10.2% since its inception in 1957, so investing over long time horizons carries with it a high probability of healthy returns that will compound through the years. Notably, the lowest annual return over any 30 year time horizon for the stock market going back to 1926 was 7.8%.
What can younger generations do to alleviate worries about money and finance?
Buy and hold the market and invest with consistency over time! As another important side note, as Boomers pass on to the great beyond, we’re going to see the biggest wealth transfer in history over the next twenty years, so we should all calm down a bit. In the same breath, your parent’s wealth should not be factored into your retirement plan!
The Great Wealth Transfer isn’t going to help traditionally underserved market participants much, so we need to do more. To build more financial equity across generations and cultural demographics, we should be investing heavily in financial acumen education in our schools.
Want to get ahead financially and reduce stress and anxiety over money? Understand money and investing. Without strong financial acumen in our population, the media will keep feeding into the anxiety of an undereducated population to drive clicks and traffic.
Oh, and stop complaining that you don’t have any money to invest in your teens and 20s. Cut back on that daily $5 latte or premium bottled water and put that money into a fund that tracks the S&P 500. You’ll be amazed how fast your portfolio will grow over the long term. $5 invested per day over 30 years at 10.2% is a cool $369,100. You’ll certainly need to invest more, but what’s more important? The latte or a greater semblance of future financial security?
A key point here is that life and financial security is all about choices and decisions. Make better decisions and you will be better off.
Next week we’re going to continue the conversation about our current epidemic of stress and anxiety, but I can’t put enough focus on the value of education and good decision-making that’s accompanied by a lifelong learning mindset as ways to reduce stress and anxiety.
Until next time…
