If I remember my college physics course correctly, we used three space dimensions and one time dimension to describe the “real world”. Today’s science uses the hypercube pictured here as the three dimensional cube extended in the direction of the fourth dimension. And so what does this have to do with retirement plans you ask.

It has everything to do with the retirement plans, particularly 401(k) being designed and managed for today’s workforce. A workforce which also has four dimensions. But these are generational dimensions, the four generations of employees in the work force for the first time in our history. In purely demographic terms, they are:

  • Veterans: 1922-1945
  • Baby Boomers: 1946-1964
  • Generation X: 1965-1980
  • Generation Y: 1981-2000

And based on their generational backgrounds, each employee has different attitudes, behaviors, and expectations. If we’re interested in using the right motivational buttons in making our 401(k) plans more effective, then we have to communicate accordingly. Let’s not take the easy way out by simply using automatic enrollment and qualified default investments.