Human Interest

Graduation! Now What?

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POMP AND CIRCUMSTANCE

May and June are exciting months of change and transition as students graduate from college. While the ceremony is the culmination of years of study, the name pays homage to what is to come…the beginning of something new. Concerns move from classes and exams to jobs and paychecks. 

As graduates step into the workforce they face the challenge of how to make enough money for their lifestyle now and in the future. It may seem premature to talk about retirement with a recent graduate but if retirement is the goal, then as author Steven Covey writes in his book The 7 Habits of Highly Effective People, we must begin with the end in mind.

I NEED INCOME!

After graduation the next phase of the financial life cycle begins, income generation and wealth accumulation. The thrill of graduation is often tempered by the uncertainty of what happens next? A degree or diploma in hand does not automatically translate into income. Many enter college with an assumption that a degree will command a higher salary, which on average is true.  

A Georgetown University Center on Education and the Workforce report concluded, if you have a bachelor’s degree you will earn one million dollars more than a high school graduate over the course of your lifetime. Marketwatch.com recently reported in June 2018 that nine out of ten new jobs are going to those with a college degree. The Georgetown Public Policy Institute forecasts that by 2020, 65 percent of all jobs in the economy will require postsecondary education and training beyond high school. So in the quest to generate income, a college degree is a wise step.

I NEED A JOB!

After commencement, if not continuing onto post graduate studies students are faced with the hurdle of finding a job. This next step should be taken with an awareness that the strategies for earning income and saving for retirement have changed, and are continuing to evolve. Fresh thinking and new ideas will be needed to generate income and grow wealth during the working years because the work-to-retirement paradigm has shifted.

Now most workers will have numerous jobs and careers during their working years. A commonly cited statistic based on a Bureau of Labor Statistics study concluded on average, people in that study held 11.7 jobs between age 18 and 48. (www.edsurge.com How Many Times Will People Change Jobs? The Myth of the Endlessly-Job-Hopping Millennial 7/20/2017). So if the way to retirement used to be a career path with one or two employers, for today’s graduates it is more like an open field through which they must create their own path. Changing jobs every few years is becoming more the norm than the exception.

WHERE TO WORK?

The workplace is changing and career pathways are constantly evolving. New fields of study and new job titles are emerging daily. Would our grandparents ever have imagined their grandchild being a computer science engineer, a social media expert, a blogger, an app developer, a drone operator, a podcast host or an Uber driver? These jobs and opportunities were all created within the last 20 years. What will happen in the next 20?

The options for employment have also changed and the new workforce will need to adjust. More and more workers are creating their own income stream in addition to, or instead of other employment. Websites supporting project work on a contract basis are making it easier and easier to connect someone needing work done, with the doer of the task. Need a graphic designer, personal assistant or driver? With a click you can earn full-time or part-time income by performing a task or using a skill, and get paid for your time. 

Others find starting a business in place of, or in addition to a conventional job a viable option. The online store Stitch Fix was started while the founder, Katrina Lake was still in college and her company is now worth $1.46 billion. www.fortune.com Stitch Fix’s IPO Is More Exciting Than Its Stock Would Have You Believe, November 17, 2017.

Today’s graduates will have more control over where they work, how they work, when they work. This level of control will be important because more and more they will be responsible for accumulating enough money to support their lifestyle now and in retirement. For them, the retirement rules have changed.

OLD RULES ARE OUT

Years ago getting hired at a company meant you were likely to retire from that same company. Employees would celebrate decades of service before retiring with a pension. There was an incentive to stay, a loyalty that was felt, and a career path that was marked within the company. Ascension through the ranks was common and a pathway to retirement presumed.

Not only have pensions gone the way of the dodo bird (an extinct flightless bird) but the retirement safety net of social security may not be a guarantee of income for current graduates either. The Wall Street Journal reported on June 8, 2018 “The Social Security Trust Fund Goes Bust” raising the red flag for current and future recipients. These two major sources of retirement income may not be options for our young workforce.

Young graduates must now meet the challenge of how to create income, and eventually wealth, for themselves now and in the future. This is a daunting task. The good news is the emerging workforce is creating a work environment that can be creative and flexible, allowing them to construct their own financial path. 

WHAT TO DO FIRST

Getting guidance on financial decisions will be extremely important for younger workers because more and more they are in control of their financial future. Control can be a good thing but it can also be dangerous because deciding what to do with money can be very confusing. It is never too early to seek the help of a financial professional, starting with your first pay check. Does that sound odd? Let’s start young workers out with a financial education so they understand how money works. How often have you thought “I wish I knew that before…” when it comes to money? How many money mistakes could have been avoided? 

With the changing landscape of the American workplace and workforce let’s help our new graduates take their first steps with a clearer view toward the future. 

Asalyn Coachman is a Registered Representative of and offers Securities through The O.N. Equity Sales Company, Member FINRA/SIPC, 39395 W Twelve Mile Road, Ste. 102 Farmington Hills, MI 48331 (248) 482-3600. Investment Advisory Services offered through O.N. Investment Management Company. Financial Architects, Inc. is not affiliated with The O.N. Equity Sales Company or O.N. Investment Management Company.

Asalyn earned a degree in Economics from Harvard University and a law degree from the State University of New York at Buffalo. She lives in Lake Orion with her husband and two children where she is active in organizations such as the Harvard Club of Eastern Michigan, Lake Orion Schools, and the Baldwin Center of Pontiac, Michigan, where she serves as board president.

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