Are you ready for retirement? If you’re a millennial, the answer is likely “no.” According to a 2018 survey from the National Institute on Retirement Security, two thirds of millennials have no retirement savings whatsoever.
Why is that? Half of survey respondents reported that there is no viable retirement plan at their workplaces. Millennials are also a famously buy-now, pay-later generation, so there’s not a lot of money left for retirement savings. They are also (finally) getting to the point where they can afford to buy homes, so any savings that they are racking up is going to down payments.
This all means that retirement, no matter how far it is in the future for this generation, is looking a bit bleak. Pensions are a concept from a different age — very few people will receive a pension during retirement. And Social Security? Most people, 72 percent, don’t believe Social Security will be enough to fund their retirement, according to a recent TD Ameritrade survey.
The concept of outliving your money is all too real. So, what now? All of it points to the absolute necessity of having an income stream in retirement, yet, millennials aren’t getting with the program.
Enter Design Thinking
Design thinking has helped even the most traditional industries rethink their approach to meeting customer needs — and insurance is no different. This customer-centric approach is giving companies across the insurance industry a powerful tool to transform, update and freshen traditional products and services so they appeal to a new generation of consumers.
Consider Blueprint Income, an online provider of annuities and personal pensions. The company leveraged design thinking to solve the problem of why millennials aren’t saving much for retirement and came up with a new product putting this generation squarely at the center of the process.
They realized that one of the major roadblocks to Millennials investing in traditional insurance products like annuities is the upfront cost. Because customers typically purchase an annuity with one lump sum, it put these products out of reach of younger, cash-strapped generations.
So they wondered, what if there wasn’t such a large upfront cost? A simple concept, but a radical shift when thinking about the tradition-steeped insurance industry.
For Blueprint, looking at that stumbling block with fresh eyes helped them transform the concept of an annuity by turning the model on its ear. Their solution includes less upfront investment — as little as $5,000 — and monthly contributions of just $100, rather than a large, one-time lump sum. Suddenly, an underserved, even lagging insurance product is accessible, understandable and relatable to a new generation of customers.
This example should offer hope to business leaders who feel trapped by old models that no longer work for today’s consumers. It proves that by looking at old problems with a design thinking mindset, even the biggest barriers can come crumbling down, providing win-win scenarios for both customer and company.
Don’t miss Three Ways The Insurance Industry Can Innovate With Design Thinking for more stories on how design thinking can transform insurance.
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