Principal Financial CEO Dan Houston On The Return To Office And Retirement In An Age Of Living To 100
Life expectancy in the U.S has grown drastically over the past several decades, reaching an all-time high of 78.9 years in 2014. While some factors, including the coronavirus pandemic, have caused that growth to slow, Americans are still living much longer than they were in the 1950s and '60s — with some making it into their 100s.
As a result, people need to start thinking about retirement differently.
“This will be the first generation with a very high probability that they will spend more years in retirement than they will have worked,” said Dan Houston, president and CEO of Principal Financial Group. “That has never happened since the beginning of Social Security.”
Houston has spent his entire career helping people prepare for retirement. As President and CEO of Principal Financial Group, a global financial investment management and insurance company, he and his company help people plan for their financial futures through life insurance, retirement accounts and more. Today, he is working to help them prepare for the new realities of modern American life.
Houston was this week’s guest on the Walker Webcast, where he spoke to Walker & Dunlop CEO Willy Walker about how people should be planning for retirement, the return to office and his personal philosophy for running a business.
Walker said that he finds the way that Houston works and interacts with people “incredible.” Houston responded it stems from the fact that he’s a big proponent of servant leadership. Growing up in a small town, he watched his family members purchase dozens of turkeys from the local grocery store and bring them to the homes of local service providers as a way of saying “thank you,” and that really resonated with him. He has tried to give back to the community in the same way throughout his career.
When Principal decided to let go of its health insurance arm, Houston got an offer that would have allowed him to virtually sell it overnight and immediately let go of 1,500 people. Instead, he chose to wind it down over the course of three years, both to honor the company’s commitments to its clients and to its employees. He even called competing health insurance to help find his employees new opportunities.
Today, 60% of his workforce in Des Moines, Iowa, is back in the office about three days a week. He said his single largest concern isn’t about keeping his employees safe, because he has a very safe, distanced 2M SF office, it is about the impact the pandemic and work-from-home trends have made on the DNA of the company and the relationships between employees and managers.
“The reason why we've been successful in a remote environment is we have a lot of tenure among our employees, and the relationships are there, and they're able to be maintained,” Houston said. “I don't think employees that have been onboarded in the last two years are going to have the same feeling as our employees who were onboarded in a face-to-face environment.”
In response, Houston has been working to find ways for new employees who are onboarded virtually to get together in safe environments with social distancing in place to help them build those relationships and get mentoring. This is something he is passionate about, and the company even runs a Community Learning Center out of its office where children can come after school and experience a professional office environment.
When asked about modern retirement planning, Houston said many people think they are eligible for Social Security at 65, when in actuality it is 67. He said if people work a 40-year career, and set aside 15% of their wages in something that has a mix of equities — like commercial real estate — that could replace 85% of their pre-retirement income.
“If today you save 15%, and on the day of your retirement, you are making $100K, if you'd done what I had said over those 40 years, you're gonna have $85K a year of annual income for the rest of your life, it’s really that simple,” Houston said.
He said the good news is it appears that Millennials and members of Generation Z are saving, and even doing a better job of it than the baby boomers, which he said indicates the way they feel about the future.
“I do think that individuals today have less confidence that Social Security is going to be there when they retire,” Houston said. “I think it will be, frankly, but there's less confidence it will among other generations. To the extent that that's a true statement, they're actually prioritizing it and saving more for retirement.”
On Nov. 10, Walker will host Allyn Stewart, managing partner at Flashlight Films. Register here for the event.
This article was produced in collaboration between Walker & Dunlop and Studio B. Bisnow news staff was not involved in the production of this content.
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