It's Time For Generation X To Start Taking Retirement More Seriously
The current generational buzzword might be “millennial,” but there is another generation that is very important, and they’re set to take over the baby boomers as America’s wealthiest generation.
Generation X, also known as “the forgotten generation,” is squeezed in between two much larger demographic groups, but are poised to be our country’s highest earners. With the oldest of the generation just hitting the age where they’re starting to get AARP mailers, Gen-Xers are savvy about their cash – many have 401(k) plans, and they’re leery of financial planners due to high fees and fake promises.
Despite being known as “slackers” by older generation, Gen Xers have gone on to be extremely succsssful, adapting to changes in the world of business and the rise of new technologies, all while surviving the worst financial crisis in modern history. Yet, despite their overcoming nature, the majority of Gen Xers have not channeled their professional success into true successful planning for retirement. It is estimated that only approximately 8% of the generation have enough saved to be considered “on track” for their retirement.
A lot of Generation X’s shortcomings may be at no fault of their own. They are the first generation to lose several retirement benefits that previous generations have taken for granted. With no pension to rely on and drastically reduced Social Security benefits, the outlook can be bleak for many of the generation.
So how can this “forgotten generation” secure a savings for their retirement? Most Gen-Xers, approaching 40%, in fact, do not have any strategy for their retirement, and only approximately 1/3rd currently work with an advisor, according to a 2016 study by TransAmerica. This rolls back to a lot of Gen-Xers’ fears about the fees and expenses that are associated with working alongside a financial professional.
We all know, though, that retirement is a lot more complicated than many people make it out to be. The confidence of Generation X to get things done on their own, including managing their own finances, is a huge hindrance. An advisor’s expertise is critical in helping them reach their goals.
What we are left with is responsibility. It is the responsibility of the client seeking help from a financial professional to fully understand the role of the advisor, and what it is they will do for them and, perhaps most importantly, how they are paid. While the financial industry is working hard to provide a higher level of transparency so that a client can more fully understand the role of their advisor, it also comes down to that advisor themselves to make sure they full explain their position and role to the client.
As with anything else, there is hardly a one-size-fits-all approach when it comes to choosing the right advisor. There are defining factors in the advisor-investor relationship, and it mostly depends on the client; making sure to work with their advisor to outline their wants and needs for retirement, and making sure that their advisor is working in their best interest. A good advisor will understand your priorities, but a great investor should also spend time to understand the life goals of all of their clients – Gen-X or otherwise.
Gen Xers need to understand that they are falling behind in “retirement readiness.” There is a large amount of planning, dedication, and discipline that goes into making sure that by the time retirement rolls around, there is a secure financial resource to be utilized. There is no better time to get started in planning for retirement than right now.