The retirement plight of Gen X – people born between 1965 and 1980 – is well-documented, but in a case of better late than never, Gen Xers are finally prioritizing retirement planning and they’re doing in significant fashion.
With the bulk of the generation flirting with or over the age of 50 and many of them knocking on the door of 60, their retirement vigilance isn’t surprising. It’s also call to action for both Gen X do-it-yourself investors and prospects as well as advisors currently serving clients in this demographic and advisors that see value in adding more Gen Xers to their client rolls.
At the intersection of Gen X and retirement planning, there are other factors advisors should account. Notably, this is the first generation to enter the workforce without the benefit of employer-sponsored defined benefit pensions. In some regards, that explains Gen X’s enthusiasm for annuities.
Likewise, Gen X, broadly speaking, is the only generation with a large number people caring for both children and older family members – a situation that presents unique financial challenges and one that can be burden when it comes to saving for retirement.
Gen X Moving Past Retirement Procrastination
“What’s done is done” is one pervasive attitude when it comes to Gen X and saving for retirement. While many members of this cohort admirably and quickly admit they should have started saving for retirement sooner, they’re not necessarily caught up on that mistake. They’re trying to correct and at an accelerated pace.
“Among the steps Gen Xers have taken upon realizing that retirement was near, one-third (34%) increased contributions to their retirement accounts, around one-fifth (19%) shifted their investment strategy to reduce risk, and around one-quarter (23%) sought professional financial advice,” notes Nationwide.
A case can be made that 23% is too low, particularly when considering 37% of surveyed Gen Xers told Nationwide they got on the ball with retirement planning because they saw a friend or family member struggle with that issue. Both data points should serve as motivation for advisors and Gen X to better connect. Same goes for the demographic’s angst-riddled views on retirement.
“While many Gen Xers will be motivated to hasten their preparations as retirement nears, anxieties over current or future economic conditions may complicate the planning process,” adds Nationwide. “Fears of inflation, for example, have not gone away; more than half of non-retired Gen Xers (56%) believe inflation will increase in the next year, up from 39% six months earlier.”
Building a Foundation with Gen X Clients
As is the case when working with clients in any other age group, advisors must eschew cookie cutter approaches with Gen X and understand this cohort demands bespoke ideas and strategies. Fortunately, doesn’t mean a trip into the exotic and risky. One of the pillars of success with Gen X as it pertains to retirement is income.
“The need for retirement income is common ground where financial professionals and clients can both agree. In our survey, 32% of Gen X investors and 39% of financial professionals cited insufficient retirement income as one of the biggest obstacles to Gen X Investor’s retirement readiness,” concludes Nationwide. “A plan for retirement income can also be valuable in helping clients feel prepared for uncertain economic conditions. Half of Gen Xers surveyed said events over the last 12 months have made them more likely to put part of their portfolio into an annuity or other solution that provides guaranteed income.”
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