Generation X (aka Gen Xers) – individuals born between 1965 and 1978 – are facing intimidating uncertainties about their upcoming retirement.
Gen Xers entered the workforce around the same time 401(k) plans did, and therefore they started saving for retirement at a younger age than previous generations. Unfortunately for Generation X, however, there has been a roller coaster of financial markets since then.
There was the dot-com boom and the subsequent dot-com bust along with the market decline that happened after the 9/11 terrorist attacks. The equity markets helped them recover through 2007 but the ‘Great Recession’– the U.S. recession from 2007 to 2009 that’s “generally considered the largest downturn since the Great Depression” – brought them down again.
The stock market has since recovered, having surpassed its 2007 high in March 2013, but Generation X didn’t make it through unscathed – according to a Transamerica Center for Retirement study:
- 12% were laid off
- 25% had their hours and/or wages reduced
- 35% lost equity in their home
- 4% lost their homes entirely
- 37% saw declines in the value of their investments
Only 12% of Generation X feels they’ve fully recovered from the Great Recession, which is bad news because Gen Xers started turning 50 in 2015 – and most are looking at retirement with a mild sense of panic. In fact, 34% expect their standard of living to drop upon retirement, and 83% don’t expect Social Security to be around when they retire.
The Transamerica Institute says,
Retirement readiness is more than just saving enough; it involves planning for both the expected and, moreover, the unexpected … a worker’s retirement strategy must consider a broad range of factors that could impact his/her retirement savings, ability to generate income in retirement, and protection of savings.
They also offer 7 tips to improve retirement readiness for Gen Xers:
Evaluate your financial situation
Fully assess your current financial situation regarding retirement – what is your level of retirement savings? Are you in debt? If so, what kind, and how quickly can you pay it off? Do you have other investments, like stocks and bonds? Consult a financial advisor, if necessary.
Calculate savings needs
When you retire, how do you want to live? You probably want to keep your current standard of living, so figure out the dollar amount that allows that. Factor in living expenses, healthcare needs, government benefits, and long-term care – and surprises. You can’t plan for everything, unfortunately.
Participate in retirement plans
Participate in employer-sponsored retirement plans, if available, and take full advantage of matching employer contributions. Consider deferring even more, if possible, and avoid taking loans and early withdrawals. When eligible, consider catch-up contributions.
Get educated about retirement investing
Ask questions – learn about social security, government benefits, long-term investments, etc. Whether you’re a do-it-yourselfer or a rely-on-a-financial-advisor type doesn’t matter. Learn what you need to make good decisions.
Be proactive about the job market
The job market won’t get any less competitive, so keep your job skills up to date, perform well at your current job, pay attention to marketplace trends, and don’t be afraid to go back to school to learn new skills.
Start a conversation about retirement
Share an open dialogue about retirement preparedness, risks, and expectations with your family and close friends.
Are you from Generation X? Are you facing retirement with a sense of trepidation? Contact us to begin the important discussion about your financial future.