If you’re a member of Generation X, your eyes probably roll at the labels “Slacker,” “Latchkey Kids,” or “MTV Generation.” Generation X (or Gen X), broadly defined as the generation born between the mid-1960s and 1980, was once known for its cynicism but later established itself through its entrepreneurial spirit and independence.
This entrepreneurial spirit has carried through to their retirement strategy. Your generation was the first to embrace online investment platforms, such as E*Trade, and have maintained that DIY spirit ever since. You were likely setting money aside for retirement earlier in life than your Baby Boomer counterparts.
Gen X was doing all the right things. You took on good debt, buying a home as opposed to renting. You invested in your 401(k)s.
Then, just as your generation hit its stride, the Great Recession sent the economy into a spiral. Wages stagnated as unemployment skyrocketed — all while you were in the prime of your career. For the first time in many decades, housing values dropped, leaving some to pull from their savings just to get out from underwater mortgages.
Now, many of you are trapped between two generations of dependents, your children and your parents, who are increasingly relying on your generation to care for them as they age. The MTV Generation has become the Sandwich Generation.
And with all the financial stress, the cynicism has once again reared its head: 50 percent of Generation X believes they will receive no Social Security benefits at all. The gig economy emerged, as contract work and side hustles have become the norm. After all, unlike previous generations, you can hardly expect a pension these days. If retirement is a pipe dream anyway, why go through the stress of a conventional 9-5?
You’re not alone. The average Gen-Xer has saved only $69,000. Worse, Gen Xers tend not to have emergency reserve funds, and have higher levels of credit card debt than any other generation.
While it might be tempting to go it alone and ditch the retirement plan completely, doing so simply isn’t practical. A healthy couple retiring today can expect to spend $363,946 on health care alone, a number that shows no signs of declining.
Fortunately, time is on your side. There are some simple and important steps you can take now to get caught up:
• Increase your 401(k) and IRA contributions. A 40-year-old can still retire a millionaire by investing as little as $23 a day, and that’s before employer contributions. Set aside a higher percentage of your income if you are substantially behind.
• Take full advantage of employer contribution matching. Whether it’s a full or partial match, take advantage of every dollar your employer is willing to put into your 401(k) or other retirement plan.
• Set limits. The housing market is booming again, and it might be tempting to upgrade, but will doing so allow you to set aside enough for retirement? If you are supporting your parents, decide what your financial limitations are, and where other sources need to step in. Decide how much of your children’s college education you are willing to pay for, and plan accordingly.
• Get a plan. Now. While members of your generation might see a financial adviser as yet another cost burden, it is a crucial step toward establishing and pursuing your retirement goals.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations.
This article originally appeared in Pioneer Press on August 24 2019. You may view the article here.
Series 7, 53 & 63 Securities Registrations,1 Series 65 Advisory Registration,† Insurance License Peg was attracted to the financial services industry early in her career. She feels fortunate to be able to use her 30 years of in-depth knowledge working alongside Preston, the Roundtable™ and their staff to prepare clients for retirement. A lifelong learner, she enjoys collaborating with her team to stay on top of the best practices regarding comprehensive planning....Read More