Members of Generation X need shoulder to lean on - a financial shoulder, more specifically.
Poor fellows, those Gen Xers.
They’ve been hard hit with living through the Great Recession, dealing with children, managing parents and blazing the trail into the defined contribution system forced upon them.
Gen Xers put off thinking about retirement for years. But two years ago, the oldest members of Gen X - people born between 1964 and 1978 - turned 50. Now retirement is beginning to appear on the horizon and loom larger by the year.
For experts who study these trends, Gen Xers are not in good shape going into retirement. They have not saved nearly enough to seal a comfortable retirement for themselves.
“Where advisors can really help is that Gen Xers need encouragement and they need some tough love,” Catherine Collinson, president of the Transamerica Institute and the Transamerica Center for Retirement Studies, told InsuranceNewsNet.
“This is a wake-up call.”
Gen Xers need moral support, a cheerleader, a mentor to show them the way. This is especially true because many Gen Xers are in the midst of hectic stages of their lives as they deal with sometimes tenuous careers, along with raising children and helping aging parents, Collinson said.
Collinson, who hunts through retirement segment data for a living, has found several “alarming” data points related to Gen X. This data is contained in the 17th Annual Transamerica Retirement Survey of Workers published earlier this year.
Here's one cause for such alarm. The median total retirement savings for a Gen X household in 2016 is $69,000; 30 percent of Gen Xers report having taken a loan, early or hardship withdrawal from a 401(k) plan or a retirement account.
Especially “shocking,” Collinson said, is the following statistic: Among Gen Xers who are married, the estimate median in retirement savings in all accounts is $81,000 versus only $48,000 for savings in all accounts for Xers who are not married or divorced.
As the gap widens over time, the disparity only grows by orders of magnitude.
“Of the people who are retired, we asked them for their current household savings and the median among married retirees was $224,000, and for unmarried it was $40,000,” Collinson said.
What about the arguments made by conservative think tank researchers that the nation’s retirement crisis is overblown? What about their claims that the trillion-dollar wealth transfer coming from the Greatest Generation to the baby boomers to Generation X is never factored into these retirement numbers?
And what about all that real estate equity that will be passed on as Gen Xers' parents sell and move to a small condo by the beach?
Yes, what about those numbers?
It turns out those numbers are pretty low as well, not just among Gen Xers but all generations, according to the Transamerica survey.
Only 12 percent of Gen Xers cited inheritance as an expected source of income in retirement, and an equal percentage of Gen Xers cited home equity as a source of income in retirement.
Not Too Late
Although few of them knew it at the time, Gen Xers came of age when seismic shocks were buffeting the retirement system.
Pension plans were disappearing, some Gen Xers started to take on college debt, and many grew up in broken households.
Yet for all the headwinds, it’s still not too late for the Gen Xers, especially if they get help with an advisor, Collinson said.
As Gen Xers develop a retirement plan and stick to it, the less hectic their lives should be, in theory, and that takes away the worry.
Estimating income needs, conducting a gap analysis, and pointing Gen X clients in the direction for budgeting and basic financial planning are critical things an advisor can do to help ease their financial burdens.
Advisors can even serve as a referral service, advising Gen Xers how to remain in the labor force longer to ease the burden on retirement savings.
After all, a plan — financial or otherwise — is exactly that: a blueprint to lean on, of which Gen X seems to be in desperate need.
InsuranceNewsNet Senior Writer Cyril Tuohy has covered the financial services industry for more than 15 years. Cyril may be reached at [email protected].
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