Are Gen Xers Unprepared for Retirement? Experts Weigh In
Gen Xers may be known for their contributions to the world of music (even if Nirvana is now played on the classic rock stations) and fashion (though flannel never really went out of style). They might have given us a range of iconic movies and TV shows. Unfortunately, Gen X is also distinguished from other generations by the unique challenges they face when it comes to retirement.
Be Aware: Downsizing for Retirement? Avoid These 6 Mistakes
Learn More: One Smart Way To Grow Your Retirement Savings in 2024
Sandwiched between baby boomers, who entered retirement generally assured of the safety provided by pensions, and millennials, who have come of age learning to expect the unexpected, Gen Xers are balancing the financial needs of elderly parents and kids alike. At the same time, they’re also dealing with broader uncertainty around supposedly common retirement practices.
But is Gen X totally unprepared for retirement? GOBankingRates talked to several experts to get some answers — and some hope for the grunge generation.
Gen X Is at the Cusp of New Retirement Strategies
While Gen X may feel removed from their parents’ approach to retirement, which involves getting a comfortable pension after years of working at the same company, that doesn’t mean their prospects are dim. In fact, far from it.
According to Garrett Smith, financial advisor and CCO at Ascend Investment Partners, Gen X is actually at the forefront of a shift away from traditional retirement planning to more creative, fluid and dynamic strategies.
Check Out: Here’s What the Average Social Security Payment Will Be in 15 Years
“They’re the first to aggressively blend traditional investments with newer, alternative options like tech startups and green energy funds,” he said. “This mix reflects a broader trend of seeking growth and sustainability in their investment choices, acknowledging that the old rules of thumb may not suffice in today’s economy.”
Smith added that Gen X is more tech savvy than older generations, likely to seek financial advice online and rely on robo-advisors. However, the drive toward autonomous practices doesn’t mean that Gen X has completely abandoned parents’ and grandparents’ kinds of retirement accounts.
“Instead, they’re diversifying their approach to secure their financial future,” Smith said.
Gen X Has a Different Relationship With Wealth and Retirement
With some of the older members of Gen X approaching their 60s, it seems like the Xers are about to get on deck to start retirement. However, Stephen Kates, CFP, principal financial analyst with Annuity.org, said Gen X is, by and large, less prepared than the baby boomers who have already started their retirement journey.
“Although Gen X started saving for retirement earlier than baby boomers, they hold a much smaller share of wealth than boomers did at the same point in time,” he said. “One of the factors that has been a disadvantage for Gen X is the transition away from pensions and towards defined contribution plans like 401(k)s.”
Kates also added Gen X also came of age at a time “when investing was costly and personal finance education was thin. Millennials and Gen Z are awash in information about the benefits of saving early and how to invest for the future. Gen X had none of that.”
Gen X Will Be Working Longer
If baby boomers counted down the days until they clocked in for the last time or received a gold watch at a formal farewell party, Gen X anticipates a slower, more drawn-out approach toward retirement.
“Data suggests that a combination of financial worry and a commitment to staying active means Gen X will likely work longer than their predecessors, either as employees or through part-time or self-employment work,” Kates said. “It is more likely that Gen X workers will have a phased-out retirement than a hard stop. This is extremely beneficial from a retirement planning perspective for two reasons.”
However, this slow burn toward retirement does have clear advantages. Gen Xers will get extra time to save and let their savings grow. They’ll also get the chance to ease into the retirement lifestyle, learning more about what they like and don’t like before they formally ride off into the sunset of their work lives.
Gen X Is at a Unique Moment in History
For Smith, one of the biggest issues confronting Gen Xers is the fallout from some economically volatile moments — notably, the dot.com bubble bursting, the Great Recession and the implications from the global pandemic.
“These events have not only affected their earning potential but have also impacted their retirement savings,” Smith said.
He added that Gen Xers are unique in that they’re caring for aging parents and children, which can put greater strain on their financial resources, including retirement savings.
More From GOBankingRates
This article originally appeared on GOBankingRates.com: Are Gen Xers Unprepared for Retirement? Experts Weigh In
