Why Gen X is Unprepared for Retirement, and What We Can Do About It

It’s been reported that $30 trillion will be transferred over the next 20 years from the Boomers to Generation X. While that number represents a staggering transfer of wealth, it also begs the question: Is Generation X properly planning for their financial future, regardless of whether they stand to receive any amount of wealth from their parents?

In full disclosure, I am a member of Gen X, those born between 1965 to approximately 1981. We’re often characterized as independent, self-reliant, and cynical. After all, we were the first generation of kids with both parents working outside the home, so we learned to be on our own from an early age. We’re also the first generation to experience disposable income at levels not previously seen, and, ironically, became the first group of workers without pensions, leaving us on our own when it comes to planning for retirement.

In recent years, Gen X has also found ourselves in the midst of devastating economic times. We witnessed friends and family lose jobs, homes, and significant value in their portfolios. We saw, in hindsight, the danger that lax lending laws created. We stretched ourselves too thin, and didn’t realize what the repercussions would be if things slowed down. The most recent recession was a wake-up call to Gen X that we need to get our act together when it comes to our finances.

In order to accomplish this, we must first set aside our natural tendencies of independence and cynicism in order to begin having transparent and authentic conversations with each other, and with our loved ones, about money. In fact, this is all pretty uncomfortable for Gen X. I get it. But it’s also very necessary to secure our futures.

Here are some conversations that we Gen Xers can start having now:

  • Our Parents. If you haven’t already, now is the time to begin talking with your parents about their wishes when it comes to transitioning their wealth. Issues to consider include:
    • Do they have a will or trust?
    • How would they like to see their legacy live on while living or after they’re gone?
    • If the need arises, have they provided for their long-term care in their financial plan? This may become the next wave of burden for the children.
    • Is there a measurable financial plan or wealth manager in the picture? If so, suggest a meeting so that you’re all on the same page about your parents’ wishes.
    • It’s also a great time to learn from our parents. Growing up, you probably didn’t hear about money from them. Sure, you saw them driving cars for ten-plus years and living frugally, but they didn’t teach us the value of saving or the dangers of debt. Ask them how they were able to save.
  • Our Spouses or Partners. As a couple, it’s imperative to be on the same page about your finances. In fact, failure to communicate about money is among the top reasons that couples divorce. Discuss your budget, your short-term savings, your retirement goals, and develop your plan together. Monitor it on a regular basis so that you can see the progress and celebrate as you inch closer to your goals. Agree on saving and spending guidelines that both you and your spouse or partner can feel comfortable with. For example, my wife and I have agreed that if either of us wishes to make a purchase over a certain dollar amount, we discuss it first. Communication is key and not only helps you reach your goals, but also helps build trust in your relationship.
  • Financial Advisor or Wealth Manager. A recent study by Northwestern Mutual found that Gen X is the least likely generation to have worked with a financial advisor, and the vast majority of us don’t feel financially secure. Whether this is due to our independence and self-reliance, or due to the fact that our parents didn’t talk to us much about money or savings, the fact is that retirement age gets closer every day and we must begin establishing plans now so that we’re confident about the future. As an advisor, my job isn’t to judge you or tell you not to spend any money. It’s to help you build wealth, if that’s what you’re striving to do, and to help you envision your life in retirement. You still want to live life, be happy, and experience things with your family, and I can help you make choices and prioritize to help you achieve your goals.
  • Successful Peers. I’ve always been a believer that if you want to be successful at something, go and talk to someone else who has been successful. This applies to everything from money and career to marriage, children, and even hobbies. When you have these conversations, let your guard down, and let yourself be a little vulnerable. This will help you open up and have straightforward and transparent conversations.
  • Our Children. Begin to teach children the value of saving while they’re young. Talk to them about making wise choices. Let them know the dangers of going into debt and stretching their finances too thin. Give them the financial knowledge that we didn’t receive as children.

We Gen Xers are perfectly and uniquely positioned to impact our financial futures if we begin talking – and planning – today. The best place to start? Right where you are and right now.