Are you gen X? Then it’s time to get your retirement planning into gear.
But don’t worry, you are not alone, too many gen Xers have their heads in the sand about the fact they are approaching retirement.
Investment managers Natixis recently published a report saying this ‘stubborn middle child’ between boomers and millennials is ignoring that they will be 60 soon, if not already, and are woefully underprepared for retirement.
As a gen Xer myself, I feel seen.
Aptly titled Reality Bites, after the gen X-defining ‘slacker’ movie, the report outlines the unique challenges this generation faces in enjoying retirement.
Who are gen X?
In case you are wondering, ‘gen’ is generally defined as people born from 1965 to 1980. Gen Xers are known for growing up with minimal adult supervision and as a result have a reputation for being resilient. They are also known as the forgotten generation as they are one of the smallest cohorts by population, despite currently holding 51 per cent of business leadership roles globally.
The Natixis report that says despite weathering the dot.com bubble, global financial crisis and more recently the pandemic, retirement is rapidly approaching, and their resilience is being tested in a new way.
“Generation X’s experience as investors has been shaped by a 25-year bust and boom cycle,” the report stated.
“In their 20s, gen Xers got their first hard-knock lessons about investing when the tech bubble burst in 2000. In their 30s, they learnt another hard lesson from the global financial crisis.
“The losses may have hardened their resiliency, but many found some rewards in their 40s as a decade-long bull cycle pushed markets to record highs. This may be where their biggest challenge lies.”
Sandwich generation
As a sandwich generation supporting their children and caring for their ageing parents, many gen Xers have failed to concentrate on their later life financial plans.
“Almost half of gen Xers surveyed (48 per cent) say it’s going to take a miracle to retire securely,” the report stated.
It’s worth noting that while the report takes in Australian views, it’s based on global surveys, none of which have Australia’s unique superannuation system.
However, according to the study, by far and away, gen Xers’ biggest concern about their retirement future seems to be inflation.
“Overall, 83 per cent of generation X investors say the recent bout of inflation has revealed just how big a threat rising prices are to their retirement security,” the report stated.
Gen Xers are also concerned about eroding support from the government, globally 77 per cent believe increasing public debt will reduce retirement benefits. That figure is 78 per cent for Australians.
What to do
Natixis says even if you turned 60 this year, there is still time to plan out your retirement.
“It starts with a realistic financial plan – one that considers not only how income will change after working years but also how expenses will likely change,” the report stated.
“It’s time to take stock of savings and look for ways to maximise opportunities for topping off retirement and nonretirement accounts.”
It’s also a time to reconsider risk. More than four in 10 (47 per cent) of gen Xers said they sometimes take more risk than they should to get better returns.
“They can’t avoid risk altogether, but generation X will need to balance the risk they overwhelmingly define as exposure of volatility and loss of assets with one key new risk: longevity,” the report stated.
“As they get closer to retirement, they may want to look for strategies that can help dampen volatility and ensure their portfolio is properly diversified.”
Natixis Investment Managers’ Global Survey of Individual Investors surveyed 8550 investors in 23 countries.
Are you planning for retirement? Do you think you left it too late? Why not share your experience in the comments section below?
Also read: Thinking of moving to the country? Here are 10 of the best destinations
I really don’t understand why adults do not read some well noted books about investing and/or going to see a reputable financial advisor. You don’t need to start with alot of money, but over long term the gains are great. All my children were taught by us at a very early age the advantages of compound interest. People have got to stop this victim mentality and start researching stuff themselves and get professional help.