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As a member of this generation, I admit my bias in the following proclamation, one that I make frequently in this space: Broadly speaking, traditional financial services firms and fund issuers have essentially ignored Gen X.
For years, these companies were quick to tell advisors to focus on baby boomers – a strategy that hasn’t relented. It’s increased with so many boomers retiring or close to doing so. More recently, the generational emphasis of the financial services community has morphed to include millennials and Gen Z.
Congratulations Gen X. We a generation of 65.2 million people in the U.S. We the generation that will benefit first from the great wealth transfer. It appears no one wants our financial and retirement planning business. Alright, that’s hyperbole, but it often feels that way.
For advisors, Gen X is fertile territory for not only building new business, but bringing much advice and support to a generation that desperately needs it. Read more to see why that’s the case.
Gen X’s Ugly Retirement Picture
A recent study by the National Institute on Retirement Security (NIRS) paints an ominous picture of Gen X’s retirement planning state of affairs.
“Generation X grew up in the shadow of the postwar economic boom that so greatly benefitted their generation predecessors, the Baby Boomers,” according to NIRS. “Many in Generation X spent their formative years as the United States grappled with the oil crisis, ‘stagflation,’ and a growing sense of disillusionment following the Watergate crisis.”
Indeed, history is potentially meaningful with Gen X clients. Some of us born in the late 1970s may remember Black Monday in 1987 and essentially all of us remember the tech bubble bursting, the impact of the 9/11 terrorist attacks on markets, the global financial crisis and the brief coronavirus bear market of 2020.
Point is, we’ve seen a lot and not all of it has been positive in the markets. However, Gen X has seen significant bull markets, but data indicate our retirement planning isn’t up to par. NIRS notes 18% of Gen Xers have nothing saved for retirement. That’s one point that confirms this generation is in dire need of immediate attention from financial professionals.
Compounding the need for advisors to better cater to Gen X and this generation to better seek out such advice is the simple fact that time is slowing starting to work against us.
As NIRS observes, the oldest members of Gen X are still four years away from being able to claim Social Security.
“Accruing savings takes time, and Social Security alone won’t provide enough retirement income,” NIRS research director Tyler Bond said in a press release. “So it’s critically important that we change course quickly. The status quo means we are looking at elder poverty for many Gen-Xers and pressure on their families for support.”
Good and Bad News for Gen X and Retirement
Advisors should note that when it comes to Gen X and retirement, it’s very much good news/bad news scenario as things stand today. In the essence of concluding this piece on an upbeat note, let’s get the bad news out of the way.
First, the NIRS report points out that the retirement savings woes faced by Gen X hold true across gender and racial lines. Second, those are compound by the fact that 12% of this generation are working on a part-time basis.
In better news, data indicate that Gen X’ers that access to an employer-sponsored retirement plan are taking advantage of that perk, though not to the extent that they should be. In even better news, this generation stands to be on the receiving end of trillions of dollars of transferred wealth over the next two-plus decades. Point is advisors have a lot to work with when it comes to Gen X and are likely to find a receptive audience.