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I frequently mention Gen X in this space because, well, that’s my generation and I’m a firm believer that we’ve gone largely overlooked by wealth management companies. Not advisors themselves, but larger parent firms that have spent ample amounts of time and dollars directing market efforts to baby boomers and the generations below Gen X.
The reasons behind that market strategy are up for discussion, but individual advisors should be paying closer attention to Gen X and that’s true for multiple reasons. Those include the facts that this demographic to receive the benefits of the great wealth transfer and because Gen X is in retirement crisis.
Yes, “retirement crisis” is an oft-used phrase in the financial services community and it accurately describes the current state of affairs for a broad swath of age groups, not just Gen X. However, Gen X is in a dire retirement position meaning opportunity abounds for advisors willing to put some attention and effort into this demographic.
Data confirm the effort is needed and ultimately pay dividends for advisors looking to retain Gen Xers as clients when their baby boomer parents pass on.
Alarming Trends in Gen X Retirement
The oldest Gen Xers will soon turn 60 and many acknowledge they’re not where they need to be in terms of retirement savings. According to the newly released Schroders 2024 U.S. Retirement Survey, polled Gen Xers believe they’ll need $1.06 million to have a comfortable retirement, but most expect to have about $603,000 saved for retirement when they depart the work force.
That’s a gap of about $467,000 that needs to be closed, or at the very least, substantially narrowed. Making matters worse is the fact that about half of Gen Xers have no retirement savings at all – a stunning data point when considering the youngest members of the group are 44 years old.
So there is an element of “doing good” when it comes to working with Gen X clients. For advisors that need more convincing, consider the point that of the four working-age generations, Gen X is the least likely to be currently working with advisors.
“Notably, members of Generation X are the least likely to be working with a financial advisor,” according to Schroders. “Just 27% of Gen Xers surveyed are currently working with a financial advisor compared to 37% of Baby Boomers and 31% of Millennials. Further, 48% of Gen Xers say they have not done any retirement planning, which exceeds the 41% of Millennials and Baby Boomers that have not done any planning.”
Advisors Can Add Confidence for Gen Xers
There’s a slew of studies and surveys confirming that investors working with advisors are more confident in their financial futures, including retirement. On a related note, it’s fair to say that one of the reasons Gen X lacks retirement confidence is because they’re not working with advisors.
“The absence of a plan or guidance from a financial advisor could explain why 60% of non-retired Gen Xers are not confident in their ability to achieve their dream retirement compared to 48% of non-retired Millennials and 52% of non-retired Baby Boomers,” adds Schroders.
Bottom line: Gen X is making a retirement mistake by not working with advisors and advisors are making a mistake by not targeting this demographic. It’s time for both groups to eliminate those errors.
Related: Client Debt Trends: What Advisors in These States Should Address