Retirement Planning for Gen X
If you were born between 1965 and 1980, you're a part of Generation X and are probably thinking about your retirement. Our retirement planning for Gen X guide goes into detail about the challenges and considerations you may factor into your retirementSpeak to a retirement specialist
Do you belong to the Gen X generation?
If so, how confident do you feel about your current retirement plan?
With Gen X spanning a timeframe of around 15 years, it could be the case that you are nearing retirement. On the other hand, younger Gen Xers may still have some way to go. In either case, there’s no better time today to ensure your retirement plan is on track with a financial planner.
So whether you’re all set for retirement, or if you need help overcoming many common challenges faced by Generation X as a whole – here is how to get you and your financial assets in the best possible position for retirement.
Gen Xers and Retirement
Retirement planning is never a one-size-fits-all service.
It’s fair to say that with generational retirement planning especially, every generation has unique challenges to contend with.
With Gen X specifically, the key headline is that Gen Xers can feel very stressed when it comes to thoughts of retiring. Namely, this is down to realising that their funds won’t stretch far enough.
Furthermore, the ability to remedy any shortfalls depends on how early Gen Xers realise there is work to be done on their retirement fund and their source of retirement income.
As retirement experts, the good news is that we’re here to help you as a Gen Xer regardless of your current retirement plan status.
Did you know? 💡: 80% of Gen Xers wish they started saving earlier for retirement according to Benefits Pro.
Who are considered Gen Xers?
You’re considered to belong to the Gen X generation if you were born between 1965 and 1980.
For context, Gen X is the generation after Baby Boomers and the generation before Millennials.
In retirement planning circles Gen X is also known as the sandwich generation. This is because the methods of planning for retirement were vastly different in the generation preceding and following Gen X.
How much will Gen X need to retire?
“For those of you who want to keep your full pre-retirement lifestyle (which should be the goal if you can swing it), you will want to have about 17 times your annual salary at retirement age.” – Forbes
If we use this analogy based on a higher rate taxpayer salary of £75,000 a year, this would mean Gen Xers would need £1,275,000 in their retirement fund to be on track.
Of course, as an individual reading this, you may have completely different aspirations for your retirement as a Gen Xer.
In general, how much you’ll need to retire should consider:
- The age at which you want to retire
- Daily living expenses
- Healthcare expenses
- Advanced care as you age
- Lifestyle purchases
- Financial gifts to loved ones
- The need for a financial safety net
- Any other expenses which may apply to you
When you sit down with our retirement planners, we can help you work out a tailored figure, based on the age you wish to retire, along with your desired standard of living during retirement.
Read more: How Much Money Do You Need to Retire?
What is Gen X retirement age?
The current state pension age is 66, although this is expected to rise in the coming years.
As a high-net-worth Gen Xer, you might want to retire long before the state pension age, especially if you have other ways of funding your retirement.
Therefore, the age of retirement for Gen X will also depend on the steps you’ve already taken, along with any work you do on your retirement plan now.
Is Gen X prepared for retirement?
On the whole, research suggests that no, Gen X is not prepared for retirement.
Furthermore, CNBC conducted a survey which found that ‘Gen Xers are the most stressed out group’ of any generation when it comes to their retirement planning.
As financial advisers, what we think is important here is to ask yourself, as a Gen Xer, whether or not you feel financially prepared for retirement.
That’s because your own retirement fund is the only thing that applies to you personally, along with being the only thing that you can control – mainly from your pension income.
Problems faced by Gen X with their retirement planning
No generation is immune from issues which can affect their retirement.
For Gen X, many of the obstacles have been a result of falling between two stools where different pension systems are concerned. Plus, various economic events which have made it more difficult to save for retirement.
While it’s certainly not the case that all Gen Xers will have retirement shortfalls, it’s still good to be aware of potential challenges which may affect your retirement fund.
That way, you can either continue your retirement planning as you are confident you’re on track.
Or, you can be made aware of any of the following issues which may mean your retirement fund needs topping up before you come to rely on it.
The long-term impact of the Sandwich Generation
Gen Xers get their name the ‘sandwich generation’ because they fell between two different retirement systems, where previous generations have benefitted more from their retirement.
Baby Boomers came before Gen X and benefited from traditional pension plans. Millennials who followed Gen X have benefited from being auto-enrolled into workplace pensions, along with generous employer contributions.
This leaves Gen X stuck in the middle, aka ‘sandwiched’ between two types of retirement funding, with neither option automatically being taken care of for Gen X and their financial future.
In another article on our site, we also told you that as of December 2018, the average pension wealth stands at £32,000 for Gen X and £117,000 for baby boomers. As time has moved on, the divide has only gotten bigger between generations, especially with the current economic challenges.
Discover: How do I grow my pension?
Gen X are not prepared for longer life expectancies
“Four in 10 U.S. Workers Say Living Past 85 would be a Financial Hardship” – Wells Fargo
Life expectancies are increasing.
The ONS predicts that by 2045, those aged 65 can expect to live a further 21.9 years for males and 24.1 years for females. This would give an average life expectancy of around 86 for males and 89 for females.
Yet, as the above research from Wells Fargo shows, neither gender at present feels they could financially sustain themselves beyond the age of 85.
With life expectancies continuing to rise every few years, this is storing up a huge problem for Gen X, along with other generations which follow.
Cost of living crisis means lower retirement contributions
Since the mid-1970s, the UK has officially been through four recessions.
For any Gen Xers who have lived through these recessions, plus a pandemic, rising inflation and now a cost of living crisis – there’s a good chance your retirement fund has suffered as a result.
Gen X is certainly not alone in feeling the effects of the economy on their retirement fund. But what it does mean is that if your retirement fund does have shortfalls, work is needed to mitigate the effects.
Less time to fix retirement fund shortfalls
Those born between 1965 and 1980 are classed as Gen X.
Granted, that’s quite a large span of time covering 15 years. But for those closer to being born in 1965 than 1980, your retirement is fast approaching. This means that if you do have any gaps in your retirement fund, there is a limited time to do anything about it.
That doesn’t mean nothing can be done to improve your retirement prospects. But the key is realising action is needed and actually doing something at the earliest opportunity.
How can Gen X get their retirement back on track?
If you’re reading this and recognise that any of the above challenges apply to you, all is not lost.
In fact, any action you take now could hugely change your outlook depending on the time you have left to retire, along with the options which may be available to you.
Our retirement experts can work with you personally to overcome any challenges to your retirement fund, regardless of your generation.
In the meantime, here are some techniques to recover your retirement fund as a Gen Xer.
Develop a planning mindset
A Natixis survey of 2,500 people with $100,000 of investable assets found that Gen Xers were less likely to have used a financial adviser than Millennials and Baby Boomers.
So it’s fair to say one of the best things any Gen Xer can do is to build a long-term relationship with a trusted financial adviser. Given few people are experts in finance, financial advisers are there to look at the whole picture, to see where your portfolio needs help the most.
For your retirement, you’ll need to figure out your predicted costs. This cost then needs to be paired against what you currently have saved. A planning mindset can ensure you’re on track and help minimise any shortfalls.
Look at all available options to fund your retirement
It’s a simple fact that the more income streams you have to support your retirement, the more comfortable your retirement will become.
You may have some existing retirement strategies. But what about maximising these opportunities, or discovering new options to grow your retirement fund?
The options to explore could include:
- Inherited wealth
- Passive income
- Tax efficiency savings
- Other income streams
Your retirement planning expert can help you work out what options will be feasible based on your personal circumstances. For instance, diversifying your retirement portfolio.
Plus, look at ways to increase your retirement contributions now so they have time to come to fruition by the time you retire.
You may also be interested: How to Generate Passive Income for Retirement
Continue to monitor and adjust your retirement plan
Arguably, ‘attention’ is one of the best investments anyone can make into their retirement fund.
After all, knowledge is power. If you review where you’re at and find you’re on track, and have a healthy safety then this is fantastic.
By the same token, not leaving your retirement fund to gather dust will also ensure no nasty surprises await. If anything does need adjusting, at least you’ll be given the opportunity to do so while you still can.
Don’t assume that the Gen X retirement crisis doesn’t apply to you
If you belong to the Gen X generation, we hope your retirement planning is on track.
But even if you assume that it is, there’s also no harm in giving your plan a once-over just to make sure. This is especially the case given the recent cost of living crisis and the rise in inflation.
You might feel confident managing your retirement plan yourself. However, if you’re not sure about any aspect of your retirement fund, seeking professional advice from our experts could prove to be invaluable.
Your financial assets are crucial to a retirement income and thus should have the appropriate attention given to them.
The earlier you approach us for advice the sooner we can help you achieve peace of mind.
You can also keep up to date with our latest financial news and advice by reading the Holborn Assets blog.
Why the 5 years before retirement are important
As a Gen Xer (particularly those born closer to 1965) it might not be long until you plan to take your retirement.
If this sounds like you, then it’s time to listen carefully. That’s because the 5 years prior to taking retirement are a golden opportunity to tie up many loose ends. Plus make the most of some of the financial benefits available to you, which will slip away once you stop earning an income from your job.
What you need to know about this timeframe:
- Compound interest starts to pay off
- Your actual costs for retirement start to become clearer
- Now is the time to pay off any larger purchases upfront
- Now is the time to undergo any health procedures covered by your workplace health insurance
- Many life distractions have now passed giving you time to fully focus on what’s ahead for the first time
In many ways, you can liken the last 5 years before you retire to a captain’s pre-flight checks before a plane takes flight. In short, it’s a final opportunity to go over your checklist and take care of anything that would cost you more to do so once you retire.
You may also be interested in: Expat Pension Advice
Gen X retirement planning FAQs
Want to learn more about how you can plan for your retirement if you belong to the Gen X generation?
We’ve answered some of the most common queries below.
Need more help? Please contact us and our team will be in touch shortly.
Some experts predict that Gen X needs 17 times their current salary saved by the time they retire.
However, it’s important to draw up a retirement plan to see how much money you’ll actually need, along with working out how your retirement will be funded. If you don’t have enough saved for retirement, it may be possible to generate other income streams to fund your retirement.
The latest research suggests that the minimum yearly income someone needs in retirement in the UK is £15,700 or £1,308 a month.
However, to live a comfortable lifestyle this figure currently stands at £47,500. These stats are based on national averages and do not include those living in London, where costs are significantly higher.
For you as an individual, your required level of retirement income will depend on several factors. As high-net-worth individuals (HNWIs) or ultra-high-net-worth individuals (UHNWIs), we can help you work out a tailored level of retirement income so that you can maintain your current lifestyle in retirement.
Gen X can retire by looking at all available options to fund their retirement. The current state pension age is 66, and so long as Gen Xers have made contributions, they should receive a full state pension.
Beyond this though, Gen Xers may hold workplace pensions or other pension types. Budgeting, investments, savings and inherited wealth may also be able to fund retirement for Gen X.
As with any generation, Gen X will only be able to retire at the desired age, and to the standard of lifestyle they wish to lead with the right funds in place. What we do know is that Gen X as a generation is considered woefully underprepared for retirement.
This means that action is needed now to boost any available opportunities to best support retirement for anyone who falls into this category.
Gen X can set themselves up for the best possible retirement by taking action now to discover their retirement fund compared with their actual needs. If there are any shortfalls, steps will need to be taken at the earliest opportunity to plug any gaps in your finances.
Holborn Assets – Get Expert Advice With Your Gen X Retirement Plan
Worried you might not be prepared to retire as a Gen Xer?
There isn’t a better time to find out than today. Holborn Assets provides retirement planning on a global scale with 18 offices located around the world including in the UK, EU, the UAE, and many other jurisdictions.
For any help or advice with anything we’ve mentioned above send us a message and our team will be in touch.
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