Generation X is under more financial stress than their younger and older co-workers, and they're further behind in saving for retirement.¹ How can Gen X save for retirement while they’re taking care of everyone else?
They brought us MTV, they're our Friends, and they came of age as the Soviet Union and Berlin Wall fell. But with both their kids and their parents moving in with them, life isn’t so much The Wonder Years as it is a Full House for Generation X.
Financial stress affects Gen X retirement planning
Americans who were born between the mid-1960s and early 1980s are caught in the middle – between children who need care and college tuition, and aging parents who need care, housing, and help with medical expenses. Almost four in ten of our Generation X survey respondents say that supporting for their parents or in-laws is a cause of stress.
Generation X is in worse financial shape than millennials and baby boomers. In our annual Financial Stress Survey, we’ve learned they are:
- More stressed about the rising cost of their employee healthcare benefits;
- More worried about job security;
- Not saving enough for emergencies;
- In worse shape with debt and credit cards; and
- Less confident in their ability to make financial decisions.
In 2019, the upper edge of Generation X is 54 years old. They were hitting the job market right as defined benefit plans were falling out of favor and 401(k)s started to try to fill the void. But in the early years, eligibility generally didn’t start until after a year of employment, and company matches and auto-enrollment were rare. After growing up seeing their parents earn a pension, it took a while for many to realize that saving for retirement was actually their own responsibility.
So, although they will start hitting normal retirement age in 13 years, financial wellness seems elusive for Gen X, and they’re in worse shape for retirement than millennials and baby boomers. When asked to rate their retirement savings:
- 43% of both baby boomers and millennials is behind schedule in saving for retirement
- 55% of Gen X is behind schedule in saving for retirement
How financial wellness can help retirement readiness
What’s a Gen Xer to do?
The top two reasons Gen Xers aren’t saving more for retirement are poor spending habits and credit card debt—they’re having trouble managing core elements of financial wellness.
And the top three topics on which they would seek advice are retirement planning, investing, and long-term care insurance. In spite of their age and life stage, Gen X could benefit from some help with the financial basics, such as:
- Developing and following a budget, which should include both spending and saving needs, like setting up an emergency fund and contributing to a 401(k) and/or IRA
- Consolidating debt and paying monthly credit card bills in full
- Paying attention to credit scores and managing finances to maximize them
- Making payments on time
- Limiting their number of credit cards
- Protecting assets and preparing for uncertainty with disability and life insurance
- Developing a financial plan for retirement
- Putting together an estate plan that includes designating a beneficiary and a durable power of attorney
- Writing a will and a healthcare directive
Whether you're a member of Gen X or you're advising one, a holistic approach that starts with the basics is a good way to get on track for retirement. Start with spending, budgeting, and credit cards to get today in order, and put together a plan for tomorrow.
For more information about John Hancock’s Financial Stress Survey, please click here to view our latest results. And to find out how our financial wellness resources can complement your own approach, please check out our participant experience or contact your John Hancock representative.
1 Unless otherwise noted, all statistics cited are from John Hancock’s fifth annual Financial Stress Survey, John Hancock Retirement Plan Services, Greenwald and Associates, June 2018. A survey of more than 1,300 workers to learn more about individual stress levels, their causes and effects, and strategies for relief.
The content of this document is for general information only and is believed to be accurate and reliable as of posting date but may be subject to change. John Hancock does not provide investment, tax, plan design or legal advice. Please consult your own independent advisor as to any investment, tax, or legal statements made herein.
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