The facts are clear: Gen-Xers are more worried about their finances than other generational cohorts like the Boomers and the Millennials. A recent survey indicated that more than 80 percent are worried about running out of money once they no longer receive steady paychecks in retirement – particularly since Gen-Xers worry that Social Security may go bust before or during their retirement years.

But that’s not the only financial worry Generation X has. Roughly 60 percent feel anxious or uncertain about finances and more than half are worried about their ability to manage money.

The Reasons Gen-X is Concerned

Why are Gen X-ers so worried? Because we are under a lot of financial strain that previous generations didn’t have. 

First, older generations like the Boomers and the Silent Generation (the one before the Boomers) often had retirement pensions from the companies that employed them. But starting in the 1980s, U.S. corporations shifted from defined benefit (DB) plans such as pensions to defined contribution (DC) plans, such as 401(k) retirement accounts. In DC plans, employees save for their own retirement through a tax-advantaged plan. While employers may match these contributions, the primary responsibility is the employees. 

Frankly, many members of Generation X are worried that they haven’t saved enough for their retirement. Some have not saved at all, and our generation is moving closer to retirement age. The fear of running out of money in our golden years is definitely there. Many worry that they will have to continue to work in retirement – which previous generations usually didn’t have to do.

But retirement alone is not the only financial stressor in the lives of Gen X-ers. Many have high levels of debt – from sources as varied as student loans to high mortgages to credit cards. Gen X was the first generation to have widespread student loans and some are paying both on those loans and student loans for their children. Interest on credit card debt is also widespread and carries very high-interest rates. Paying those bills can sap our monthly earnings, leaving us with little left for savings.

They are also concerned about the costs of caring for their elderly parents and their children and grandchildren, all at the same time. These dual and even triple caregiving responsibilities are also new – they were not nearly as widespread in previous generations. Also, life expectancy has risen over the past decades, which means our parents are living longer. It also means that we may well live longer in retirement than previous generations. This creates worry both about money in retirement and the continually rising cost of medical care, both now and in retirement.

Given the strains of saving for retirement, paying off debt and potentially caring for several generations, some Gen-X-ers are also concerned that they don’t have money saved for emergencies, such as car repair. 

What’s the Solution to Gen-Xer’s Financial Worry?

Fortunately, there are several solutions to the persistent financial worries of Generation X retirement.

• Concentrate on the Positives

First, there are some potential bright spots in the financial picture. It’s time to focus on and plan for these.

One bright spot is the potential for wealth transfer. In the coming years, the assets of the Baby Boomers may be left to their children. Baby Boomers have a number of assets, including their homes, saving, and investments. If you will be receiving assets from your parents, it’s a prudent idea to plan and save for it, to make sure that both you and your children benefit from it.

Another bright spot is that time is on your side. Generation X still has time to plan for retirement. You may be in your peak earnings years.

If you can save and invest for retirement, you can change your fear of running out of money. Currently, if you have access to a 401(k) retirement plan, you can save up to $23,000 per year, tax free. In addition, since the funds are taken pretax, your earnings will be lowered, which can save you on taxes. Especially if your company offers a match on a 401(k), you are leaving money on the table if you don’t contribute as much as you can.

You can also save up to $7,000 in an Individual Retirement Account (IRA). The amount rises to $8,000 if you are 50 or over.

• Make a Financial Plan

But the chief corrective to worry about Generation X and retirement is sitting down and making a concrete, comprehensive financial plan. Many Gen X-ers either don’t have a financial plan or worry that they may not be making the best decisions if they’re doing it alone.

A financial advisor can alleviate worry. They can create a plan for your retirement. A Greeneville, TN financial advisor can both advise you on retirement savings and investments and give you a blueprint for estimating the amount of money you’ll have in retirement. An estimate of how much you may have opens the door to solutions, whether that’s saving more, downsizing your living space, deciding when to retire, or planning to work part-time.

A comprehensive financial plan includes elements other than retirement, of course. A financial advisor will review your budget, meaning your monthly income and expenses. They can help you create a cash management plan that will give you an emergency savings and, if you’re currently in debt, a plan to pay it down so that your cash flow is freed up. 

We can also help you invest in a diversified way so that you both benefit from appreciating assets in appropriate asset classes while also retaining the stability folks need in retirement. 

Finally, a comprehensive financial plan includes estate planning for later life, including powers of attorney for your affairs and bequeathing your assets with a Will or Trust.

Contact a Generation X Financial Advisor in Greeneville, TN

At Sapiat, we work with Gen X-ers because we are Gen X-ers ourselves. We know the stresses and strains unique to our generation. We can help you save and invest for retirement and your other goals, create a cash management plan, and work with an estate plan. Contact us to discuss your financial situation in Greeneville, TN, and surrounding areas.