This year, an entire generation reaches a critical milestone: The oldest of Generation X turns 50. Gen Xers are about to get serious about retirement savings, says Greenwald & Associates’ Lisa Greenwald Schneider — and their go-to savings vehicle will be their employer’s DC plan.
Gen Xers are not saving for retirement as much as they should, and they know it, writes Schneider in the Fall issue of NAPA Net the Magazine. Why? Competing financial priorities, especially debt. Gen Xers are the true “sandwich” generation, Schneider believes: Many Gen Xers are paying down their own student loans while trying to save for their children’s education. They are buying homes and taking on mortgages despite credit card debt and trying to save for their own retirement, while increasingly taking on a caregiving role for their retired parents.
To their own detriment, says Schneider, it seems Gen Xers have focused on one goal at a time: debt first, then retirement savings. “But this is where the opportunity lies. The debt is nearly gone, or at least is becoming manageable. And most say that paying off their debt will prompt them to save more for retirement, specifically within employer-sponsored retirement plans.”
Accumulation is not the only thing on Gen Xers’ minds, says Schneider. A majority indicate an interest in financial products that provide a stream of income in retirement. Last year, the Retirement Confidence Survey calculated and showed respondents a monthly income projection based on current assets and savings levels. Six in 10 Gen Xers said the monthly income amount shown was less than expected, and 4 in 10 said the information would lead them to increase their contributions. And Gen Xers are becoming eligible for catch-up contributions, so those willing have an additional way to increase savings.
Plan sponsors and advisors play a critical role in implementing plan designs and educational and advice programs to help Gen X catch up, Schneider says. “There is now an emerging and important opportunity with Gen X if we stop thinking these ‘kids’ are too young to care and recognize their complex financial situations.”
In addition to the debut of Schneider’s “Inside the Generations” column, the Fall 2015 issue of NAPA Net the Magazine inaugurates NAPA’s lists of the top women advisors in the industry in four separate categories. Judy Ward also discusses the potential pitfalls of managed accounts, while Nevin Adams debuts his new “Polling Places” column highlighting some readers who shared their experiences with the client firing process. The issue also features insights from contributors Jerry Bramlett, Warren Cormier, David Levine, Brian Graff, Don Trone, Steff Chalk, Joseph DeNoyior, Jania Stout and Fred Barstein.
To view Schneider’s column, click here. And to view a pdf of the full 52-page issue, click here.
