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Many Generation Xers struggling to catch up with retirement savings

Dale Horn, managing director of UBS Financial Services Inc., said that Generation X is an overlooked segment in financial planning advice.

Dale Horn, managing director of UBS Financial Services Inc., said that Generation X is an overlooked segment in financial planning advice.

The oldest members of Generation X are within 10 years of turning 65 years old. Still, according to studies and financial planners, that cohort of Americans trails previous generations in preparing to retire.

Members of Generation X, those born between 1965 and 1980, generally accumulated more student debt and often incurred larger credit card bills than members of the Baby Boomer or Silent Generations. As a result, their retirement savings are lagging, and they’re usually not receiving the financial advice they need to catch up.

“Generation X is kind of overlooked in the way financial planning advice is given,” Dale Horn, managing director of UBS Financial Services Inc., said.

But with the help of technology, inherited wealth and aggressive financial planning, Generation X still has time to make up the difference.

In terms of retirement planning, Generation X more closely resembles the Millennial generations than their parents or grandparents, according to research conducted by the Society of Actuaries.

Generation X has some advantages over younger members of the workforce, such as 73% of Generation X members own their homes compared to 60% of Millennials.

However, only 57% of Generation X members surveyed in the report said their finances were under control, and only 54% felt on track to a secure retirement. That’s the lowest of the four generations surveyed in the report.

Generation X also faced significant headwinds during their time in the workforce, making retirement more challenging than their parents and grandparents.

The most significant setback to Generation X’s retirement planning, according to the Society of Actuaries, was the 2008 financial collapse. The collapse, which turned into the worst recession in 80 years, created deep unemployment and arrived as Generation X entered their peak earning potential.

As a result, large segments of Generation X slowed or halted saving for retirement. That gap persists to this day.

At the same time, how American prepared for retirement drastically shifted as Generation X went to work. Only 33% of Generation X members said they anticipate receiving defined pension benefits compared to half of the Baby Boomers.

“Even though Gen X is generally doing better than Millennials, they are also closer to retirement, which makes higher financial insecurity more concerning,” according to the Society of Actuaries.

Despite Generation X trailing in retirement savings, Horn said, there’s a handful of steps members of that generation can take now to ensure a financially secure retirement.

The first step is to “turbo charge” their savings. That means if at all possible, maxing out contributions to savings vehicles like 401Ks, and taking full advantage of matching funds from employers if that’s an option.

Generation X also must navigate college savings. Roughly 39% of that generation’s children are at least 18 years old. Generation X has an advantage in paying for college because, unlike their parents, they’ve had access to savings vehicles like 529 plans since their children were born.

At the same time, Horn advises members of Generation X not to shortchange their retirement to pay for college. Parents with college-bound students, he said, should pursue merit scholarships and, yes, let their children take on debt via student loans.

“It’s not necessarily a bad thing for kids to have some skin in the game,” Horn said. “Parents have to take care of themselves first.”

It’s also time for members of Generation X to start having what can be uncomfortable conversations with their parents about estate planning. Making sure their parent’s financial matters are in order, Horn said, helps on two fronts.

The first is having a solid estate plan and discussing those matters with parents to mitigate potentially costly conflicts with siblings and other family members.

Having those conversations now also helps younger generations understand what financial resources they can expect to inherit, which helps with retirement planning.

“Inherited wealth is an advantage many Gen Xers will be able to take advantage of,” Horn said.

Generation X also has a technological advantage in closing the retirement savings gap. They have technology at their disposal — technology they’re comfortable with compared to older generations — that, paired with a financial advisor’s counsel, can craft a strategy to get their retirement savings on track.