Don’t forget that group that’s between the headline grabbing millennials and boomers: Generation Xers, Americans between ages 36-55. A survey from the IRA (Insured Retirement Institute) appears to have uncovered a significant knowledge gap in this group when it comes to personal finance.
Think Advisor’s recent article, “These 3 Threats Scare Gen Xers More Than Basic Retirement Costs: IRI” explains that the survey aimed to find out how Gen Xers are handling retirement planning. The analysts who summarized Gen Xers’ approach to retirement planning said “They’re (mostly) doing it wrong.”
The results showed that only 20% of Gen Xers have talked to a financial advisor, that only one-third of Gen Xers have tried to figure out what they’d need to have saved to retire and that only 23% of the Gen Xers who have tried to save for retirement, have more than $250,000 in retirement savings. However, the research shows that roughly 58% of the Gen Xers are somewhat or very confident they will have enough cash to cover basic expenses in retirement.
The survey didn’t break down most of the results by income or asset level, but they did look at the use and lack of use of a financial professional. Participants with financial professionals might be the ones who have more overall financial flexibility, with 82% of the Gen Xers with financial advisors responding that they’d discussed retirement planning, and 61% said the advisors had discussed investing. Those discussions may have contributed to 87% of the Gen Xers with advisors saying they were confident about having enough income to cover their basic expenses in retirement. However, even the Gen Xers with advisors said they had grave doubts about their ability to handle other major financial challenges.
Here are some of the other findings:
- Covering long-term care (LTC) costs. Just 63% of the Gen Xers with advisors said they were somewhat or very confident about having enough money to pay their long-term care expenses. It looks like advisors hadn’t done much to help Gen Xer clients with that concern. Only 9% had talked about planning for cognitive decline, like dementia or Alzheimer’s. Only 29% had talked to their clients about insurance.
- Addressing parents’ LTC needs. A little over half of the Gen Xers with advisors said they were somewhat or very confident about being able to assist with their parents’ LTC bills. The survey didn’t ask Gen Xers how many had talked about that with their advisors.
- Paying children’s college bills. Many experts in the field suggest that Gen Xers should prioritize their retirement planning and leave the children’s college bills second. However, Gen X parents say the money to put their children through college must come from somewhere. Only 51% of the Gen Xers with advisors said they were somewhat or very confident they’ll have enough money to defray their children’s higher education expenses.
While their priorities are admirable, this survey paints a picture of a generation that needs to consider more seriously retirement and estate planning. There are many facets to consider from how to leave assets to children to who is named as power of attorney.
For more information on estate planning, visit our website to schedule your consultation today! Especially is you are a Gen Xer who has yet to start long term planning.
Reference: Think Advisor (March 24, 2018) “These 3 Threats Scare Gen Xers More Than Basic Retirement Costs: IRI”