Do your Gen X employees feel a little bit like middle children? Stuck between Baby Boomers and Millennials, they may seem a little left out or invisible if retirement plan education and communication materials emphasize the other generation groups.
Yet, Gen Xers have some very distinct and pressing retirement plan needs that should be addressed sooner rather than later to avoid a future shortfall. Born between 1965 and the early 80s, Gen Xers are also nicknamed the 401(k) Generation because they entered the workforce along side the rise of the defined contribution plan and the decline of the defined benefit plan.
Despite the 401(k) Gen nickname, 85 percent of these employees believe their generation will have a much harder time achieving financial retirement security than their parents’ generation, according to a recent study. Nearly the same percentage of Gen Xers are also concerned Social Security won’t be available when they retire.
The Great Recession of 2008 hit Gen Xers the hardest on many levels, including job loss, layoffs, home foreclosures, and general financial loss. While the economy has rebounded from the recession, many Gen Xers have not, with only 12 percent reporting full recovery.
While Baby Boomers lost 25 to 28 percent of their median net worth, “Gen Xers lost nearly half (45 percent) of their wealth, an average of about $33,000, reducing their already low levels,” according to the 2013Retirement Security Across Generations study by the PEW Charitable Trusts.
Given these collective studies and findings it’s important for Gen Xers to act now to improve their retirement readiness while the changes still have time to make a significant impact. Help your employees understand and implement the following:
- Formal retirement strategy – Obtain a clear understanding of future retirement needs and create a plan for reaching those goals. The strategy should factor in living expenses, healthcare, government benefits, and long-term care, plus include a back-up plan for unforeseen circumstances
- Employer match – Take full advantage of employer match program
- Catch-up contributions– Consider channeling additional dollars into a retirement plan
- Hold Steady – Avoid taking out loans, making early withdrawals or cashing out on retirement savings
- Stay Current – Keep job skills up-to-date, especially if planning on working longer and delaying retirement
- Get Help – Consider using a professional advisor
The time for Gen Xers to act is now. Even with a minimum 15 years until retirement, serious planning and savings rates can still have a huge impact on retirement readiness. Don’t let these employees feel left out; help address their concerns and needs with targeted information and attention.
The opinions voiced in this material are for general information only and are not intended as authoritative guidance or tax or legal advice. You should consult with your attorney or advisor for guidance on your specific situation.