Generation X, born between 1965 and 1980, is often referred to as the sandwich generation. This nickname stems from the fact that they are sandwiched between providing financial and emotional support to both their adult children and aging parents, all while trying to secure their own financial future and meet their current lifestyle aspirations. It’s no easy feat, and many Gen Xers find themselves struggling to balance all these responsibilities.
Despite being referred to as the latchkey kids and the forgotten generation, Gen Xers are actually at a peak earning stage of their lives. With a median income of $101,500, households aged 44-54 have the highest income across all age groups. However, they also face challenges such as high levels of debt, particularly student loan debt, and a lack of confidence in their retirement prospects. A significant portion of Gen Xers do not have a retirement plan in place, and many feel uncertain about achieving their retirement goals.
A 2023 survey revealed that 61% of Gen Xers do not feel good about their retirement prospects, and 45% do not have a retirement plan. Additionally, Gen Xers are more likely than other generations to have experienced financial trauma, which can shape their relationship with money and impact their financial well-being. Due to their experiences as latchkey kids, Gen Xers may have trust issues when it comes to seeking financial advice and planning for their future.
Despite these challenges, there are steps that Gen Xers can take to improve their financial security. One key strategy is aligning your life and money with purpose. By giving your money assignments that align with your values and goals, you can feel more confident and secure in your financial decisions. Additionally, owning your preferences for your current and future lifestyle can help you create a plan that works for both your present and future selves.
Investing in Retirement
For Gen Xers with access to traditional or Roth 401(k) plans, making maximum contributions can help boost retirement savings. In 2024, employee-based contributions can go up to $23,000, with an additional catch-up contribution of $7,500 for those aged 50 and older. By taking advantage of employer-sponsored retirement accounts and individual retirement accounts, Gen Xers can start building a solid foundation for their future.
To enhance flexibility and optimize asset management, Gen Xers can consider pairing tax-deferred investment accounts with taxable brokerage accounts. This approach allows for more control over funds and provides the opportunity to fund both current needs and retirement goals simultaneously. Additionally, assets in a taxable brokerage account receive a “step-up” in basis at death, potentially reducing capital gains tax for heirs.
It’s essential for Gen Xers to prioritize their self- and financial care while also supporting their loved ones. Having open and honest conversations with adult children and aging parents about financial responsibilities is crucial. By setting boundaries and ensuring that their own financial well-being is prioritized, Gen Xers can avoid burnout and financial strain.
Building trust with a financial advisor is another important aspect of securing financial security. Gen Xers are more likely to seek advice from professionals with expertise they don’t have and a track record of experience. By establishing a trusting relationship with a financial advisor, Gen Xers can receive valuable guidance and support in navigating their financial journey.
Generation X faces unique challenges when it comes to balancing financial responsibilities and securing their future. By taking proactive steps such as aligning their values with their financial goals, prioritizing retirement savings, and building trust with financial advisors, Gen Xers can feel more confident and empowered in their financial decisions. It’s never too late to start planning for the future and taking control of your financial well-being.
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