PLANADVISER - March/April 2021 - 24

plan design | demographics
Generation X
* Birth Years: 1965 - 19801
* Age Range: 41 - 562
* Generation Size: 65.2 million3
* Target savings amount across all savings: At least 3 times salary by age
40; at least 6 times salary by 504
FINANCIAL CHALLENGES
The latest " sandwich generation, " Generation X, juggles a list of priorities-and
experts worry that this group is placing retirement saving last.
From managing household expenses to caretaking elderly parents and/or children,
many Gen X workers struggle to even own an individual retirement account
(IRA). A 2016 Employee Benefit Research Institute (EBRI) study comparing financial
status across Gen X families found that 66.9% own assets in a retirement
plan, whereas 71.5% of Baby Boomers had assets in a plan at the same age.
According to EBRI's Lori Lucas, Gen X was less likely to be offered the retirement
savings vehicles that have benefited the Baby Boom and Millennial generations.
While some Boomers had access to a pension plan, these were being
phased out as Gen X joined the workforce. On the other end, the Pension
Protection Act (PPA)'s endorsement of automatic enrollment in 401(k)s did not
occur until 2006, so Gen Xers missed the savings boost that Millennials got
as they started their careers. Without either supplement to saving, many Gen
Xers lag behind.
Now, as these workers face anticipated retirement in the next 10 to 15 years,
more are longing to catch up on savings. " It becomes more real to Gen Xers who
are having kids start to move out of the house, and are just now focusing on
retirement, " notes Steve Vernon of the Stanford Center on Longevity.
EFFECTIVE PLAN DESIGN ELEMENTS TO IMPROVE OUTCOMES
Targeted financial advice, with a tailored, detailed plan for designing a budget,
projecting expenses and investing for retirement are essential for this age cohort,
says Vernon. " The decisions that people make once they're older have higher
stakes, so that requires personalized advice. " As this group nears traditional
retirement age, its members will be more apt to engage in discussions about planning
and expectations, he says.
" Historically, financial well-being was exclusively viewed as helping workers
save for retirement, " says Lucas. " But now it's helping people with many of the rest
of their financial wellness needs-such as saving and paying down student loan
debt-and ensuring that a financial wellness program is available. "
Other benefits, including flexible work arrangements, allow Gen Xers to do
their job remotely while caring for a child or parent and continue to save for
their future. According to a survey by the Society for Human Resource Management,
Gen Xers (39%) are more apt to request flexible work hours than
are other age groups.
Further research, compiled by Purdue University Global, concurs
that flexible work arrangements are valued by these employees.
Encouraging the use of catch-up contributions when Gen Xers turn
50 may also help them reach viable savings, notes a Wells Fargo Advisors study
on generational strategies.
Adding life or disability insurance benefits for those with young children,
providing education on debt management, and re-enrolling older participants
are additional options to help Gen X prepare for retirement, experts say.
1Pew Research Center. 2Pew Research Center. 3Statista. 4
Fidelity Investments.
The average
Gen Xer carries
$142,000 in debt,
though most of this
is in his mortgage.
- Kasasa
The highest
percentage
of startup
founders-55%-
are from Gen X.
- Inc.
By 2028, Gen Xers
will outnumber
Baby Boomers in
the workplace.
- Pew Research Center
24 | planadviser.com March-April 2021
http://www.planadviser.com
PLANADVISER - March/April 2021

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