Retirement advice that Gen X and Boomers need to know

You’ve heard it all: Start saving early, save consistently, diversify your portfolio, and more. Retirement advice has several “rules of thumb,” but sometimes,a one-size-fits-all approach doesn’t actually fit.

In fact, many Gen Xers and Boomers are discovering this as they –plan for or enter into retirement. These particular generations came of age at different times, experienced different economic realities, and now have different retirement needs, attitudes and timelines.

Do Gen Xers (born between 1965 and 1980) understand how to respond to their specific retirement circumstances, and are they comfortable doing so? If you’re a Gen Xer, are you making the decisions that are best for you? Where do you stand in retirement planning compared to your cohorts?

If you’re a Boomer (born between 1946 and 1964), an imminent retirement or projected retirement may be nerve wracking. Have you saved enough and, if not, how can you do so now? And if you’re already retired, what can you do to help ensure your money lasts as long as you do?
 

What retirement advice are you getting?

To find out what retirement advice these different generations are getting and how they feel about retirement, Jackson conducted research on the psychographics of successful retirement incomes. The research, performed in partnership with Advanis, surveyed 1,000 pre-retirees ages 55 to 70, and 1,000 retirees — mostly retired for five or more years.

Here’s what we found:
 

Interest in their finances

Boomers show greater financial planning interest than Gen Xers do. This may come as no surprise since Boomers are closer to retirement. But Gen Xers – despite their longer retirement timelines – show more stress in planning for their retirements. They don’t like thinking about money and finances. This also makes sense, because Gen Xers are more likely to be in the high-stress “sandwich generation,” caring for both children and parents.¹
 

Retirement preparation

Gen Xers feel much less prepared for retirement (also potentially contributing to their stress) than Boomers do. Boomers, most of whom are past retirement age, have had to do the hard work of retirement planning and seeking retirement advice. Gen Xers may have put it off, and now see retirement suddenly approaching.
 

Financial knowledge

Gen Xers tend to have lower financial knowledge than Boomers do. They are more likely to find financial information and retirement advice confusing or overwhelming — and they’re less likely to get that advice from a financial professional.
 

Financial investment risk taking

Gen Xers are bigger financial risk takers than Boomers are. That’s understandable given that they’re chasing higher investment returns to close a larger savings gap. But as their investment time horizon narrows, they may have too much exposure to market volatility, and too little time to recover from downturns.
 

Financial profile/income and expenses

The Gen Xers we surveyed are in their peak income years and have higher incomes than the Boomer respondents. That’s fortunate, because they also have greater household expenses, especially around housing. Most parents allow their children over 18 to continue to live with them, many continue to support those adult children financially, and these parents are more likely to be Gen Xers.²
 

Financial profile/assets

Gen Xers may have more income than Boomers — but they also told us they have fewer investable assets than Boomers. On the positive side, Gen Xers have more of their investable assets in tax-deferred^* accounts, tax-free accounts and Health Savings Accounts – all of which have clear retirement benefits.

Related: Our recommendations for asset allocation by age.
 

Financial behaviors

Unfortunately, both generations should get retirement advice from a financial advisor more regularly. Few seek professional retirement advice, although Boomers are somewhat more likely to seek that advice than Gen Xers are. Even fewer in either generation have a written retirement plan — a key element in any retirement planning.
 

Retirement income sources

One of the most glaring differences between the generations is their view on Social Security, with Gen Xers much less likely than Boomers to depend on it for retirement income. Gen Xers are more likely to plan to work longer to generate income. Baby boomers tend to make annuities a bigger part of their retirement plans. Many economists believe annuity uptake should be much higher.³
 

Practical retirement advice for each generation

So, what can each group do to gain some clarity and maximize their retirement lifestyle?

Retirement advice for Gen Xers

Forty-two percent of Gen Xers told us they feel unprepared for retirement and face significant challenges such as higher household expenses and debt. Thankfully, there is retirement advice that can help many Gen Xers:

1. Make debt reduction a priority.
2. Make retirement savings your next priority by, for example, maxing out your 401(k) contributions and your employer match.
3. Take advantage of IRS “catch up” contributions to your IRA. Educate yourself on the broad array of financial tools available to you and the retirement advice targeted to your generation.

Retirement advice for Boomers

You might consider reassessing your risk tolerance and rebalancing your portfolio to help protect you against market volatility. Consider diversifying your income streams with rental properties, part-time employment, and financial tools such as annuities. Revisit your retirement plan (or write one if you haven’t already done so) and think about adjusting based on your experience in retirement, updated medical status, and any other changes.

Retirement advice for everyone

Whichever generation you belong to, it’s smart to work with a financial professional, seek their retirement advice, and work with them to devise a retirement plan that meets you where you are. Virtually every aspect of retirement advice we’ve mentioned here can potentially be implemented faster, more accurately, and with greater benefit to you when you work with a financial pro on your unique needs.

Whatever your retirement status and timeline, there’s more you can do to strengthen your retirement position.  To uncover all of our retirement research on Gen X and Boomers, download the study: Gen X vs. Boomers: Retirement readiness in 10 charts.