Enhancing Financial Literacy Across Generations: Generation X

The second article in our Financial Literacy Month series is dedicated to Generation X. Born between 1965 and 1980, “Gen X” is balancing career advancement with heightened financial anxiety. This “sandwich generation” is in their key wealth-building years while also juggling working and caregiving. A recent study by Bankrate found that this cohort is significantly behind on saving for retirement, and more than half are uncomfortable with their level of emergency savings.

Let’s explore the unique challenges Gen X faces, and discover strategies for managing competing financial goals, creating a personalized savings plan, and navigating the complexities of achieving financial security.

Understanding the Challenges
Generation X is grappling with several pressing financial issues. Tasked with balancing career advancement, financial stability, and caregiving responsibilities, coupled with elevated inflation, and it’s no wonder Gen X is stressed about money. Their challenges include saving for retirement, caregiving for both children and aging parents, and building adequate emergency funds.

Challenge #1: The Retirement Savings Gap
Many Gen Xers are lagging in saving for retirement. With the pressures of supporting both aging parents and children, this generation often prioritizes immediate financial needs over long-term retirement planning. As a result, they risk falling short of their retirement goals. Gen Xers must actively prioritize saving for retirement to secure their financial future. By maximizing contributions to employer-sponsored retirement plans such as 401(k)s or IRAs, they can take advantage of tax benefits and compound interest to build a robust retirement nest egg. Additionally, exploring alternative retirement savings vehicles like Health Savings Accounts (HSAs) can provide supplemental avenues for tax-advantaged growth. Gen Xers over the age of 50 can boost their retirement savings through catch-up contributions, allowing them to make additional contributions to retirement accounts beyond the standard limits set by the IRS.

Challenge #2: Emergency Savings Dilemma
A substantial portion of the Gen X demographic feels uncomfortable with their level of emergency funds, leaving them vulnerable to unexpected financial expenses such as medical bills or job loss. Without adequate savings buffers, they may resort to high-interest debt or deplete their already underfunded retirement accounts. But building an emergency fund is paramount to weathering unforeseen financial storms. Gen Xers should aim to set aside at least six months’ worth of living expenses in a readily accessible savings account. Automating contributions to this fund can help create a disciplined savings habit and provide a financial safety net during challenging times. Consider researching a high-yield savings account to save money seamlessly while also taking advantage of record interest rates, so that money can grow while still being available for unexpected expenses.

Challenge #3: Work-Life Balance Struggles
Balancing career advancement with caregiving responsibilities poses a considerable challenge for Gen Xers. Many find themselves sandwiched between caring for aging parents and supporting their own children, all while striving to progress in their careers. This delicate juggling act can lead to increased stress and limited opportunities to focus on long-term financial planning. Despite these challenges, there are actionable steps that Generation X can take to improve their financial well-being. Gen Xers can prioritize their financial goals, establish clear boundaries, and communicate openly with family members about their financial situation and expectations for support. Leveraging available resources and support networks, such as community organizations and professional caregivers, can help lighten the caregiving burden.

Additionally, exploring flexible work options and negotiating with employers for telecommuting or flexible hours can provide the ability to better manage both professional and personal obligations effectively. Practicing self-care and prioritizing personal well-being amidst the demands of caregiving and career advancement is also important. This may involve setting aside time for self-care activities, seeking support from friends and family, and practicing stress-relief techniques such as mindfulness or exercise.

The Importance of Seeking Professional, Fee-Only Guidance
Working with a fee-only financial advisor can provide invaluable guidance and expertise tailored to the unique needs of Generation X. Fee-only advisors are committed to acting in their clients’ best interests, can offer personalized financial planning strategies, investment advice, and retirement projections. By partnering with a trusted advisor, Gen Xers can gain clarity on their financial goals and develop a roadmap for achieving long-term financial security.

Gen Xers can secure their financial well-being and build a brighter future for themselves and their loved ones by understanding their unique challenges and implementing proactive strategies to prioritize saving for retirement, establishing adequate emergency funds, and taking steps to calm their financial anxiety.

If you have questions regarding financial literacy, contact our team of CERTIFIED FINANCIAL PLANNERTM (CFP®) professionals at 631.218.0077 or at info@rwroge.com and schedule a complimentary discovery call, or click here to get started.

R.W. Rogé & Company, Inc. is an independent, fee-only financial planning and investment management firm serving clients locally and virtually across the country, with Long Island, New York, Beverly, Massachusetts, and Naples, Florida office locations. R.W. Rogé & Company, Inc. was founded on a “client first” culture and proudly commits to acting in your best interest as a fiduciary. We help clients Plan, Achieve, and Live® the life they want since 1986. To learn more about how we do this, click here.

The Author used elements of OpenAI to aid in creating this article: OpenAI. (2024). ChatGPT (3.5) [Large language model]. https://chat.openai.com 

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