The Baby Boomers have been holding center stage for many years when it comes to the attention given by mainstream financial products and services.
But the light is beginning to shine on financial planning for younger generations like Generation X.
With many of the Boomers in formal retirement now, Gen Xers and Millennials are taking the investing spotlight. Gen Xers (those aged between 40–56) are in their peak earning years, and the time to plant seeds for a prosperous financial future is right now.
This post is for the female Gen Xers out there; you may have felt neglected by mainstream financial services and planning advice for decades, but things are changing. The financial industry was, by and large, designed by men. But the future involves women increasingly becoming more engaged in financial planning and investment services.
Traditional financial planning and services do not account always for key issues that women face — starting with a longer life expectancy. Women also face persistent pay gaps in nearly every industry, often take career breaks to start a family, and invest with a different perspective than men. A rise of female professionals and financial planners can help to address the needs of this underserved sector.
Gen X is a Unique Generation — Embrace it!
Generation X women are the highest income earning women in history, and yet studies have shown that they’re less confident[1] about their ability to plan for retirement than either the Boomers or the Millennials.
Why is that? On the surface it seems counterintuitive; after all, Gen X women are in a sweet spot of sorts, with years of income earning still ahead, but also decades of valuable life experience under their belts.
A lot of it comes down to circumstance. Each generation reaches adulthood against the backdrop of a different national culture, and it undoubtedly affects how that generation’s women see themselves, their future, and their finances. Gen X was the first generation to attend college en masse, but college costs have been skyrocketing for nearly 30 years, and that puts a higher debt burden on Gen Xers than the Boomers.
Gen Xers also find themselves increasingly[2] likely to be supporting both their parents (who will live longer than any generation before them) and their children at the same time, which makes building savings and allocating for investments that much harder.
And speaking of circumstance, let’s not look past the straight up unlucky pieces of history Gen X has encountered. Those who started investing in early adulthood got the rude awakening of the Dotcom Bubble bursting in 2000–2001, followed by the Great Recession and housing crash of 2007–2009 — not a great way to build confidence in financial markets and investing!
Wipe the Slate Clean
Gen Xers may have had some bad luck with the economy when they grew up but are not a self-pitying lot. For those who feel woefully underprepared to maintain the lifestyle they want in retirement, the time to fight back is now.
Here are some key fundamentals of retirement preparation to write down in pen and never forget:
#1 – Put Your Oxygen Mask on First
Like the flight attendants will tell you before takeoff, you have to put your own mask on first, even before you put one on your child. The reason is simple — if you are wiped out, you’re no good to anyone.
The same is true for your financial security; in order to best help children, parents, and all of your loved ones, you have to secure yourself first. Remove the notions of “I’ll start on that later” and “Maybe I should, but…” from your mind, forever.
#2 – Time Is Either Your Enemy or Your Ally — You Choose
We believe stock market investing provides the greatest opportunity for long-term gains that beat out inflation. And while stock markets can and will be volatile year to year, history shows that the longer you stay invested, the closer you get to guaranteed upside.
#3 – Take Advantage of the Tax Advantaged Spots First
The key retirement planning tools at your disposal are IRAs (Individual Retirement Accounts) and 401(k)s through your employer. They both offer key tax advantages that can add up to hundreds of thousands more in your retirement.
A 401(k) allows you to put pre-tax dollars into an investment account — that’s a 20–30% immediate boost to what you can set aside. And if your employer has a match program, do everything you can budgeting-wise so that you can put the maximum amount into your 401(k) up to the match amount (such as 3% match, 5% match, etc.).
IRAs are another account structure that allows you to set aside either pre-tax money, or post-tax income (that comes out tax-free in retirement). If you haven’t started an IRA yet or have not put in the max amount allowed each year ($6000)[3] for a while, you can make “catch-up” contributions if over the age of 50 of $1000 per year, and on through your retirement date.
Empower Yourself
Gen X women should embrace new technologies, mobile apps, and digital learning tools like webinars and social media to increase their financial literacy. Wade into the waters at your own pace, and utilize mobile apps that can help with budgeting, saving, and investing.
Learn with other women. There can be immense value in collaborating alongside other women who experience similar challenges. And engage professionals like a CERTIFIED FINANCIAL PROFESSIONAL (CFP®) who can listen to your story, learn your goals, and map a path to get to the future you desire.
Starting on a journey of financial empowerment, you may find some pushback. You may have someone in your life who downplays or denigrates your efforts. Understand that this can happen almost reflexively from someone who is used to being “the one who controls the finances.” Push back with love, but definitely push back! Stress how earnest you are to learn more (from professionals!), how two minds are bound to be better than one, and how you want to share the burdens and responsibilities of prudent financial management.
Taking control of your own financial literacy can increase the chances that you can have a comfortable lifestyle that fits your goals in the decades to come. And there’s relief in quieting that little voice in the back of your mind that secretly knows you should be more proactive with your own financial future.
[1] https://www.forbes.com/sites/generation-x-women-are-least-confident-in-their-financial-future
[2] https://www.synchronybank.com/blog/how-gen-x-women-change-saving/
[3] https://investor.vanguard.com/investor-resources-education/article/ira-contributions-should-you-catch-up-if-you-were-never behind
Disclosure: The opinions expressed herein are those of SYM Financial Corporation (“SYM”) and are subject to change without notice. This material is not financial advice or an offer to sell any product. SYM reserves the right to modify its current investment strategies and techniques based on changing market dynamics or client needs. This blog is for informational purposes only and does not constitute investment, legal or tax advice and should not be used as a substitute for the advice of a professional legal or tax advisor. Information was obtained from third party sources which we believe to be reliable but are not guaranteed as to their accuracy or completeness. SYM is an independent investment adviser registered under the Investment Advisers Act of 1940, as amended. Registration does not imply a certain level of skill or training. More information about SYM including our investment strategies, fees, and objectives can be found in our ADV Part 2, which is available upon request.
