When it comes to Gen X and Retirement all is not well with the MTV Generation. But this despair doesn’t seem to be rooted in a systemic lack of effort—one of the core flaws often noted by its preceding generation—rather it originates from a demoralizing late-in-life shift in world view coupled with a struggle to gain attention among the institutions that most likely hold the answers to Gen X’s path to retirement prosperity.
Or perhaps it’s just a hold over of that 90’s Curt Cobain and Fiona Apple everything sucks and everyone is awful mentality with which a lot of them entered into adult hood augmented by their having to witness the breakdown of the US economy right before most of them truly got to ride the gravy train.
It’s a Great Time to be Alive
The boundaries for Gen X—like most other generations—tend to be a tad blurred, but the consensus places them between the birth years of the very early 1960’s and very early 1980’s. And with this, we see individuals who were just entering their professional lives at the beginning and end of the largest modern day economic expansion in the United States.
Younger Gen Xer’s watched older Gen Xer’s walk out of high school and college and into awesome jobs with great benefits and few worries.
Those born at the latter end of the Gen X time period, certainly contended with much leaner prospects for prosperity and were much more in touch with the realization that the life is about a whole lot more than just hard work and doing what you’re told. And that a college degree of a dollar are worth exactly four quarters—actually probably more like 99 pennies.
So, many Gen Xer’s have wrestled with the paradigm shift that required them to accept risk as a real element to their professional lives and come to the realization that no everyone gets to become an astronaut or make partner, and the consequences of that kind of suck.
But is this really the core driver behind their negative outlook on retirement? After all Millennial (aka Gen Y) has also had to contend with a shift in expectations, and they appear to be a group sharply divided into two groups, one group embracing modernity and the reality that good fortune takes a lot of hard work and another group that complains about debt and unfairness (looks like making everyone a winner in grade school left and impression on some people and left them expecting that to always work out).
But perhaps they really are the forgotten generation…
The Middle Child Generation
Research from Pew shows us that Gen X is the most pessimistic about it’s future as it relates to retirement. And in attempt to explain why that pessimism exists, Pew and others have suggested that Gen X suffers from the unfortunate fate of being sandwiched between two generations that have managed to call more attention to them by the financial services industry.
Boomers, retiring at massive rates represent money in motion. And money in motion is where a large portion of financial advisers and investment brokers make their money. Not to mention that fact that retirement means using your assets to generate the income your job once did, and this means plenty of opportunity to talk about annuities—and rightfully so.
Gen Y on the other hand is new to the game. And there are a number of financial products millennial should be contemplating as they start out on their journey to retirement. But oddly it seems strange that the financial services industry would focus so intently on them over Gen X.
After all Gen X certainly has a much larger pool of individuals who have established careers and likely more money in the bank. Gen Y on the other hand is only at most roughly a decade into its professional life and most are far less. Factoring in the fact that many millennial opted to borrow big for their fancy college degrees and you have a generation squeezed rather tight by financial constraints.
Perhaps the financial services industry feels guilty or sorry for Gen Y and wants to ensure that it’s helped along better than generations past.
Somehow…I seriously doubt it.
What makes Gen Y more coveted then? Nothing, and I don’t think they really are.
It’s Really about the Boomers
Despite all of their attempts to suggest otherwise, the financial services industry is mostly focused on transactional business that happens immediately. And quite honestly, there is way more money in that model—the more desperate you are, the fewer options you have.
Of these three generations, it may be the case that more people want to focus on Gen Y than Gen X, but I’m betting that this difference is microscopic when compared to the focus that goes towards the Baby Boomers. In other words, Gen X and Gen Y stand in the shadow of the Boomers and any difference in attention given to one versus the other is insignificant and incidental.
Gen X is likely more pessimistic (though not widely more pessimistic by the data from Pew) due largely to the fact that it did have to face an uncomfortable paradigm shift much later in life than Gen Y. In other words, Gen Y has had more time to get comfortable with the idea that you can’t just buy Yahoo stock and become a millionaire.
We Personally Love Gen X
Gen X has been very good to us, and we’ve been very good to them. Keep in mind that pessimism doesn’t equal failure but lots of times optimism can be a precursor to it. Anecdotally, we’ve meant plenty of Gen Xer’s who are cynical about their future. But that doesn’t place their finances in trouble. If anything, it makes them substantially stronger.
They scoff at the notion that they will, in fact, get a 5% raise every year just because that’s what happened before. They don’t view their jobs as secure and do worry about having to find a new one at a reduced salary versus what they are currently making.
None of this is cause for alarm. It’s actually cause for celebration that someone finally gets it. That risk is real and you have to understand its implications on your life. That doesn’t mean you can let it control your every move and stop you from prospering. But it does mean that you can let it keep you from jumping off a cliff and assuming that if you flap your arms you’ll be all set.