The newest 55-plussers: How will the next generation change the demographic’s approach to finances?
By Deborah Jeanne Sergeant
While the baby boomers and millennials have been duking it out on social media as to who ruined what, the generation in between, Generation X, has been quietly growing older.
Depending on the generational cut-off, the oldest Gen-Xers are between 55 and 57. How will the next generation of 55-plussers change the demographic’s approach to finances?
Their tech savviness will make a big difference.
“This population is the first generation to grow up in the personal computer era,” said Phil Provenzano, insurance agent and financial adviser at The Financial Guys Insurance Agency in Rochester. “I say that first because this population is one that has had the benefit of technology to help with retirement, savings and finances in general, amongst other things.”
He doesn’t mean that Gen X necessarily handles its money better, but that this generation has different tools and resources to build wealth from previous generations. The thrifty baby boomers — brought up hearing about the Great Depression from their parents or grandparents — have prized thrift and eschewed debt. Growing up in the glitz of the 1970s and ‘80s may have skewed Gen X in a different direction, with less emphasis on saving and investing.
“The Gen X population is vastly different in their approach and view of finances and retirement,” Provenzano said.
Gen X has become a “sandwich generation,” caring for their own children while helping their aging parents. This puts additional financial strain on a generation that likely has not been as frugal as baby boomers.
There’s also the “drastic increase in the costs of education for their children, increased cost of healthcare and insanely high inflation,” Provenzano said.
The US Bureau of Labor Statistics states that prices for college tuition and fees are 1,461.32% higher in 2022 versus 1977. The bureau also states that the prices for medical care services have grown by 7,123.08% from 1935 to 2022. The buying power of a dollar is only 18.127% of what it was in 1975. To make times even tougher, Gen X faces a retirement of hardship.
“There’s a lack of pensions and diminished pension,” Provenzano said. “The days of employer pensions are virtually gone. Seventy-nine percent of Americans work for an employer that utilizes a 401K. That can be good. However according to the US Census Bureau, only 41% of Americans actually contribute to such 401K.”
He advises Gen-Xers to improve their financial status by eliminating debt, especially credit card debt.
“Prioritize retirement savings,” Provenzano said. “Start, in any capacity, to contribute to an employer sponsored retirement plan and if you don’t have one available seek professional advice on how to start saving. Start with contributing small amounts and then go from there. An easy one is that if you get a raise with your employer, pretend that raise never happened. Just take the amount your income increased by and put that amount into your retirement account.”
Starting early on retirement planning is ideal. However, starting at any age is better than not starting at all.
Diana Apostolova, investment consultant at Rochester Investments, said that because pensions — if any are available — have not kept pace with inflation and Gen-Xers have not saved much, “the remaining years from now until retirement could be the most important years for them to catch up and retire as planned.”
She advises finding a financial adviser to create a plan for retirement that makes sense with the person’s obligations, income and goals.
“Planning for retirement can be fun and exciting and having a financial adviser to help can make a whole world of a difference,” Apostolova said. “The difference maybe finding yourself out of money at a time you’re unable to have any other income or living happily without worrying that your money will run out before you do.”