Gen X – Don’t Forget About This GenerationBy Angelica Malin
If you grew up at a time when Duran Duran topped the charts, permed hair was all the rage, and the Young Ones was a must-see programme, you are probably aged between 45-54. Being in this age group makes you part of Generation X.
What Is Generation X?
Generation X, often referred to as the ‘Forgotten Generation,’ is the descriptor given to the demographic cohort following the Baby Boomers and preceding the Millennials. It is the generation of people born between the mid-1960s to the early 1980s.
Financially Pulled From Both Directions
According to the FCA, many Generation Xers are financially stretched, and the pressure comes from both ends. Many will be providing financial support to their children through the ‘Bank of Mum & Dad’ while simultaneously looking after aging parents. Despite many Gen Xers having higher than average incomes, they find it challenging to put any money aside for retirement.
Although benefitting from the rising property market, many Generation Xers missed out on the final-salary pensions enjoyed by Baby Boomers. The auto-enrolment pension schemes that many Gen Xers joined will not produce the same returns that Millennials will enjoy.
Concerns Over Retirement
According to research conducted by Portafina, 40% of Gen Xers stated that their biggest concern heading into retirement was not having the money to sustain their current spending and lifestyle. One in three of those surveyed don’t think they’ll be able to do what they want once they stop working. Around 20% previously had aspirations of helping their families but now believe they may not be able to do so.
These concerns result in 25% of Gen Xers suffering from anxiety about their retirement finances, according to YouGov. The same survey found that 50% of respondents felt uncertain regarding their financial future. The YouGov report concluded that Gen Xers’ plans for making up their retirement financial deficit were to reduce their living expenses. Almost one-in-three believes that the State Pension will ease the burden.
Gen Xers’ Financial Plans
Despite the financial concerns that Gen Xers may have, it doesn’t prevent them from having a positive outlook on the future. When surveyed about their aspirations for the forthcoming 10-15 years, they gave the following responses:
- Do more travelling – 44%
- More time with family – 32%
- Be mortgage-free 31%
- More time socialising – 22%
- Retirement – 20%
Although it might feel daunting at the time, taking a realistic look at your financial situation will do you good. Developing a retirement plan now will help reduce the anxiety you have about having money for the future.
How To Create A Successful Retirement Plan In 5 Steps
Step 1. Get a Grip on Your Spending
If you have concerns about your financial situation when you retire, it is time to take action over your expenses. Creating a budget is the best way to do this, and there are plenty of budgeting apps to help you get a grip on your spending. Cutting back just a little each month means you can put a bit more into your pension.
Step 2. Consider Your Income During Your Retirement
How many employers have you had over the years? If you’ve had plenty, then the chances are you have a few workplace pensions that you may have forgotten.
These old pensions may be small, but they could mount to enough to cover some of your expenses during retirement if you have a few of them. If you cannot locate them, try phoning your old employer or using the Pension Tracing Service.
You will also be due a State Pension on retirement, and you can get a forecast from the Gov.uk website of the amount you are likely to receive. You should factor this amount into your monthly spending plan, too, as it will be a top-up on your income.
There may be other sources of income that you can incorporate into your monthly budget, such as rent from a property or cash from a lodger. Equity release is another option for raising money to fund your retirement. Whichever means you have to increase your income, you need to consider how it affects your tax obligations.
Step 3. Be a Little Bit Selfish
Around 20% of UK citizens consider supporting other family members to restrict their financial future. It is quite acceptable to say no to your family once in a while if it means you can safeguard your retirement.
You deserve to enjoy things that you’ve planned to do in your retirement and to do so without a guilty conscience. Have a down-to-earth conversation about your retirement plans with your family. This openness will remove any disappointment and awkwardness in the future.
Step 4. Visualise Your Retirement As You Want It
Take time to think about the things you want and what you want to do during your retirement. Building a picture of how you want your retirement to be will let you know how much money you need to achieve that life.
It might be challenging to know the exact figure of what you need to put into your pension, but you should be looking to save as much as you can afford. Predicting your final pension amount is equally tricky, so you should keep a regular check on how your pension is performing and consider adjusting what you put into it if your situation allows.
Step 5. Seek Professional Advice About Your Pension Options
Understanding your pension is important, and the number of options you have makes it challenging to get your head around the best thing to do. You can access your pension from the age of 55 and take a tax-free lump sum of 25%. Before doing this, you should consult with a financial advisor, as you do not want to risk leaving yourself short for your retirement. A regulated financial advisor can go through your pension and other financial options, ensuring that you are in the best position for your retirement.