Advising Through the Generations

Generations Apart

On the heels of the Boomers, younger people today need help catching up on saving

by Katie Libbe

Ms. Libbe is vice president of Consumer Insights, Allianz Life Insurance Company of North America. Connect with her by e-mail: 

Too many Americans are unprepared for retirement, according to a grim and growing pile of studies showing how little people have set aside for the future.

Unfortunately, that’s not news to many financial professionals, who are all too aware of the problem. To help their current and potential clients become better prepared, financial professionals need to know more about the motivations and needs of those reaching retirement age.

To illuminate the issue, Allianz Life conducted the Generations Apart study, surveying 2,000 members of the two generations reaching and approaching retirement: the Baby Boom Generation (age 49-67) and Generation X (age 35-48). These two groups have experienced fundamentally different economic and social conditions from which to build a future, but share serious concerns about their financial futures.

Findings from the Generations Apart study were sobering. The vast majority of both groups (84%) said that a traditional retirement is a romantic fantasy of the past. They also concluded the idea of retirement starting at age 65 spent doing exactly what you want is now unrealistic.

A case of very bad timing

The pessimism about the future goes deeper among those in Generation X.

They suffered from bad timing, as the Great Recession took down the economy just as they were hitting their stride as active adult members of the economic mainstream, purchasing homes and settling into careers.

As a group, Generation X lost nearly half its wealth between 2007 and 2010, according to a Pew Charitable Trusts analysis1. Those losses are also reflected in Gen Xers’ reduced retirement savings. According to a study by the Insured Retirement Institute2, those savings dropped 15% between 2012 and 2014, to a median of $59,800.

So maybe it’s no surprise that the Generations Apart study found Gen Xers seem to have a bleak overall view. They see themselves at an economic disadvantage compared with previous generations, with the vast majority responding that they have it worse than boomers in terms of getting a job, saving money, and staying out of debt. Interestingly, many of the boomers agree that the generation behind them has it harder in those respects.

Given the struggles they face in their day-to-day finances, retirement is a far-off goal that is hard to put in concrete terms. Gen Xers indicated they are unsure about their ability to achieve retirement goals. More than two-thirds (67%) of Gen Xers agreed that retirement savings targets are out of reach. By contrast, less than half (49%) of boomers thought so.

The recession must have been a deeply unsettling experience for this generation. Gen Xers expressed that they get bogged down with uncertainty when planning for retirement (64%). Nearly half say “it is useless to plan for retirement when everything is so uncertain” (44%). Idyllic retirement no longer a dream The concept of ending their careers and taking it easy is not a dream Gen Xers are holding on to.


A solid majority (68%) believe they’ll never have enough money to stop working; boomers are not so fatalistic – less than half (43%) of them think they may never be able to retire. This is in contrast to the relative optimism that people in their 30s and 40s have had in the past.

A yearly survey by the Employee Benefit Research Institute (ebri) found that among workers age 35 to 44, people who said they are very confident that they will live comfortably in retirement dropped to just 14% in 2015, down from 25% in 2005 and 20% in 19953. Part of the problem is that financial planning is mystifying to many Gen Xers. Most said that it is almost impossible to figure out what expenses will be in retirement. Nearly two-thirds agreed that retirement is a big puzzle and they don’t have the right tools to figure it out.

The pessimism about the future goes deeper among those in Generation X. They suffered from bad timing, as the Great Recession took down the economy just as they were hitting their stride as active adult members of the economic mainstream, purchasing homes and settling into careers

While this pessimism is disheartening, it actually seems to reflect the sense that Americans at midlife may not have the mental energy to devote to planning for retirement while they juggle the rest of their lives. They figure they will get to it at some unspecified time in the future. This is where financial professionals can come in and deliver effective guidance, because we know that procrastination can mean leaving a lot of money on the table in lost compounding for all those years when small contributions to savings were not accumulating interest or invested in the stock market.

Gen Xers are open to getting help – more than half of them said they believe working with a financial professional can have a positive impact on their finances and readiness.

Advisors have their work cut out

All of that adds up to an opportunity for financial professionals to step in and help educate a group of people who are still reeling from the recession and unable to focus on their future needs.

More than two thirds (67%) of all respondents in the study noted that they are still feeling the impact of the crash today. Financial professionals can start by providing a few simple, easy-to-understand steps for their Gen X clients There are a few specific steps that financial professionals can take to help their midlife clients face reality and create a more secure financial future.

  • Take inventory. Rather than remain paralyzed by uncertainty, Gen Xers need to disregard doubt and dive head first into the planning process. An effective way to do this can be through taking inventory of spending habits to determine where to make changes. Even a week’s worth of detailed information about spending can be extremely enlightening and be the first step toward a better understanding of a client’s financial situation.
  • Reduce reliance on credit. Nearly half (49%) of Gen Xers regard credit cards as a survival tool rather than a convenient way to pay for monthly expenses. This attitude can lead to the bad spending habits that have created the mountain of debt that currently faces Generation X. Encourage your clients to make their monthly payments on time to avoid hits on their credit report and high interest fees. They should get to a place where they are paying with cash for current expenses so the debt doesn’t get any deeper.
  • There’s still time for the magic of compounding. Gen Xers are still working, and the economy is improving so their prospects are good for putting money away for the long-term. Even a modest amount saved on a monthly basis can grow substantially over the course of 20 years. Consider a 45-year-old Gen Xer who decides to save $100 every month for the next 20 years. Assuming a 7% return on investing those funds, the end sum would be more than $53,000. That’s more than double the amount that would be available if that same Gen Xer was to simply save that same $100 every month without the benefit of compound interest.

It’s clear the financial services industry needs to provide more resources and support for Generation X. Although they are not as close to retirement as boomers, Gen Xers need to understand that a successful tomorrow can happen only through careful planning today. They must move past the negativity and take control of their finances.




1 Pew Charitable Trusts – The New Financial Reality – September, 2014
2 Insured Retirement Institute – IRI Sees Drop in Retirement Confidence and Savings of Generation X – January, 2014
3 Employee Benefit Research Institute – Retirement Confidence Survey, 2015