It's Time for Generation X to Grow Up

Last week MSNBC had an interesting article titled For Gen X, Time to Grow Up and Get a Broker. This generation had a somewhat negative image when we were kids, but as the article points out, most of us in this generation have outgrown that image and moved on to be at successful points in life. Even so, many people in their 30s are still behind when it comes to retirement savings.

Melanie Keller, 35, admits that fact. She worries about retirement because she only has $3,000 put away in a 401(k) plan and has no other investments. But instead of socking away money for retirement, the pharmaceutical saleswoman is trying to save $60,000 so she can buy a starter home where she lives in San Jose, Calif.

Melanie is a very typical example. She has an established career, is trying to save money to buy a house, and is probably already married, or planning on getting married and starting a family soon. With so much going on as it is, saving for retirement has taken a back seat.

One reason that many Gen Xers have trouble getting started early with retirement savings is because of debt, usually student loans:

Even if they are not supersizing their lives and living beyond their means, she said, many Gen Xers ‒ generally defined as those born from 1965 to 1980 ‒ carry significant debt due to college alone. Once they have kids, they begin to worry about saving for their college educations, and retirement planning often drops in priority.

This is very prevalent with people I meet with who are in their late-20s or 30s. In some cases, these individuals have upwards of $75,000 in student loan debt still, and if they are married to someone who also has student loan debt, this can be a huge burden. Factor in some regular credit card debt, trying to buy a house, and all of the other financial issues in life and it is easy to see how retirement can get overlooked.

Oppenheimer Funds also did a survey and found:

  • 62 percent say they live paycheck to paycheck
  • 56 percent have an outstanding credit-card balance of $3,000 or more.
  • 62 percent of women say they have not bought any investment products.
  • 45 percent of women would buy 30 pairs of shoes before saving $30,000 in retirement assets.
  • 65 percent of women and 48 percent of men said they do not know how a mutual fund works.
  • Nearly 65 percent did not know that when interest rates go up bond prices typically go down.
  • 38 percent of women have not started saving for retirement.

Improving These Statistics

The only way to improve these statistics is through education and a willingness to learn. You don’t have to read a bunch of books on finance or create complicated investment strategies to reach your goals, but you do have to pay attention to your situation and take action. We all have bills to pay, debt, housing costs, a vehicle, and so on. These are all very important, but so is saving for the future. It doesn’t have to be an issue of sacrifice, but understanding how a little bit as soon as possible can go a long way towards funding your future.

Author: Jeremy Vohwinkle

My name is Jeremy Vohwinkle, and I’ve spent a number of years working in the finance industry providing financial advice to regular investors and those participating in employer-sponsored retirement plans.