5 Reasons Gen X Needs a Retirement Strategy That Doesn’t Copy Boomers
Written by
Laura Bogart
Edited by
Kristen Mae
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It’s no secret that Gen Xers and baby boomers aren’t alike in many ways. Almost every aspect of American life and culture differed dramatically as each generation grew up — including how they plan for retirement. Just as boomers shook their heads at flannel and grunge, Gen Xers may view the retirement strategies their parents took for granted with their trademark cynicism.
As members of Generation X find themselves in often precarious financial positions — facing an uncertain global economy and personal pressures to care for aging parents and their own children — they need fresh approaches to retirement planning, ones that don’t simply follow the baby boomers’ examples.
GOBankingRates spoke with several experts about why Gen X should apply the iconoclastic thinking it’s known for to retirement planning.
1. Shifts in Tax Rates
Popular music isn’t the only thing that has shifted between the peak of the baby boomers and the rise of Gen X. According to James DesRocher, founder and financial coach at TrueView Financial, tax structures and rates have changed significantly over time.
“Boomers built wealth during a period of falling tax rates,” he said. “Gen X faces the opposite challenge — today’s tax rates are historically low, and most experts expect them to rise.”
DesRocher explained that these shifts in tax rates have essentially flipped the retirement equation: While boomers planned for lower taxes in retirement, Gen X needs to plan for the possibility of higher taxes.
2. Housing Is More Expensive
When boomers were purchasing homes, the costs related to homeownership were more manageable.
“For boomers, owning a home was a manageable expense and a cornerstone of wealth-building,” DesRocher said.
Conversely, Gen Xers are facing higher home prices and mortgage rates, which make housing a major strain on their overall financial plans — including their ability to save for retirement.
3. Caregiving Responsibilities
To Isabel Barrow, a financial planner at Edelman Financial Engines, the retirement landscape that Gen Xers must navigate is far more complex than the one their parents experienced. A huge part of this change involves their position as “the sandwich generation,” tasked with raising children while supporting their aging parents.
While this considerable financial — and personal — strain can limit Gen Xers’ ability to save for retirement, it doesn’t make retirement planning impossible.
“That dual responsibility can make it difficult to prioritize saving for retirement, but consistent saving and disciplined investing have never been more important,” Barrow said. “Focusing on what you can control, like paying yourself first through steady contributions and thoughtful asset allocation, can help create real progress, even in a challenging environment.”
4. Social Security Feels More Uncertain
When baby boomers were considering retirement, they generally viewed Social Security as a reliable source of income. Barrow said that now, given uncertainty around the program’s long-term solvency, Gen Xers can’t put all their eggs in the Social Security basket.
Instead, she recommends that Gen Xers establish a retirement strategy focused on diversifying income streams — through IRAs, brokerage accounts, real estate or small-business investments. She also urges Gen Xers to work with financial professionals who can guide them toward the right products and investments for today’s environment — not their parents’.
“Working with a financial planner can help you build flexible, forward-looking strategies that reflect today’s realities rather than outdated models of retirement,” she said.
5. Gen Xers Have Had More Career Changes
While baby boomers could often plan on staying in the same career — or even with the same company — for decades and collecting a steady pension, many Gen Xers have had more varied job histories. Barrow said that the rise of self-employment and frequent career changes among Gen Xers means they need to be proactive about managing their retirement accounts — often for a longer retirement horizon than their boomer predecessors.
“Unlike baby boomers, Gen Xers may need to plan for retirements lasting 30 or more years,” she said. “With frequent career changes and the rise of self-employment, it’s essential for Gen X investors to take an active role in managing retirement accounts, consolidating old 401(k)s, and ensuring their investments remain aligned with long-term goals.”
The Bottom Line
Gen Xers and baby boomers grew up in very different social and economic environments, requiring distinct approaches to retirement. While Gen Xers can’t rely on some of the same methods and products their parents did, they can still chart their own path toward a stable retirement.
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