Can Gen X and Millennials catch up to Boomers?

Of all the wealth in the United States, Baby Boomers (born between 1946–1964) possess more than half (52%). The Gen X generation (born 1965–1980) is next in line, holding just under 29%.1 But is it enough as they begin entering retirement?

And what about Millennials? Old stereotypes have largely fallen by the wayside for this age group. That’s because they’re generally no longer perceived as the “entitled” youth of the past. With the oldest Millennials entering their 40s, many today have families, college educations, good paying jobs and a home, and are doing their best to live the “American dream.” 

But some are hard-pressed to achieve it. That’s because Millennials (born 1981 or later) hold less than 7% of the nation’s wealth.1 That’s a significant wealth gap compared to their parents.

But that doesn’t mean that Millennials are actually worse off than Gen Xers. In fact, both generations may have a hard time catching up to Baby Boomers.

Gen X and millennial retirement challenges

The retirement horizon for the oldest Gen Xers is less than 10 years away. Despite Gen Xers having about four times the wealth of Millennials, both generations face similar challenges

On the surface, Gen Xers appear to have the upper hand. A survey conducted by the Society of Actuaries noted that about three-quarters of Gen Xers (73%) own a home compared to just 60% of Millennials.2 Gen Xers are also higher earners with 51% saying they earn more than $100,000 compared to just 42% of Millennials.2

However, more Millennials (62%) than Gen Xers (57%) say they feel their finances are under control. In fact, fewer Gen X individuals say they are on track in planning for a financially secure retirement. Overall, Gen Xers feel less optimistic when reviewing their financial situation and looking toward the future.2

So, why do so many Gen Xers feel less secure about their financial futures, when the numbers seem to suggest otherwise?

While many investors and advisors see the Great Recession spawned by the 2008 financial collapse as a distant memory, it may have lingering effects on Generation X’s retirement outlook. Some Gen Xers may have slowed or halted their savings contributions as a result, just as they entered their peak earning years.

What about the great wealth transfer?

The potential transition of wealth from one generation to the next may help Gen Xers and Millennials close the gap. However, most advisors would agree that it shouldn’t be relied upon as a solution to any shortfalls. Much of the wealth held by Baby Boomers will likely transfer to their Gen X and Millennial children, but with older generations facing longevity risks of their own, there’s a chance that some of that wealth could be exhausted before it changes hands.

Younger investors need to focus on their own retirement strategies and consider any inheritance a bonus. Maximizing employer-sponsored retirement plans, reducing spending, delaying Social Security and paying down and avoiding debt need to be considered as incremental parts of a multi-pronged approach.

Another option for especially risk-averse clients may be to place a portion of their portfolio in index-linked annuities. This unique type of annuities allows individuals to participate in markets while striking a balance between tax-deferred growth potential and downside protection by setting their own limits on potential losses versus gains.

Regardless of what changes a client may make to his or her portfolio, the greatest impact may be through behavior change. While it sounds simple enough, some investors are hard-pressed to follow their own advice, let alone that of an advisor. Emotions can cloud judgments and lead to knee-jerk reactions when markets fall or leave clients feeling paralyzed to make important financial decisions.

Help your clients navigate the certainty of uncertainty with our helpful Behavioral Finance Advice (BFATM) program. These interactive resources allow you to connect with clients on a deeper level and uncover their motivations and underlying fears to help them make rational decisions based on their values rather than shifting emotions.

Access these resources below, and connect with your wholesaler to talk through unique scenarios and strategies.


Marshall Heitzman
Written by: Marshall Heitzman, CFP®, ChFC, FLMI, CPCU, BFA™

Marshall is TruStage's Advanced Planning Expert and has more than 25 years of experience in the insurance and financial services industry. He consults Financial Professionals on advanced retirement planning concepts for retirement and wealth management clients.

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