Gen-Xers ‘are behind in their retirement plans’

Research shows that Gen-Xers may be far behind when it comes to their accumulated savings. Picture:

Research shows that Gen-Xers may be far behind when it comes to their accumulated savings. Picture:

Published Nov 3, 2023


The majority of Baby Boomers (people born in the years 1946 to 1964) have reached retirement age and, for a number of reasons, are generally not well prepared financially for retirement. Now, the next generation, Gen X (those born in 1965 through to 1980) is approaching retirement age and, recent research shows, may be even less prepared.

While Boomers were, on the whole, better educated and earned more than preceding generations, they faced challenges new to their generation, notably increased longevity and the migration by the retirement industry in the 1980s and 90s from defined-benefit to defined-contribution funds. As a result, to ensure a comfortable retirement, they had to save over and above what they accumulated in a company pension scheme.

The generation the Boomers engendered, Gen X, may not have learned the lessons of their parents. The oldest Gen-Xers turn 58 this year, having just seven years until the traditional retirement age of 65. Research here and in the US shows that people of this generation may be far behind where they need to be when it comes to their accumulated savings.

A CNN report (“Gen X isn’t financially prepared for retirement”) refers to a study by the US National Institute on Retirement Security, which suggests that many Gen-Xers aren’t accumulating enough savings to maintain their standard of living when they retire. This is in a country where social security benefits are considerably greater than in South Africa. Here, where the low level of social security should provide a greater incentive to save, the situation may be more dire.

In the recent Sanlam Money Matters survey, 30% of South Africans of 50 years and older said they were planning to stop working completely come retirement age; however, 32% said they could not afford to stop working and will keep going for as long as they can.

If you’re one of these Gen-Xers, Farzana Botha, segment manager at Sanlam Risk and Savings, suggests assessing your situation and putting a solid plan in place.

“The retirement journey is highly personal and complex, with challenges for everyone. My suggestion for Gen-Xers is to pause and take stock. Speak to a trusted financial adviser to get a holistic view of your situation. And then create a roadmap to reach your goals,” Botha says.

Gen-Xers who are not on track will need to make some tough decisions. “Often, anxiety brings apathy and inaction. Work with your adviser to move past this. The sooner you act, the better and more in control you will feel,” Botha says.

She suggests that you consider the following steps:

• Get the information you need. “The first step is to know where you stand. Use a retirement calculator to assess whether your current savings are on track for your wind-down years.”

• Admit that compromises may have to be made in the short term. “If you’re not on track, that means possibly making sacrifices to reach your goals over a relatively short, specified period. You may need to compromise your current lifestyle to live better later.”

• Review your expenditure. “Even in tough times, there are usually expenses you can cut down on to ‘up’ your retirement contributions,” Botha says.

• Manage your money more efficiently. Botha suggests working with your adviser to make your money work harder for you and maximising tax breaks to align with your goals.

• Consider products that offer flexibility. “Investigate retirement products that offer fixed and variable options, for growth and peace of mind,” she suggests.

• Chat to a life coach: Botha says the wind-down years could be an exciting time to pivot and forge a new career path. A life coach could help give direction and clarity on this journey.

Botha says the wind-down years may call for some tough decisions that’ll pay dividends down the line. “Stay focused on what you want this chapter to embody. Then, work with your adviser to craft a reasonable path to make this happen,” she says.