Head-in-the-Sand Gen Xers Need Retirement Planning TLC

Several factors are creating a domino effect that has a crushing retirement impact for the majority of Generation X.

First, according to the Generations Apart study, commissioned by Allianz Life Insurance Company of North America (Allianz Life), two-thirds (64%) of Gen Xers find themselves frozen by uncertainty whenever they think about retirement. This paralysis means they don’t take any positive actions to secure their financial future, despite their skepticism about Social Security and Medicare.

Compounding their anxiety about the future is a heavy load of present-tense worry. Nearly three-quarters of Gen Xers (72%) do not think it is possible to figure out what their future retirement expenses will be, and 67% believe the supposed targets are way out of reach.

Then the mood seems to blur: Despite these feelings, Gen Xers express some delusional attitudes about retirement. More than half (55%) say they see themselves having a relaxed, easy time in retirement, and 46% report they will just figure it out when they get there.

At the same time, Gen Xers are generally dubious (92%) about the country’s retirement system, expressing doubt that  pensions, Social Security and Medicare will be there for them and feel they will never have enough saved to stop working. In fact, most (94%) believe it is up to them to build their own retirement nest egg.

This ambivalent mindset calls for empathetic, nonjudgmental financial planning, according to Allianz. This generation may not be ready to retire yet, but they are reaching a pivotal time where it’s crucial to accumulate assets for the future, and it’s worrisome that they’re simply not doing that, notes Katie Libbe, Allianz Life vice president of consumer insights.

Given the overwhelmed feeling that financial planning causes Gen Xers, financial professionals can play a key role in helping them build a solid financial path. Generations Apart found that the best strategy financial professionals can employ when working with Gen X is to be empathetic and nonjudgmental. Sixty-four percent of Gen Xers want a financial professional who makes recommendations that reflect their actual life and choices, not some ideal. And more than a third (34%) seek a professional who does not judge their financial choices, even if they are indulgent.

Not only are Gen Xers stressed about planning, some are also afraid they’ll feel shame in professional financial discussions, especially when it comes to credit card debt. Nearly half (49%) feel that credit cards function as a survival tool for most people. They don’t want someone who wags their finger at past financial decisions. Some say they’d be embarrassed to tell a financial professional if they were carrying a lot of credit card debt. Instead, they want to work with someone who completely understands why they might have credit card debt.

Professionals can help Gen Xers move past their financial issues and clear up misperceptions by understanding what they are looking for: assistance with planning, setting and achieving long-term financial goals, Allianz says. The study revealed that financial professionals have a unique opportunity in this area because the majority of Gen Xers (67%) are willing to delegate some of their financial decisions and plans to their professional.

To establish that lasting relationship, financial professionals should first build trust by helping Gen Xers manage their everyday financial issues—such as building savings or paying off debt. Half of Gen Xers describe themselves as more “live for today” than “save for tomorrow,” and 44% say they will splurge on something they want. Some Gen Xers also make investment decisions based on their gut, so a financial professional can be valuable by guiding them to accumulate their savings in the right way.

“If Gen X clients have a low level of financial preparedness, a good starting point for financial professionals is to help address current financial issues. This could even mean offering support to save towards a job transition, if retirement feels distant,” adds Libbe. “When financial professionals help solve immediate financial concerns, it can then open the door to the next phase, like retirement or simply living a lifestyle less dependent on work.”

In short, Libbe says, Gen Xers need to begin facing their financial planning issues head on, and a combination of help from professionals and other resources, especially cost-effective options, is critical if they want to retire or get ready for the stage after their career.

The Allianz Generations Apart Study was conducted online by Larson Research + Strategy in November 2014 with 2,000 U.S. adults ages 35 to 67 with a minimum household income of $30,000.