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A new retirement is taking shape

Retirement goals evolve with each generation, reflecting their unique experiences and aspirations. Today, the retirement landscape is being transformed by Gen Xers and millennials. Several factors are contributing: the rise of financial advice on social media, financial events that have shaped these generations鈥� savings habits and a reimagining of what retirement looks like. 

For the past 20 years, financial professionals have been at the forefront of helping baby boomers successfully retire. But it鈥檚 worth noting that the first Gen Xers turned 59 1/2 in 2024, making them eligible to withdraw retirement savings. Very quickly, Gen Xers will outnumber baby boomers. In 2028 there will be 63.9 million Gen Xers to 62.9 million boomers.¹ Millennials are right behind them, and both generations are in their prime saving and wealth-building years.

It鈥檚 important to take a step back and remember these generations faced their share of economic impacts that shaped their ability to save 鈥� including the burden of health care and housing costs outpacing income growth. Baby boomers have certainly faced their share of challenges. But they began their savings journey during more stable times, including the market growth of the 1990s, when housing was generally more affordable. This created a steadier approach to saving. In short, Gen Xers and millennials have experienced their own distinct savings journey.  

First, let鈥檚 understand the new landscape

Retirement goals and financial needs for the new retirement generation are changing:

• Retirement age and life expectancy: Longer lifespans mean savings will need to last longer 鈥� and many in these generations aren鈥檛 sure they鈥檒l have enough. Expenses like health care and housing are making it vital to supplement future savings as much as possible. 
  
• A savings gap creates complexities: Gen X accounts for just 25.6% of the nation鈥檚 wealth, while baby boomers own over half (51.6%), highlighting a significant disparity. Higher levels of debt exacerbate this gap, creating a difficult challenge for saving.³ Student loans are particularly burdensome on these generations.⁴ Plus, these generations have a greater dependence on 401(k)s, IRAs, and personal investments.⁵ Compared to the pensions of the boomers鈥� heyday, these retirement accounts put the onus on the participant to know where and how to invest dollars.
• Shift in investment style: There is appetite for risk and investing. Even though these generations experienced significant economic disruptions, they are less risk adverse than older generations.⁶ They rely more on digital tools, robo-advice, and digital sources for education, which opens their curiosity. Sustainable investing is also popular, offering a way to align their investment strategies with their values and life perspectives.⁶ 
• Lifestyle and goals: There is an increased focus on an active and purposeful retirement, such as travel, second careers, or working part-time to stay engaged. Many are reimagining retirement as an opportunity to explore passions, volunteer, or continue contributing to society in meaningful ways. This shift reflects a desire for fulfillment and personal growth.

Key tactics to adapt to the evolving landscape

Because these generations make retirement more personal, it鈥檚 important to help ensure their planning aligns with their unique lifestyle goals.⁷

Focus on client personalization: Help encourage clients to consider their lifestyle and long-term goals in retirement planning. Showing clients that you understand their unique journeys can help build trust. Listen closely to their concerns and provide reassurance through proactive communication. You may also consider tools like personalized projections, scenario planning, video, and interactive resources to help clients visualize their retirement and help clients get a solid footing.

• Guide clients on effective saving strategies and maximizing potential: It鈥檚 crucial to assess each client鈥檚 current financial standing. Start by determining a client鈥檚 retirement readiness, knowing that closing the savings gap can have a lasting impact. Focus on maximizing contributions to retirement accounts,⁸ especially for those nearing retirement. Annuities, with guaranteed income, can play a pivotal role in expanding savings, particularly given longer life expectancies. Many from younger generations may choose to work beyond traditional retirement age to compensate for savings shortfalls. Discuss options like catch-up contributions each year and maximizing Health Savings Account (HSA) contributions, which can offer tax advantages and additional growth opportunities. 
• Discuss managing market volatility and protecting investments: Help clients navigate market fluctuations by locking in gains during market highs and protecting assets when markets dip. This approach is particularly beneficial for those concerned about volatility. Walk clients through sustainable investing options and explore strategies for shielding a portion of their nest egg from market risks with, for example, the guaranteed income of a fixed indexed annuity. 

Financial professionals play a key role in helping these generations navigate retirement. Take a proactive approach to guiding clients toward the new retirement.

Learn more about helping post-boomers plan for retirement.

Insights on 麻豆传媒 Connect. Tips, tools and resources to grow your business by helping clients retire with confidence.

1 The for research on demographics and generational numbers. 
2 The on Generation X confidence in retirement funds.
3 The nation鈥檚 wealth gaps as noted in the .
4 Student loan debt by generation, . 
5 Savings vehicles and decline of pension dependence as noted in .
6 Information on increase in sustainable investing from the .
7 Retirees looking for personalized approaches as seen in .
8 Maximizing contributions for savings as outlined by .