Gen Xers and millennials are ready for retirement planning
This content is categorized as:These generations present tremendous potential for you to reach new clients and strengthen your practice, while also helping them prepare better for retirement.
were born between
1965 鈥� 19801
were born between
1981 鈥� 19961
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The opportunity facing financial professionals
Gen Xers and millennials can use financial professionals' assistance as they plan for retirement and other long-term goals. However, there's a knowledge gap among younger generations on the benefits of professional planning and knowing how to access advice.
As a professional, it's a chance for you to be part of the solution, bridging the gap with guidance and direction. And it's a key opportunity to help grow your practice for years to come. These prospects are in their peak earning years, but many need help utilizing the tools at their disposal.
*The age at which individuals can typically begin withdrawing money from retirement accounts without a federal income tax penalty.
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Let's talk about the client's challenge
Nearly half of Gen Xers and millennials report feeling underprepared for retirement and worry they may not be able to retire at all.2
But they're not looking for the same portfolio management approach as their parents. They have different attitudes around life, money, and retirement 鈥� and different ideas on professional financial advice.
27%
31%
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Help Gen Xers and millennials build their retirement story
Retirement is drawing near for some Gen Xers, and is getting closer on the horizon for millennials. They鈥檙e looking to make smart moves with their finances, and see retirement planning as a priority. But many need professional guidance to learn how to move to the next chapter.
Millennials have already surpassed boomers as the largest generation. And together with Gen Xers they will continue to increase their share of wealth. That means they represent tremendous potential for you and your practice. Let鈥檚 dive in to learn ways you can help guide this next group of retirees.
Who are the Gen Xers and millennials?
Although both generations are planning for retirement and learning to save better, they still have unique financial situations that significantly impact the way you can best work with them.
Understanding where Gen X stands
They want to learn strategies and wealth-building options. They're asking smart questions but need a good financial professional to point them in the right direction. An interesting takeaway seen in the recent Insured Retirement Institute (IRI) research4 shows Gen X wants to understand retirement options that provide downside protection, lifetime income, or both.
As their wealth continues to grow, Gen Xers will need to overcome any hesitation and prioritize planning and saving. As a sandwich generation, they may have a lot on their shoulders, caring for aging parents while raising their own families. They can benefit from help balancing priorities as they plan for tomorrow.
Did you know?
Gen X often feels overlooked. Between the baby boomers and millennials, they view retirement planning with hesitation.
Understanding the millennial point of view
Millennials view financial planning as part of a relationship with their financial professional. With a willingness to learn, they're seeking a partner or coach to help them identify opportunities and make long-term financial decisions 鈥� it's not just about finding a portfolio manager.5
As digital natives, they may often expect easy integration of technology in their financial lives, including advice in a personalized model.5 They can also rely more on digital tools, robo-advice, and digital education sources, which shows they are open to learning.
Their financial characteristics are unique
Saving for retirement is harder today than it was for previous generations. Here are three reasons why.
Housing costs
Home prices have surged alongside interest rates, causing Gen Xers and millennials to face record-high mortgage costs.6Debt loads
Student loan debt impacts all generations. Gen X has the highest average balance at $44,240, while 39.9% of all borrowers are millennials.7Retirement security
Opinions are improving, but 47% of non-retirees believe Social Security won't pay retirement benefits, adding to questions over savings.8You can help Gen Xers and millennials improve their habits and provide them more saving options with growth potential and protection from risk. Based on what is suitable for each individual client, you may consider helping them with options like a Registered Index-Linked Annuity (RILA) or other annuities alongside traditional retirement savings. As long as it fits their needs.
Preparing for retirement can cause confidence to dip
Across generations, many felt more confident after the bull market of 2023. But Gen Xers saw the smallest increase in confidence.9
These individuals are the first group of U.S. workers to come of age with 401(k) plans as their primary retirement vehicle after employers shifted away from traditional pensions. But a 401(k) puts the onus on participants, which can be more challenging for those less informed on investing strategies and options.
Additionally, according to Intelliflo,10 more than a 1/3 of Americans (35%) don't seek financial advice from a registered financial professional because they don't believe they have enough money to hire one. It will be important to address this hesitancy to help you personalize your approach to and advice for these generations.
The average retirement savings for Gen X households is roughly $150,000 鈥� far from the $1.1 million that Americans say they need to retire comfortably.8
Though these generations have shifted consumer behaviors, they're still looking for guidance
Both Gen Xers and millennials have a gap in knowledge around financial advice and access. Personalized strategies will be necessary to help them catch up and feel informed.
More than half (52%) of Americans turn to family for financial advice. Many also turn to digital sources.11
Financial professionals can win these clients over with adjustments to their digital and online presence. But remember: The goal is educating with a mentorship mindset. Share knowledge on savings plans and the details of your compensation model.
When it comes to digital connection, younger generations lead the charge.
See below for a look at how many turn to digital advice today.
Gen Xers and millennials also seek diverse strategies and expert guidance on more than portfolios. Millennials, for instance, take a proactive stance on estate planning but often lack the knowledge to execute it effectively. You can bridge this gap 鈥� offering insights that turn their financial curiosity into a solid plan.
Let's bring Gen Xers, millennials, and financial professionals together
These generations want to increase their savings and develop a truer picture of their financial security. Financial professionals play a key role in helping these generations navigate their future.
Many clients in these two generations are seeking guidance
This creates an opportunity for financial professionals to step in.
Reaching this audience may require you to:
- Fully embrace technology. Connect with clients where they are. Consider video for meetings and messaging platforms so they can stay connected more easily.
- Increase your online presence. Maintain a social media presence and interactive website to serve as a virtual financial resource, providing tools, tips, and easy connections.
- Prioritize relationships. When it comes to finances, Gen X and millennial clients want a partner. They're looking to learn from you, but they want to play an active role themselves.
- Focus on personalized plans. These generations want real-time updates, personalized insights, and easy-to-use tools that empower them to make decisions.
- Lead with education, not sales. Share blogs, videos, and other content to help these clients actively learn more about enhancing their financial security.
These generations want to learn from you and build trust before they commit. Read our 5 tips to connect with Gen X.
Financial professionals can reach these clients with personalized plans
Start your conversations by considering their unique goals, attitudes, and financial circumstances.
You can play a key role in elevating the next generation of retirees. Your guidance can help them plan more successfully.
You can establish yourself as the trusted expert for Gen Xers and millennials
Learn more about the role of a financial professional in closing the savings gap.
1 on defining generations.
2, 9 on who works with financial professionals.
3 looks at Gen X and their concerns on retirement.
4 on how these generations view investing.
5 for statistic on younger generations' desire for financial coaching.
6 on record-high mortgage costs in the U.S.
7 on student debt amounts by age.
8 looked at opinions on Social Security.
10, 11 on how generations are seeking financial advice.
12 on interest in financial professionals' assistance.
13 on how many Americans consult advisors.
