Gen Xers Confront Retirement Reality
Economic Challenges
Natixis IM said its survey showed that North American Gen Xers are coming to terms with how swiftly volatile markets and the economy can affect their retirement plans. For one thing, they are split on how much financial freedom they will have in retirement.
Forty-three percent anticipate having “the freedom to do what I want, when I want,” while 48% said they have no choice but to live frugally. Twenty-nine percent worry that they will have to relocate to somewhere less expensive.
Eighty-five percent of North American Gen X investors said inflation has shown them how big a threat prices are to retirement security. Two-thirds reported saving less because they are facing higher everyday costs, while a quarter said higher inflation has motivated them to save more.
Although 46% of North American Gen X respondents said they are comfortable taking risks to get ahead, 78% said that if forced to choose, they would still opt for investment safety over performance.
The survey found that Gen Xers may be letting cash investments take the place of longer-term ones. Only 4% of Gen Xers believe that having too much invested in cash is risky. In reality, Natixis IM noted, cash investments typically offer lower post-maturity rates compared with bonds, are vulnerable to inflation and can limit long-term earnings.
Thirty-six percent of Gen Xers reported owning bond investments, but when quizzed about how interest rates affect bonds, 45% said they did not know, while only 2% answered correctly.
Importance of Financial Advice
According to the survey, North American Gen Xers have a lower appetite for professional advice than their peers elsewhere. Only 38% reported that they need professional advice, compared with 56% of Gen Xers globally.
North American Gen Xers’ use of advisors decreased from 46% in 2019 to 44% in 2023, and their reliance on automated advice fell from 21% in 2021 to 15% in 2023. Still, 64% acknowledged the importance of professional guidance in navigating recent inflation.
Seventy-nine percent said they prefer to speak with advisors person to person, rather than receive digital advice. In contrast, 49% of Gen Xers globally prefer digital advice to the in-person kind, up from 35% in 2019, and in Asia, 64% prefer digital, up from 41%.
North American Gen Xers also said what they most want from their relationship with an advisor are financial planning advice, accessibility and help in understanding investing — especially important, Natixis IM said, as 48% of Gen Xers reported that they do not fully understand all the investments in their retirement plan.
