It seems that my parent’s generation, the Gen Xers, are not necessarily banking on retiring between the ages of 62 and 65 as the baby boomers did and are doing. In fact many Gen Xers plan to continue working until at least age 70 and beyond. But the reasons behind this thinking could be a little disturbing. It seems that overall Gen Xers have not been as diligent about socking away money for their future retirement as the baby boomers. The good news is that there’s still time as well as investment strategies for Gen Xers that can assure them some measure of financial security during their retirement years ahead.
1. Pay Off Debt
One of the first things the Gen Xers should do is pay off debt. One of the primary reasons Gen Xers haven’t invested as much toward retirement as baby boomers is because of poor spending habits. Gen Xers need to buckle down and pay off debt as fast as possible. Create a budget, stick to it and get their financial affairs in order so they can invest more and invest wisely for the greatest gains toward the retirement years that are approaching.
2. Invest Often
Investing often is a great habit to help the Gen Xers toward a better future in their golden years. Once debt is paid and bills are under control, they need to invest regularly to accumulate the money needed for retirement.
3. Hire an Investment Advisor
According to an article by CNBC, Gen Xers who work with a financial advisor end up saving about twice as much as those who do not work with an advisor. Therefore, it stands to reason that one of the investment strategies for Gen Xers to follow would be to hire a financial advisor to help them plan and invest for their future.
4. Utilize 401K’s
Whenever 401K’s are offered by employers, Gen Xers need to take advantage of this opportunity for investing. Not only will it save tax dollars since contributions are made pre-tax, but it also gives them free money toward their retirement. Most employers offering these benefits also contribute to the 401K up to a certain percentage. This additional money can help grow retirement savings faster than if they were to contribute to a retirement plan on their own without the additional money many employers offer.
Another retirement strategy that is available for Gen Xers who have come to age during the technological revolution is robo-advisors. The robo-advisor is a growing investment choice that Gen Xers could utilize to grow their retirement income allowing them to save both time and money due to their ease of use. In addition, the use of a robo-advisor can provide portfolio management at a cost much less than for that of a financial advisor.
6. Delay Social Security Benefits
One of the final strategies that can aid the Gen Xers in their quest for building investment wealth is to delay their social security benefits. Rather than retiring at an early age, especially if they have not been diligent about frugality, is to put off retirement until age 70. Delaying retirement by just a few years can increase monthly social security checks by as much as 8%.
Gen Xers can rest assured that these investment strategies, if put into place, can aid them toward investing for the retirement years that are to come.
What other investment strategies might Gen Xers employ to help them save for their retirement?