During late 2008 and throughout 2009, plenty was said about the plight of baby boomers for whom retirement was looming.
But what of the next generation in line?
Advisors, busy helping nervous boomers, didn't have a lot of time to devote to Canadians between the ages of 30 and 45. In fact, a 2008 Dollars & Sense survey conducted by the Advisor Group found 34% of advisors saying they spent more time than average with baby boomer clients, compared to 13% spending extra time with those in Generation X.
And that's too bad, because in many ways those younger investors needed more help.
"Gen-Xers seem to have higher mortgages, lower incomes and more debt than their predecessors," said Todd Morin, financial planning expert with Investors Group. "This group is also the first to put financial planning on the back burner, finding it difficult to set aside funds."
Investors Group recently conducted a survey of mortgage-holders, which found the median mortgage for people aged 30-to-45 was $140,000. That’s 8% above the national average and 33% per cent higher than survey respondents aged 45-to-54. Still, the survey found nine in ten Gen-Xers saying they planned to be mortgage-free by the time they retire.
The majority of Generation Xers entered the workforce during the 1990s recession and now face the second major economic downturn to take place during their careers. And this second slump has brought a second wave of bad news as a larger percentage of baby boomers have indicated they'll extend their working life past age 65—a decision which further limits employment and salary increase options for Gen X.
Morin notes a recent Investors Group poll found 41% of Canadians aged 55-to-64 plan to retire later than originally planned. Advisor Group's Dollars & Sense survey also found boomers saying they planned to delay retirement, although conversations with some advisors indicate some older boomers are now returning to their original retirement schedules, thanks to the improved economic outlook.
"It may seem as though retirement is moving further into the future for Gen X, but this generation has some positives in their favour," said Morin. "With more education than previous generations, greater access to financial information and now, a new savings tool in the TFSA, this generation could still retire comfortably when they are ready as long as they have a sound financial plan in place."
But getting them to plan may be hard, since Gen X differs from prior generations in terms of their view of savings and investing. Run- ups in real estate prices and other goods that were driven by boomers during the 1980s mean many younger people in North America continue to live paycheque-to-paycheque well into their adult lives.
In fact, a recent Charles Schwab survey that focused on people in the Gen X age segment in the U.S. found 25% still waiting for the next cheque to clear their bills, and another 17% falling into a category they dubbed "buy now, pay later."
The same study also found the majority of Gen-Xers do not seek out the advice of a financial advisor. For its part, the Dollars & Sense survey, which screened for respondents who were already working with an advisor, found nearly half of Gen-Xers in Canada prefer to connect with someone their own age, and that 84% are satisfied overall with the work their advisors perform.