For the approximate 65 million members of Generation X – those who were born between 1965 and 1982, the demographic generation following the Baby Boomers – retirement is just around the corner. However, as a whole, this group is not adequately financially prepared for their Golden Years.
According to Pew Research Center, Generation Xers are more pessimistic than both Boomers and younger Millennials that they'll have sufficient money for retirement. A report from Pew Charitable Trust says that Gen Xers will only have sufficient resources to replace about half of their pre-retirement income, compared with late Boomers, who can replace about 60 percent.
This group is also very concerned that they will outlive their money, says Pew Research Center.
According to the Insured Retirement Institute's 2014 report, The Retirement Readiness of Generation X, only about two-thirds of those in this group have any money saved for retirement. And among Gen Xers who do have retirement savings, 42 percent have less than $50,000 saved. With the oldest Gen Xers in their early 50s, the situation is dire and means that many will have to work more years before they can retire.
Gen Xers are very different from Baby Boomers. Among the characteristics that differentiate Generation X are the group's market-shyness, their tech savvy and their fierce independence. Before making any major decision, Gen Xers like to gather as much information as they can and then evaluate the facts on their own before coming to a conclusion. This group is generally distrustful of institutions and traditions, and has little confidence in investing, especially after living through the dot-com bust and the recent recession.
However, this group also yearns for financial security. With this in mind, annuities in general – and fixed indexed annuities (FIAs) in particular – can be a great choice for Gen Xers looking to increase their retirement readiness. But agents need to know the best ways to approach this group to make sure their message will be heard.
Financially conservative by nature, members of Generation X are looking for products that offer a measure of financial safety, and they're ready – if not overdue – for retirement planning guidance.
An article in NAFA Annuity Outlook Magazine suggests advisors and brokers need to understand and relate to Gen Xers differently than they deal with other generations. "Conventional sales approaches used with Baby Boomers won't work on this crowd, if you can get your message to them in the first place. Those in their 40s may begin to sense the eminency of retirement, but they have time to count the cost and plan as they wish," according to the article.
Conventional annuities sales methods that work with Baby Boomers aren't necessarily appropriate for Gen Xers. However, this group offers a wealth of opportunities for advisors who know the right ways to reach them. "Approaches that once worked with older clients may alienate Gen Xers," says the NAFA article. "The sooner agents understand the younger generation, the sooner they can begin offering them fixed indexed annuities and other safe products to meet their retirement planning needs."
