financial services

Gen X Most Vulnerable Financially


Different generations responded differently to the recession, according to a study, and leaving Generation X members the most vulnerable in terms of their lack of financial planning.

El Segundo, Calif.-based Financial Finesse studied the distinct financial issues, priorities, and vulnerabilities of Millennials, Generation X, Late Baby Boomers, and Early Baby Boomers, with a focus on strengths, weaknesses, opportunities, and threats each generation faces, as well as their distinct financial education and planning needs.

Millennials are managing their finances surprisingly well, despite having by far the lowest income levels, while Gen Xers are having a harder time with debt, making ends meet, and most aspects of overall financial planning.



Early and late baby boomers with minor children appear to be over-prioritizing college planning at the cost of their own financial security and leaving themselves very vulnerable to major catastrophic events as a result of not taking care of their own needs.

Liz Davidson, CEO and founder of Financial Finesse, says the report brought to light just how differently the characteristics of each generation impact financial behaviors and habits.

"When you look at the groups as a whole, you recognize that they are really dealing with issues stemming from perspectives and habits rooted in their generations,” she said in a release. “Millennials entered the workforce during a time when it was 'cool' to be thrifty, Gen Xers lived in the shadow of the Boomers and have a generally cynical attitude toward achieving their goals, and Boomers, both late and early, are part of a generation that had everything tailored to their needs. This really creates a different set of issues as a result for each group."

Greg Ward, director of Financial Finesse’s Think Tank and 18-year veteran of the financial planning industry, says this is why it is crucial for financial professionals to reform their traditional approach to financial planning and adopt a new approach that targets younger generations’ concerns.

"There is no one-size-fits-all formula to financial planning anymore,” he says. “These younger generations, in a lot of ways, are relying on the industry to help them with what they don’t know, and they need more targeted guidance that makes sense to the issues they face, not the ones their parents and grandparents dealt with. It’s definitely time for society to recognize the specific financial issues of these groups."

Only 16% of early baby boomers and 10% of late baby boomers reported having a long-term care insurance policy even though the average cost of a private room in a nursing home is $90,520 a year according to the 2012 MetLife Market Survey of Long-Term Care Costs, making it one of the most significant threats to financial security in retirement.

Retirement planning remains the one issue all generations are most vulnerable in, even for late baby boomers that are on the cusp of normal retirement age. Within this group, 50% have not run a retirement projection, and only 25% know they are on target to retire comfortably.

While this is concerning, even lower numbers for younger generations could pose a greater threat considering that younger employees are less likely to receive full Social Security benefits and more likely to face higher taxes and inflation when they retire.

Davidson notes that the financial services industry hasn’t typically recognized these differences, thinking of financial planning from a more analytical and technical perspective rather than relating to the different attitudes generations have about managing their money. This has been particularly costly to Gen Xers and Millennials, who are distinctly different than early and late baby boomers in terms of how they need to be approached.

There has been great emphasis on the significant challenges facing Boomers when it comes to retirement -- namely that more and more employees in this generation are being forced to delay retirement, or worse, are having to retire for health reasons with insufficient savings, but not enough emphasis has been placed on younger generations who are already struggling more than Boomers did at their age due to the recession, Davidson says.

“This is hugely concerning because there will be an even larger crisis if other generations, especially the Millennials who are now the largest generation in our history, cannot retire comfortably,” she says.

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