3 Nov 2022
Generation X is the name given to the generation of people born between the mid-1960’s and the early 1980’s. They seem to be missing out when it comes to savings and pensions.
Generation X (sometimes shortened to Gen X), is the name given to the generation of people born between the mid-1960’s and the early-1980’s. Gen X follows the baby boom generation and precedes the millennial generation.
According to the Financial Conduct Authority's paper on the accumulation of wealth in the UK (May 2019), half of all 20-29 year olds have no retirement savings and those aged 30 to 39 have saved less than
£30,000.
The Financial Conduct Authority also found that almost 40 per cent of working age individuals have no private pension wealth at all.
A good proportion of “Generation X” may be looking at financial hardship in retirement due to having inadequate pension savings, and run the risk of only achieving a minimum or lower than minimum standard of living in retirement as a result.
Gen X missed two pension boats
Many entered the job market too late to take full advantage of final salary pensions, yet too early to enjoy the full benefits of initiatives like auto-enrolment, meaning their retirement income will be stretched as a result. Yet another reminder that we should all be trying harder to save for old age?
Solutions for people struggling with pension saving
Generation X is far from being the only group facing a pensions shortfall, and the prudent approach should be that if you want something done, you must do it yourself.
Although pension saving might not be easy, it may be easier than you think. There’s often time to support your retirement prospects and alter their current trajectory. By paying attention on not under-saving and tapping into opportunities when you have a little more money.
Perhaps looking at saving more once debts have been paid off and increasing pension contributions when you receive a pay rise or a decrease in mortgage payments. Even a small increase in contributions can make asignificant difference to eventual retirement income. When it may be hard to make ends meet, it is tempting to think of pensions as non-essential spending – something that can be put off till later. Saving into a pension comes with the advantage of tax- relief and compound interest, it can be a smart move for your future.
Perhaps there are other assets that could help fund retirement?
When you’re saving for retirement, it’s often a pension that’s at the forefront. However, there are many other assets that can support your retirement plans. If you’ve found that your pension will leave a shortfall in the income you need, other assets such as savings held in an ISA (Individual Savings Account), property or an investment portfolio can help plug the gap.
It can be difficult to decide what assets you should access to create an income and how to substantially withdraw money from them. This is where a financial plan is essential. It can help bring together all your assets to build a retirement plan that matches your aspirations and the resources you’ve built up, in the most tax-efficient way.
The value of pensions and investments and the income they produce can fall as well as rise.
Tax treatment varies according to individual circumstances and is subject to change.