Financials Moves Gen-Xers Should Be Making Now

financial checklist in your 40s

Hey, Gen-Xer. Feel like no one’s paying attention to you?

If you think it’s all about Baby Boomers and Millennials, you’re not alone. In fact, according to a study conducted by the Pew Research Center in 2014, Gen-Xers are indeed the neglected middle child.

We may not be at the most exciting age of our lives, and we may not be as large a cohort as the generations before and after us, but we’re still here.

That same Pew research also shows that Gen-Xers are more concerned about financial security in retirement than Millennials and Boomers. In 2015, Allianz Financial Services Company’s research revealed that 84% of Gen-Xers say that retiring at age 65 and retreating into a life of leisure is a bygone fantasy.

Reaching our late 30s and 40s doesn’t mean our fate is sealed. We can still achieve the financial security we desire and the enjoyable retirement we seek. It’s just that, if we haven’t started planning for retirement until now, it’s time to start. Right now.

Figure Out How to Get Rid of Debt

Debt is one of those things that most of us have, and no one wants to talk about. Nearly 75% of Americans have debt, and it’s affecting retirements like never before in history.

Today’s retirees are finding it harder to survive on retirement savings and Social Security incomes, in part, because they have too much debt. Mortgage debt, for example, can be a significant problem for those on fixed incomes.

Additionally, the Government Accountability Office reported late in 2016 that Americans 50 and over are having portions of their Social Security checks garnished to repay long-held, defaulted student loans.

We should all seek to enter retirement with little to no debt. Speak with your partner or spouse, and a financial advisor if you have one, and figure out a course of action to pay off all significant debts before you retire.

Debt anchors our future to our past. As investors and consumers, we’re already fighting inflation. Don’t sacrifice tomorrow for today.


Tap Into Your Entrepreneurial Spirit

Maybe it’s because we started our careers just as the bubble burst or because we took it on the chin during the housing crisis, but Gen-Xers have an independent spirit and “dominate the playing field” when it comes to their entrepreneurial spirit.

Many people fear the gig-economy as being too tech heavy or too fluid with its short-term projects and freelance work. But, it can be advantageous to face those fears and look for opportunities to increase your income stream.

With a laptop, smartphone, and blog nearly anyone with courage and perseverance can start a side hustle with little to no overhead costs. Rideshare services like Uber and Lyft offer flexible employment opportunities. Sites such as Coursera and Udemy offer an excellent education at reasonable prices. Podcasts like Social Media Marketing and Online Marketing Made Easy are treasure troves of information by people who have created successful online businesses.

Speaking of people who have done it, speak with people who have done it. Find individuals who are pursuing a side hustle you envy, and use social media to connect with them. Engage on LinkedIn and join their Facebook groups to share your thoughts and ask questions.

The combination of technology and global competition are making W-2 jobs less standard and wages more stagnant. By diversifying income streams, monetizing hobbies, and starting a business, you can withstand month-to-month or year-to-year fluctuations in pay and have more money to save, invest and pay off debt with. In time you could create an asset to sell later in life when you might need more assets.

Buy Term Life Insurance

Term life insurance is one of the most affordable ways to help ensure your family is financially prepared for the unexpected. Its purpose and value doesn’t change if you’re a Millennial, Gen-Xer or Baby Boomer.

For some, you could be just embarking on life stages where you need life insurance – like getting married or having children. For others, it may be time to revisit that life insurance policy you bought in your 20s or early 30s and make sure it’s still sufficient.

Coverage in your late 30s to 40s can still be affordable and the process to secure coverage is easier than ever. For example, a healthy 40-year-old man could purchase a 20-year, $500,000 Haven Term starting at about $34 per month.

But remember: the longer you wait to secure coverage, the more expensive it will be. If you know that you and your family could benefit from some or more term life insurance coverage, there’s no better time than the present to check this off your to-do list.

Take Advantage of Compounding Interest

We have constantly been lectured on the need to save and invest. Like most generations, we were more concerned about today than tomorrow because tomorrow was another day. Well, tomorrow is now today.

Our 40s and 50s are typically our prime earning years. Being only 40 to 50, we still have time on our side. These are our accumulation years. Start accumulating.

The average 40-something currently has a median savings of $63,000. If you invest $63,000 in the stock market for 20 years and were to get a 7% annual return on your investments, you could potentially have almost $250,000 after 20 years. Always remember, the market is prone to fluctuation, but over the long-term, it has averaged a 7% historical return.

With investing, time is money. If you’re not in the market at all or enough, talk with your partner, spouse or financial advisor about how you can invest more regularly and more often for the power of compounding interest. Compound interest is interest that builds on interest and principal. Consider it growth on growth like what happens when people talk over each other, and the conversation gets louder.

For most of us, the easiest place to invest is our company retirement plan. Company retirement plans include 401(k)s, 403(b)s, SEPs and SIMPLE IRAs through your business and often provide a corresponding company match of your contributions up to a certain dollar amount or percentage. Contribute at least the minimum to get your full employer match, as it’ll help expedite retirement savings.

If your employer doesn’t offer a retirement plan or you’re self-employed, consider a traditional or Roth IRA. With IRAs, you can contribute up to $5,500 a year ($6,500 if you’re over 50 years old) with no lifetime maximum. If you’re just starting your retirement savings plan and have a small balance, be careful of minimum balance fees. Talk with a financial advisor about how to open an IRA, or if you’re the self-directed type, consider looking into a robo-advisor like Betterment, Wealthfront or Wealthsimple to manage your account.

You’re in your prime earning years – time is on your side. Make compound interest work for you, live below your means, and invest big.

Don’t Risk Your Financial Future By Helping Your Family (Too Much)

Maybe Baby Boomers and Millennials get all the attention because they need all the help. Studies show that Boomers are saving less for retirement, increasing retirement withdrawals and relying too heavily on Social Security. They often turn to their children who are still taking care of their children who are saddled with student loan debt and low-paying jobs.

Like oxygen masks on a plane, us Gen-Xer’s can’t sacrifice our future for our children or our parents. It causes a detrimental ripple effect. Make sure your parents are making sound financial decisions that will set them up for financial comfort in retirement. While you’re at it, ensure you understand their end-of-life wishes – and that there’s money set aside to honor them – medical wishes and that living wills are in place. A little preparation goes a long way in helping to reduce financial and emotional stress.

Designate both financial and medical powers of attorney. The financial power of attorney appoints an agent to handle your financial matters. The medical power of attorney designates someone to handle medical needs.

While you give some love to mom and dad, give some tough love to your kids. If they took out student loans, they need to figure out how to pay them off. If your children have boomeranged, make them earn their keep. Charge them room and board, and have them pay for their cell phone and insurance. Most parents want to assist their children financially, but if it’s sacrificing your long-term financial security, you need to understand when to say, “no.”

Get Friendly with a Financial Advisor

If you don’t have a financial planner, consider one. An HSBC study showed that people with a financial planner have nearly 29% more in retirement income wealth than those who don’t have a financial planner.

A financial planner will look at your financial life in totality to make sure you’re on target to meet your short-term and long-term financial goals. And, they’ll hold you accountable. They’ll also talk you through an investment strategy that meets your needs and risk tolerance.

For the small fee a financial planner will charge, you will likely give you 100% more peace of mind.

Don’t bookend your life with angst. As a Gen-Xer, there’s still plenty of time to set yourself up for a comfortable financial future. But, the time to wait is no more. Talk about money and retirement with your loved ones, and live your latter years better than you pretended the 90s ever were.

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Haven Term is a Term Life Insurance Policy (DTC 042017 [OK1] and ICC17DTC in certain states, including NC) issued by Massachusetts Mutual Life Insurance Company (MassMutual), Springfield, MA 01111-0001 and offered exclusively through Haven Life Insurance Agency, LLC. Policy and rider form numbers and features may vary by state and may not be available in all states. In NY, Haven Term is DTC-NY 1017. In CA, Haven Term is DTC-CA 042017. Our Agency license number in California is OK71922 and in Arkansas, 100139527.

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