“The sooner I fall behind, the more time I have to catch up.”
The Transamerica Center for Retirement Studies released a study of the retirement planning habits of Generation Xers (born 1965 to 1978), describing them as “struggling.”1 When presented with the statement, “I prefer not to think about or concern myself with retirement investing until I get closer to my retirement date,” 40% expressed agreement. Fifty-two percent admitted their planning was nothing more than their personal best guess as to what income and assets will be needed in retirement. These positions grow more disturbing in light of the fact that this is the first generation to have access to retirement savings plans (e.g. 401(k) plans) during their working career.
“Procrastination is like a credit card: It’s a lot of fun until you get the bill.”2
A penchant for delaying or avoiding planning for retirement is not new to GenXers. Their Baby Boomer parents set the tone, and this generation learned the behavior well. Those belonging to the “Greatest Generation” did marginally better in saving and planning largely to their proximity to the Great Depression. Recalling the scenes of their childhood (or the stories handed down to them) of masses having little funds or food, many determined to save. A common theme from members of this generation was, “I do not want to become a burden upon my children.” Unfortunately for the GenXers, the retirement bill is looming large, and time is increasingly precious.
“The best way to get something done is to begin.”3
The most valuable financial advice any planner, broker, retirement counselor, parent, or friend can proffer is, “Begin NOW.” This applies to every generation or individual and to every retirement or savings vehicle chosen. For example, enrolling in the Christian Churches Pension Plan at age 25 results in $800 of lifetime monthly income beginning at age 65. Waiting until age 30 to enroll, the lifetime monthly income benefit will become $595 (slightly less than 75% of that of the 25 year old enrollee). A 40 year old enrollee can look forward to a $300 monthly lifetime benefit. The difference is not attributable to investment returns. All ages are actuarily calculated and credited equally. The sole difference is time. If you are young…begin now. If you have waited and now regret that decision…begin NOW! If you are older and wonder if there is any value in trying…BEGIN NOW!! We began with the wise words of Benjamin Franklin, “Lost time is NEVER Found.”
1 Generation X: The Struggling Retirement Savers. NAPA-net.org. August 25, 2016
2 Christopher Parker. English Actor
3 Anonymous