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GenXers, despite all the fire drills that we've seen over our lifetimes, many GenXers seem to have missed the retirement FIRE memo during their early adult years: Financial Independence and Retire Early.
Many Gen X members between 41 and 56 years old are still on the road to financial independence, with retirement as a possible future destination. We have already lost the chance to say "See ya" to our bosses, and to retire. It's not too late to make smart money moves to ensure financial security for your retirement. These are my tips and tricks.
Generation X's money story
Let's first look at where we have been and where our future is. Retirement seemed impossible when we began our careers and started families. The dot.com bubble, Y2K scare, and the housing bubble all impacted us early in our adult lives. Our modus operandi was defined by financial panic.
We have also become the forgotten middle child, sandwiched between three generations of living people (The Greatest Generation and The Silent Generation) and three generations behind (Millennials and GenZ). Our responsibility is to care for our parents and children, while also trying to preserve our fragile financial security and sanity.
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FIRE drills are the best way to prepare for retirement. We have a decade before reaching our first milestone in Medicare eligibility at 65, and our optimal milestone in Social Security income at 70. This is the claiming age that provides the largest monthly benefits. It is better to prepare ourselves for retirement readiness now than ever.
Financial security can be achieved by knowing your current situation, what you want, and what you need in order to retire ready. Here's what I recommend to my clients:
You should know where you are at the moment. A Net Worth Statement is a great way to summarize your financial picture. The Net Worth Statement lists your assets (what are you own) as well as your liabilities (what are you owing), and the difference between them reflects what is available after you have paid off any debt.
These are the questions to ask after you've probably reached your highest-earning years.
Can you contribute more to your 401k or other retirement plan? If you're 50 years old or older, you can put up to $1,000 more in an IRA than you normally would and up to $6,000. More in a 401k.
You may be able to diversify your investments by opening a taxable brokerage account. This could offer tax savings for liquidating income investments and passing wealth on to your heirs.
Is it possible to repay your debt before you retire? Are you generating enough income from your assets in order to pay off the debt?
Are you aware of the amount you could receive in Social Security benefits? It's a great time to check your MySocialSecurity account by visiting the Social Security website.
Know what you want. It can be difficult to separate your identity from the professional and familial roles that require your time, attention and money. We are the sandwich generation, caring for our parents and children, while also holding senior-level management positions, so we don't have much time to decide what we want, or plan for the future.
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With each decision that takes away our financial resources or our human capital, our confidence in our ability to retire comfortably is shaken.
Many people have tried to manage their personal finances in a fragmented way, relying on the advice of family and friends, and sometimes even financial professionals.
Many Americans believe financial planners should be a luxury that is reserved for the very wealthy. A Magnify Money study in 2021 found that only 30% of Americans have used a financial planner to help them create and maintain a dynamic financial plan that is rooted in their values and goals. This includes key areas like taxes, retirement and investments.
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Know what you require. Many Americans live 30 years longer in retirement than their working lives. We Gen Xers need to adapt our strategies or change our needs to accommodate this newfound time.
You should consider how much money you might need to travel or explore. You should also plan for future health care costs and long-term care. Fidelity estimates that a 65-year old might need to set aside $300,000.
What have you done to ensure that the wealth of the future generations is preserved? Gallup polling found that only 46 percent of Americans have a will. What about you?
Read more: I am 52 and won't live past 80. I have $1.6 million. I'm tired of the rat race as well as workplace politics.
These drills will likely be revisited until we reach our retirement goals. We can get to our destination quicker if we know where we are, what we want, and what we need to retire comfortably.
Lazetta Rainey Braxton Certified Financial planner Lazetta Rainey Braxton was co-CEO of 2050 Wealth Partners, and also the CEO and founder Lazetta & Associates. She is passionate about promoting diversity, inclusion and equality in the financial planning industry. This she does through consulting, coaching, and public speaking. She was named a Crains New York Business Notable Black Executive and Leader in 2021, and one of the Top 10 Investopedias 100 Best Financial Advisors for 2020 and 2021. She is a tireless worker for the common good in all of her endeavors.
This article was reprinted with permission from NextAvenue.org, Inc. 2021 Twin Cities Public Television, Inc.
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