Generation X may sound like the title of a film you would rather avoid, but it is actually a term used by sociologists. It is the cohort that came after the baby boomers – those born in the 50s and early 60s and before the millennials, who came into this world in the late early 80s.
Generation X is therefore anyone between 38 and 53 years of age.
Generation X was born into a changing world. Now that it is getting closer to retirement age, the impact of all the ‘interesting’ times they have lived through is starting to make itself felt – in their pension prospects.
At Continuum, we are looking at the problems facing Generation X – and what you can do about it.
A bleak outlook?
According to the International Longevity Centre, many Gen Xers await a bleak financial future. Some can expect low incomes in retirement, having been faced by a lack of financial stability and setbacks from the recession and financial crisis of 2008 to the current Covid downturn. They have had their peak earning years disrupted, and stable career plans turned upside down by rapid changes to the employment market. Many have faced fluctuating incomes through these challenging times, put their pension contributions on hold, and raided their savings.
It means that a high proportion will be collecting a pension pot that is far smaller than would be required to let them enjoy a comfortable retirement.
If you are facing a bleak and underfunded retirement in a few years, it is time to do something about it now and there may be four clear steps to take.
Step one – start putting more money in your pension.
Money may be short right now, but it could be shorter still in the future if your pension pot is not large enough. Making the most of your workplace contribution means that your employer is contributing with you.
This money, plus the tax relief from the taxman will mean that every pound you can spare to put in your pension pot will be worth considerably more by the time it reaches it. What’s more, once it is there, it will have longer to grow as your pension fund investment management team get to work.
Step two – start making investment work for you
There are limits on what you can put into your pension, and the fact that once it is locked away until your retirement is a problem for any Generation Xer who finds that their financial outlook is less than clear. Investment can be cashed in if you need it – although the magic of compound growth grows more powerful with every year you leave an investment working for you.
You may want help when you start investing. The investment landscape is changing fast as a green agenda and the lockdown both make the old certainties much less certain than they once were. At Continuum, we can provide the help you need.
Of course, the investment markets are volatile, and may even be depressed at the moment, as the Covid saga grinds on. It is possible to argue that this presents opportunities. Your holdings may be boosted by rising markets if the economy starts to recover.
Step three – making the most of your pot
The study found that many people are considering putting off retirement to let their pension pots grow. However, working until you are in your 70s might not be the only answer. Annuities might not have the level of return they once had, but drawdown might make your pension savings work harder.
Step four – get expert help
Making the most of your pension needs expertise. At Continuum, we can provide an expert pension review, which will help find the most efficient ways to make the most of your pension provision now and in the future.
The pension you need could still be in reach, with help from a Continuum expert look with you as part of a full pension review.
The information contained in this article is based on the opinion of Continuum and does not constitute financial advice or a recommendation to suitable Retirement or investment strategy, you should seek independent financial advice before embarking on any course of action.
The value of investments can fall as well as rise and you may get back less than you invested.
A pension is a long term investment. The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Pension income could also be affected by interest rates at the time benefits are taken.