“Do not make the same mistake we did.” That’s the takeaway Gen Xers are leaving behind for younger generations as they prepare for retirement in the decades ahead.
Research from the CFP Board finds that Gen Xers increasingly regret common financial misconceptions from their past, including the thought of having more time to save for retirement. These errors have cost them a median of nearly $100,000, increased stress and anxiety, and have reduced their sense of financial security, they say. A few (13%) have reported losses of $500,000 or more.
Over half (53%) of Gen Xers wished they had started saving earlier and now urge Millennials and Gen Zers to begin preparing for retirement as soon as possible.
“Gen X shows how early money choices echo for decades,” said CFP Board CEO Kevin R. Keller, CAE. “Young adults can learn from that history and shape a future of greater financial freedom with the right professional advice.”
This age group warns against believing today’s common financial misconceptions, including the idea that high income is necessary to build wealth. Others initially believed that credit cards could fund their lifestyles, dismissed the benefits of an emergency savings account, or thought that investing was only for experts. Some even believed a financial setback could never happen to them until they inevitably experienced an emergency.
“Misconceptions about money, such as credit cards looking convenient or retirement being far away, can have serious consequences,” said Kevin Roth, Ph.D., managing director of Research at CFP Board. “We still see financial misinformation spreading today.
External pressures, like rising housing costs, cost of living increases, and “financial FOMO,” the fear of missing out, also attributed to their lack of savings, respondents say. On the other hand, fewer Gen Xers had regrets over waiting too long to purchase a home (14%) and making poor investment choices (12%).
Others wish they had financially planned for additional life events, like caring for aging loved ones (17%), having children (14%), earning an education (14%), the divorce or death of a partner (11%), and giving back to the community (9%).
As a result, a growing number of Gen Xers, at 59% of respondents, recommend younger Americans begin saving for retirement now. Many urge workers to open an emergency savings fund (41%) and to start investing as soon as possible (39%), while others suggest avoiding spending too much as income grows (35%).
Additional recommendations include creating and reviewing a financial plan (23%), working with a financial advisor as soon as possible (21%), avoiding emotional financial decisions (19%), learning about investing basics (18%), and buying insurance (16%).