Generation X: Navigating Financial Security After Economic Turbulence

Wedged between the wealth-building Boomers and the risk-taking Millennials, Gen X has quietly endured economic crashes, stagnant wages, and skyrocketing costs. It’s not shocking that the turmoil during their lifetimes has had a significant impact on their finances, investments, and retirement plans. 

Generation X was born between 1965 and 1980, and while they are not insignificant, they are the smallest living generation. Gen X grew up as prices rose and women attained more financial freedom. They began working at a higher rate, leaving the kids alone after school since both parents worked. These “latchkey kids” developed a high level of independence, a strong work ethic, and self-reliance. 

By the time Gen X hit adulthood, they had witnessed recessions and taken on substantial student loans, things that their parents did not have to experience. This created a “boomerang” effect where new Gen X adults had to move back in with their parents due to a lack of jobs and salaries not keeping up with inflation. The financial interdependence between generations became the reality for many, highlighting the fact that Gex X is the first generation to not financially outperform their parents. Their economic mobility was strained as a result. The dual financial pressures of having children at home as well as aging parents to care for created a suffocating sandwich for Gen X, reducing their income even further and restricting their ability to invest or save for retirement. They are currently in their mid-forties to almost sixty years of age meaning retirement should be a high priority. 

When the tech bubble burst in 2000 the economic volatility of the stock market frightened Gen X. Right on the heels of that economic downturn was the financial crisis of 2008 that pushed the whole world into a recession, costing most of the retirement savings they had managed to acquire. This crisis also collapsed the housing market, causing even more generational dependence. These seismic economic shocks forced Gen X to lean more conservative with their investment strategies and caused a lasting fear of stock volatility.

As traditional careers that were the norm for previous generations stopped being available or lucrative, Gen X had to get creative and work multiple jobs, become entrepreneurs, or have flexible careers to maintain financial security. This trend, along with the strain of expensive care for children and parents constricted the ability of this generation to build wealth through investing. A little over half of Gen X maintains an active portfolio, while an adventurous few have explored emerging classes of investments like cryptocurrency, according to a study by Investopedia. 

Those who have investments prioritize long-term stability and calculated risks with a good balance of traditional and alternative investments. Primary residences make up a significant portion of Gen X’s wealth and other real estate ventures, like vacation homes, rentals, and REITs, are a valued alternative investment. Socially responsible investments (SRIs) are also a growing market for Gen X as ethical concerns rise. 

Comprehensive portfolio diversification remains crucial for mitigating potential financial risks. Keeping options that can offer financial flexibility through liquidity helps this economically challenged generation feel safer and more in control of their investment portfolio. As this group moves closer to retirement age, the importance of regular risk assessments and advice from professional wealth advisors becomes critical. While traditional retirement funds like 401(k)s and social security are vital, alternatives can help boost and balance an investment portfolio to help them achieve their retirement goals. 

Our upcoming platform can make it easier than ever for Gen X investors to find alternative investment opportunities to build the portfolio that works for them. Find out more on the website or by listening to the Alternative Investments Chat podcast. [https://open.spotify.com/episode/2VwjIlpT48jfKE6WucincY?si=wXuD0SNWQEyBgQ1fUl9GxA]

Source: https://www.investopedia.com/generation-x-all-eyes-on-retirement-5224396