Gen-X (Early 1960’s to Early 1980’s)

Your generation begins reaching retirement age in the 2020's. If you were born in the 1960's you are already in the latter stage of your working years.

If you do not have a retirement plan you should develop one as soon as possible. The sooner you know your financial position the better. Will you have enough retirement assets to:

• Retire when you want to?
• Live the way you want to? 
• Be financially secure late in life?

You still have time to accumulate significant retirement assets or make alternative plans if you are not going to have enough assets. For example, you may start acquiring some new skills that you will use for part-time employment during your early retirement years. The ideal job would be working from home over the Internet.

Savings

Unlike older Americans you still have time to increase your savings rates. Contribute as many pre-tax dollars as possible to 401k plans and self-directed IRAs. 401ks and IRAs are also tax-deferred so you accumulate assets faster.

Longevity

You will be the first generation that starts living into your hundreds. Medical science will conquer many of the main killers during your lifetime. This means you need even more money for retirement years that may exceed your number of working years.

Investment Horizon

You have to plan for 35 to 40 years of retirement. This staggering number will have a profound impact on the lives of millions of Gen-xers when they retire. It wasn't too long ago that people retired at 65 and lived another ten years. They had a low risk of outliving their assets. Today, increasing investment horizons are a major financial risk that cannot be ignored. 

The Sharks

Wall Street advisors like assets that have two characteristics. They like large asset amounts that produce substantial fees and commissions. And they like long-term assets that produce fees and commissions for long periods of time. Your retirement assets fill both requirements. If you feel like you are swimming in a pool of sharks (aggressive salesmen) it is true. 

Performance

Your need for substantial amounts of assets is exacerbated by your 40 year investment horizon. A lot can go wrong in 40 years and you need as much money in your retirement accounts as possible to weather the storms. Consider 2008 when the stock market declined 45%. What if that type of decline occurred in your third retirement year? It could have a devastating impact. 2008 wasn't a storm. It was a Class 5 hurricane that was the result of Wall Street greed and stupidity that impacted millions of Americans.

Your solution is to generate as much performance as you can during your working years while you still have options if something goes wrong. You have time to recover losses and defer retirement dates.

Risk

Like the boomers you are going to have to take more risk than your parents because you need more assets for your retirement years. In this case, more risk means greater exposure to the stock market later in life. You may have a 50% exposure to stocks when you retire and a 25% exposure in your 80's. 

It is difficult to think that far ahead, but the challenges are real, and there is even greater risk if you ignore them.

Investment Expense

There is an old saying: "The most expensive commodity on Earth is bad advice". Nothing could be more true when you invest your assets in the securities markets. You will incur more investment expenses than your parents for a longer period of time. Your challenge is to make sure you are being rewarded for the expenses. Your bottom-line is your net annual performance after all expenses are deducted.

Paladin says.....

You have time to make critical decisions (advisors, performance, risk, expense) that will increase your retirement assets. You also have time to make adjustments if you do not achieve your financial goals. Unfortunately, every year that you do not meet your goals is gone forever.