Turo blog

How can advisers help Generation X retire comfortably?

February 25, 2021

Generation X faces a bleak future as they approach retirement if they don't receive financial intervention soon.

The 'squeezed middle' generation is sandwiched between Baby Boomer wealth and the digitally-native Millennials and faces many disadvantages, but it is not too late for them to benefit from financial advice.

The average pension of a Generation X (born between 1965 and 1980) is worth £150,837. In some parts of the UK, more than 1/3 of Generation X have no savings whatsoever.  

This group have encountered a perfect storm of events, and that's without mentioning the 'Covid' word. This has led to financial difficulties for many, with one in four set to be solely reliant on the state pension. They are stuck between pension reforms, benefitting fully from neither. They missed out on the advantages of a full-career defined benefit pension enjoyed by the Baby Boomers. And they have only caught the tail-end of the auto-enrolment initiative, missing out on decades of compound interest and employer contributions.

On top of that, this group encountered rising house prices in the early noughties meaning that mortgage, or worse, rent payments, will be a large part of their outgoings for many years to come.

This generation faces a bleak future as they approach retirement if they don't receive financial intervention soon. 

The ILC have been working to support this generation with a view to change policies ensuring that they are prepared for retirement in the future.  

Often called the 'forgotten generation', it must be noted however that all is not lost, there are glimmers of hope as well as ways to help this group enjoy a more optimistic financial outlook.

Despite the financial pressures of growing children and the demands of elderly parents, this group is in fact saving the most for retirement.    

So how can advisers help Generation X?

As Generation X approach and take more of an interest in their retirement, they would likely benefit from a 'midlife MOT'. This yearly 'check-in' takes income, pension pots and circumstances into account and aims to keep the individual better-informed about their retirement options.  

Such an MOT would include projections for retirement income, encouraging the individual to add more to their pension pot, maximise employer contributions, consider working beyond retirement age, or even to a change in career direction, such as taking on a part-time job elsewhere.  

It can also draw attention to the 25% tax-free benefit and how taking it or not taking it would affect pension income. Beyond the figures, this knowledge can really help to improve a person's mental wellbeing, by building a clear path to retirement and a plan to get there. Whether that is putting more into a pension pot as they near retirement, consolidating old pensions to a more cost-efficient plan, or taking advantage of the 25% tax-free benefit to buy a house to renovate.

This generation, unlike the one before is used to banking online as well as accessing services digitally. Digital advice can help to service this generation, as well as maintaining a low cost to serve.  

Wealth Wizards have developed the 'Retirement options report' which is generated on the Turo Digital platform as part of a holistic advice and guidance package. When the system has gathered the inputs on a person's pension pots and salary, it is able to produce a personalised report at the click of a button.

Just like a car MOT, advisers can offer and encourage a yearly mid-life MOT to check they are on the right track when it comes to being prepared for retirement, or where necessary, make informed decisions to help them get on-track.

Generation X may be at a disadvantage financially, but with access to financial advice, advisers can help them to better prepare for retirement and become more efficient with their money.  

Written by
Simon Binney

Simon is Business Development Director at Wealth Wizards, with over 20 years' experience driving the development of automated financial advice.

Find out more about Turo and how it can automate key parts of the advice process for your clients and advisers.

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