Hey Gen X, It’s Time to Stop Retirement Planning—Start Smart Financial Longevity Planning
If you were born between 1965 and 1981, you’re part of Generation X—the first generation to face a new financial reality. The oldest Gen Xers are now turning 60, and it’s time to shift the focus from traditional retirement planning to Smart Financial Longevity Planning.
The Reality for Gen X
The good news? You have a really good chance of living a long life. The average life expectancy is 85, and many of you will live to 100.
Your generation has witnessed incredible innovations in technology, medicine, and many aspects of life. However, the bad news is that everything has gotten more expensive—a double-edged sword.
Consider this: In 1965, the median household income in the U.S. was $6,900 per year, and the average home value was $21,000. If you had kept a $21,000 home for 60 years, it would be worth about $202,000 today. The cost of living continues to rise, and expenses will likely keep increasing throughout your retirement.
Adding to this challenge, only 15% of Gen Xers will retire with a guaranteed lifetime pension. The remaining 85% must rely on savings. Since the ERISA Act of 1974, corporate America has shifted the burden of retirement savings onto employees through cash savings and contribution plans instead of traditional pensions. The only sectors still offering robust pensions are the military, nursing, utility workers, teachers, state and local government employees, and unions.
For everyone else, the equation is simple: You need to save a lot of money.
Key Steps for a Smart Financial Longevity Plan
1. Keep Working If You Can (Ages 60-70)
If you continue working between ages 60 and 70, you gain key earning years while allowing savings to accumulate. Contributing just $25,000 annually to your retirement savings over 10 years could grow to $570,000 at average market rates.
Additionally, once you reach full retirement age at 67, you can claim Social Security without penalties, no matter how much you earn. If you collect $4,100 per month for 36 months (from 67 to 70), you could accumulate another $200,000. By waiting until age 70 to claim Social Security, your monthly benefit increases to $5,100, securing a higher lifetime income while maintaining extra savings for heirs and widows/widowers.
2. Plan Where and How You Will Live
Thinking ahead about your living situation for the next 30+ years is a crucial aspect of longevity planning. Consider factors such as:
- Buying your dream condo now instead of waiting 10 years when prices may rise.
- Choosing a community that fits your lifestyle—golf, ocean, mountains, or city living.
- Investing in an accessory dwelling unit (ADU) to live with or near family.
- Modifying your home for aging in place.
- Considering health care access as part of your Smart Longevity Plan.
3. Get Your Legal and Financial Plans in Order
Preparing legal and financial documents while still working is easier than doing so later. As you enter the longevity planning phase, estate planning needs shift. Now is the time to build a Smart Financial Longevity Planning team to prepare for your long-term goals, including estate planning and what to do with inheritance.
4. Secure Guaranteed Lifetime Income
By age 60, it’s time to arrange a plan for guaranteed lifetime income, starting at age 70 or when you stop working. Lifetime income plans allow you to lock in rates that won’t decrease if interest rates change. A Smart Longevity Plan ensures that your fixed expenses are covered with guaranteed income. Discretionary spending can fluctuate, but you need a rock-solid financial foundation.
5. Review Insurance Coverage
Age 60 is the perfect time for a comprehensive insurance review. Assess:
- Life insurance
- Health insurance
- Long-term care insurance
- Liability insurance
- Home and auto policies
Long-term care policies are still affordable at this age, and coverage that was once necessary for raising children may now be outdated. Redirect those funds toward senior-focused insurance policies that support a Smart Financial Longevity Plan.
Final Thoughts
Retirement planning is no longer just about saving—it’s about building a sustainable Smart Financial Longevity Plan that ensures financial security for the long haul. The choices you make today will determine the quality of your later years. Start planning now so you can enjoy a financially secure, long, and fulfilling future.