It’s time for financial planners to reach out to Gen X.
A whopping 77% do not turn to financial advisors to help them plan for retirement, according to a study released Thursday by the Insured Retirement Institute. That’s up from 63% in 2012.
Among Gen Xers with $75,000 or more in income, 65% do not work with advisors or financial planners.
Those that do have a relationship with an advisor have saved more — much more: $90,400 on average, or close to twice the $45,500 saved by households not working with an advisor.
As for Gen Xers working with an advisor, 23% have $200,000 or more in the bank for retirement, compared with 12% among those not working with one.
Still, there’s time for the industry to help Gen Xers turn the situation around.
“It appears the lasting effects of the recession and prolonged labor market woes are taking a hit to Gen Xers’ confidence and their savings,” said IRI President and CEO Cathy Weatherford. “Fortunately, with most Gen Xers still at least two decades from retirement age, there’s time to steer them back on track toward retirement security. It will begin with increasing education, which can lead to better savings behaviors and better retirement outcomes.”
Few Gen Xers say they have high levels of knowledge about financial matters (30%), the study finds. Even fewer, 11%, consider themselves to be highly knowledgeable about investing in securities.
Such figures point to the benefit Gen Xers could derive from professional financial advice, IRI notes.
Why So Few Advisor Relationships?
Gen Xers not working with advisors say the top reason, 25%, for avoiding such relationships is that they feel their savings level needs to be higher before starting these relationships.
Other reasons include the view that they are too young to use one (10%), do not need to use one (10%) and are comfortable doing their own financial planning (10%).
For the minority of Gen Xers (23%) working with advisors, the top reason they do so is to ensure they make the right decisions and get a second opinion (40%).
The second most-cited reason is their belief that it’s important to work with an expert who can serve them as a critical resource (26%).
Savings Level Drops
The survey of 800 Gen Xers also finds that the average level of retirement savings fell 15% over the past two years, to $59,800 today.
During the same time, the percent of Gen Xers who say they lack confidence in having sufficient savings to live comfortably in retirement doubled to 42% today from 20% in 2012.
Additional findings that point to areas where advisors can make a difference are:
- Only 65% of Gen Xers have money saved for retirement vs. 72% in 2012.
- Of those Gen Xers with savings, a large number, 42%, have retirement savings of less than $50,000.
- Just 35% of Gen Xers have tried to define their retirement savings goal.
- During the past year, 36% of Gen Xers say they had a hard time paying their rent or mortgage, 21% stopped contributing to a retirement plan, and 14% prematurely withdrew retirement assets.
Check out Gen X, Y Hungry for Advice, but Advisors Don’t Satisfy on ThinkAdvisor.