Gen X has earned its reputation for skepticism. Raised during economic uncertainty and known for a pragmatic worldview, many in this generation are understandably concerned about their financial futures—particularly retirement. Recent research by Northwestern Mutual highlights this concern, with over half of Gen X respondents admitting they don’t feel financially prepared for retirement.
This sentiment is rooted in real-world challenges: supporting children, caring for aging parents, and still recovering from past economic downturns. However, a secure retirement is possible. To empower Gen Xers and help them shift from pessimism to proactive planning, GOBankingRates consulted Robert Varghese, head of investments at Groundfloor, for his top investment tips.
1. Prioritize Your Financial Wellbeing
As a member of Gen X himself, Varghese understands the unique hurdles his peers face. Many Gen Xers find themselves balancing the costs of raising children and supporting aging family members, often neglecting their own financial needs.
“You can’t help others if you don’t take care of yourself first,” Varghese emphasized. “This applies to physical, mental, and financial health. While starting to save and invest is always beneficial, the sooner you begin, the better.”
Varghese recommends focusing on both 401(k) plans and IRAs, including traditional, Roth, and self-directed accounts. Maximizing employer matches on 401(k)s is crucial—it’s essentially free money. For parents concerned about college expenses, he suggests contributing to a 529 plan, which offers tax advantages that simplify education savings.
Addressing financial needs often requires difficult conversations with aging family members about medical directives, care options, and estate planning—all steps towards securing your own financial path.
2. Invest Early and Consistently
The 2007-2008 financial crisis left many with a lasting sense of financial caution. Varghese believes the key takeaway isn’t avoiding risk, but embracing consistent saving and investing, regardless of market conditions.
He illustrates this with an example: two investors, both affected by a 50% portfolio decline. The investor in their 20s has significantly more time to recover than their counterpart in their 40s, highlighting the power of time and compounding.
Even if facing challenges, it’s never too late. Varghese suggests exploring alternative asset classes beyond traditional stocks and bonds to grow wealth.
3. Explore Creative Investment Options
While traditional retirement accounts and employer matches are essential, Varghese encourages Gen Xers to consider alternative investments to diversify their portfolio.
- Real estate: Can be a way to build wealth, offering tax benefits and potential income. Passive real estate investing, through private debt, can be a less time-consuming option.
- Private market investments: Once exclusive to institutions, these investments offer the potential for higher yields and cash flow, enabling more efficient wealth creation.
Varghese emphasizes that various strategies and products are available to help investors build retirement wealth, including exploring private markets.
“Private market investments can provide higher yields and better cash flow than public market investments and allow you to create wealth more efficiently.” – Robert Varghese, Head of Investments at Groundfloor
Conclusion:
Gen X has faced unique financial hurdles, from economic downturns to the pressures of the “sandwich generation.” However, a secure retirement isn’t out of reach. By prioritizing their financial wellbeing, maximizing retirement accounts, investing consistently, and exploring alternative investment options, Gen Xers can still create a comfortable and worry-free retirement. It’s about shifting from pessimism to proactive planning and taking control of their financial future.
