At what age do you become an elder? At what age do you take advice from your elders? Hmmm! Even as answers to these questions remain elusive, one thing is clear: we don’t have all the time in the world to sock money away for whatever our later years bring. As the oldest members of Gen X hit 60, a hard truth is sinking in: saving for retirement should have been a bigger priority, earlier on. That’s the lesson Gen X now hopes to impress upon the young. Who’s listening?
Rock Around The Clock?
Sure, but the brutal truth is: at some point, for each of us, the clock stops. What happens before that? What might we want and need to do? What care might become vital? How will we pay? These seem to be the questions on the mind of Gen X, at least according to recent research from the CFP Board of Standards, titled “Lessons Learned: A Survey of American Gen Xers.” Summing up the research, the CFP Board shares these financial regrets from Gen X:
The one thing a person early in life has is time: Time to save and time to prepare. Taking steps today can help one better prepare for tomorrow’s unknowns. Looking back at the financial decisions they made early in their adulthood, more than 9 in 10 Gen X Americans regret having delayed making financial plans for significant life events. The standout financial event that Gen Xers wish they had prioritized earlier is retirement (53%). What had been a seemingly far-off event is now fast approaching for many Gen Xers. With the benefit of hindsight, many Gen Xers, regardless of gender or income level, wish they had started saving for retirement sooner.
Other common financial events that Gen Xers wish they had planned for earlier in their lives include health issues/disability (30%), being a homeowner (27%), funding college for children/loved ones (22%) and job loss/career change (20%).
Reporting for Plan Sponsor Magazine, Emily Boyle also points to research conducted by Cerulli Associates and Allianz Life Insurance that identifies similar financial insights as members of Gen X begin hitting their sixties:
- With only five to 20 years until they reach retirement age, depending on their age, members of Gen X may have their retirement timing and assets dictated by a bear market or recession, according to Cerulli. There is less time than for those in younger generations for Gen X members to adjust.
- Looking back on financial decisions they made in their 20s and 30s, more than 90% of Gen X respondents regretted having delayed making financial plans for significant life events, according to Allianz. The standout financial event that Gen Xers wished they had prioritized earlier was retirement (53%)—with health issues/disability ranking second, 23 percentage points lower, at 30%.
There are optimistic signs in some research, such as that of the Investment Company Institute, that both Gen Zers and Millennials are heeding the advice of their elders, and making saving for retirement more of a priority at younger ages. There’s hope too that adjustments to 401k plans, such as auto enrollment and auto escalation will result in improved retirement savings, especially for younger workers in company sponsored plans.
Sponsoring A Retirement Plan?
Excellent! Keep going! Because every generation has a different relationship to information, technology and communications, you can help close retirement savings gaps by tailoring messages based on what gets the attention of each age range. Additionally, increasing access to financial advice and planning is an important way that plan sponsors can help employees from every generation progress with their retirement plans–and decrease the financial stress that is likely interfering with the work day.
Of course it’s also wise for plan sponsors to secure their own futures. Indeed, AI facilitated data searches place plans under heightened scrutiny, making it easier for plaintiff attorneys to identify even minor oversights and trigger ERISA lawsuits. Even if you have done nothing wrong, being hit with an allegation is costly and disruptive, putting your business and personal assets at risk: ERISA defense costs upwards of $600—per hour.
Though outsourcing can reduce some of the risks inherently associated with retirement plan sponsorship, you remain a fiduciary under the high standards of ERISA. Specific examples of what you can be held personally accountable for as a fiduciary include:
- Decisions: Do you have the right advisor, and investment options?
- Cost control: Are the plan fees reasonable and services solid?
- Compliance: Do operations adhere to the plan document, and government regulations?
If you face claims that you have failed in your responsibilities as a retirement plan sponsor, the only type of protection that shields you personally is Fiduciary Liability Insurance—-with it, you’ll be armed with coverage for defense and penalties. To help retirement plan sponsors protect themselves, Colonial Surety Company offers an efficient and affordable Fiduciary+ Cyber Liability Insurance bundle. For just a few dollars a day, you’ll be armed with:
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