Gen-Xers face retirement challenge

If you’re part of “Generation X,” it’s time to get serious about retirement planning. Or if you have children who are Gen-Xers, why not help ensure their retirement planning is on the right track?

Members of Gen-X-loosely defined as those born between 1965 and 1980-may still have plenty of time before retirement. But they should still be thinking about retirement, and how to save and invest for the day they leave the workforce.

The reality is that many members of this generation tend to be spenders instead of savers, not as focused on retirement planning. One U.S. study revealed that about half of all workers born between 1965 and 1972 are “at risk” of having too little money to maintain their standard of living during retirement. (The study didn’t include younger Gen-Xers because their financial histories are not long enough to yield meaningful interpretations of future behaviour.)

What’s the problem? Gen-Xers aren’t saving enough to pay for the type of retirement they’d like to have.

If you’re one of the reluctant savers, or have a child who isn’t paying enough attention to his or her financial future, what changes can be made to reach a more favourable retirement destination? Here are a few suggestions:

Don’t panic

Gen-Xers have one critically important asset on their side: time. Even the first wave of Generation X members have about 25 years until they reach the typical retirement age of 65. That’s long enough to make financial moves that will enable substantial progress toward retirement goals. But don’t wait too long.

Take advantage of retirement savings opportunities

A Registered Retirement Savings Plan (RRSP) is one of the best ways to save for retirement. Money contributed to an RRSP grows tax-deferred, so over the long-term it provides the opportunity to accumulate much more wealth than by investing outside of a retirement plan. Plus, RRSP contributions can result in a generous tax break. It’s best to contribute as much as you can, as soon as you can. And don’t forget, you can make up for RRSP contributions you’ve missed in past years.

Identify retirement goals

We all have different visions of the ideal retirement. While one person might want to work until 65 and then open a small business, another might want to retire early and travel the world. The savings and investment strategy required should be based on individual goals.

Get professional help

It’s not always easy to create and maintain long-term investment strategies. A financial professional can help decide which investments are appropriate, how aggressive an investment strategy should be and when it’s time to make changes to a portfolio.

And remember, retirement may seem like a distant vision for Generation X. But it’s getting closer every day.