In this article, part two of a three-part feature, Rocco Taglioni compares Generation X to the boomer generation and explains why Gen Xers need advice from you, even more than their parents.
Is there really that much difference between Generation X and baby boomers? Comparing these generations can provide insights to expand your client base and your trusted advice.
Life seemed to be more predictable for boomers. They finished school, started their career, moved out on their own, married, and had children, in that order. Fewer young adults are following this life path. If they do, some of the aspects are occurring much later in life.1 The average age of a couple’s first marriage continues to increase — 31 for men, 28 for women; and having children occurs much later in life — the average age of women giving birth to their first child in Canada has passed the threshold of age 30.2
Competing priorities
As they pay off their homes, raise children, advance in their careers and occasionally think about retirement, Gen X looks at a world quite different from their parents’ experience:
- Housing costs are higher, with the average price of a house in Canada approaching half a million dollars.3
- It costs much more to send their children to college and university: the average cost of a year’s tuition at a Canadian university is $5,772.4
- The number of pension plans providing a guaranteed source of income is decreasing in the private sector.5
- They’re expected to live longer than their parents, so they’ll need more retirement income.6
Gen Xers need your guidance even more than boomers on reducing their debt, managing competing financial priorities, saving for retirement and how to help create an overall plan.
When you examine the median net worth of these age groups in Canada, you’ll see that Gen Xers have significant assets, steadily increasing in value, and they need your advice about how to manage them:7
Median net worth by age in Canada
| Age of major income recipient | 2012 | 1999 | % change from 1999 to 2012 |
|---|---|---|---|
| 35 to 44 (late Gen X) | $182,500 | $124,800 | + 46% |
| 45 to 54 (early Gen X and late boomers) | $378,300 | $244,100 | + 55% |
| 55 to 64 (late boomers) | $533,600 | $354,200 | + 50% |
| 65+ (early boomers) | $460,700 | $270,700 | + 70% |
A high percentage of Gen Xers expect to rely on their own savings to pay for their retirement. More Gen Xers are relying on employer or workplace-sponsored plans to pay for their retirement than boomers. It’s interesting to note also that many Gen Xers expect the government to help pay for their retirement:8
| Expectations | Early boomers born 1945-1954 |
Late boomers born 1955-1964 |
Gen Xers born 1965-1979 |
|---|---|---|---|
| Expect to rely on their own savings and investments to some degree to pay for their retirement | 74% | 69% | 72% |
| Expect to rely on employer or workplace-sponsored savings plans to some degree to pay for their retirement | 44% | 54% | 57% |
| Expect to rely on government benefits to some degree to fund their retirement | 84% | 78% | 71% |
You can use these findings to show the importance of starting savings plans as soon as possible for Gen Xers. Ask your Gen X clients if they’re leaving money on the table by not taking part in matching plans at work. It’s quite possible they are — our research indicates Canadians are not taking advantage of as much as $3-billion in corporate pension plans and their contribution-matching programs.9 Regarding government benefits, as a reality check, you can show them how much CPP and OAS they’ll receive in retirement.
Gen Xers put an even higher priority than boomers on paying down debts, including mortgages, and saving for housing, but saving for retirement is a low priority:
| Priorities | Early boomers born 1945-1954 | Late boomers born 1955-1964 |
Gen Xers born 1965-1979 |
|---|---|---|---|
| Rank paying down personal loans, credit cards and other debt as number one financial priority | 27% | 32% | 34% |
| Rank saving or paying for housing (mortgages, down payment, rent, etc.) as most important financial priority | 9% | 17% | 27% |
| Rank saving for retirement | 20% | 19% | 14% |
When it comes to having a plan, more boomers could benefit, but Gen Xers are even less engaged in making this critical financial choice: 29% of early boomers and 24% of late boomers have a written financial plan, versus just 19% of Gen Xers.10
These findings reveal that many Gen Xers want help managing their debts, but by making saving for retirement such a low priority, they may not understand the consequences of not starting a retirement savings plan now. They also need a plan to help them reach their goals. A Tax-Free Savings Account (TFSA) can be a great place to start.
If they start to contribute to a TFSA now, Gen Xers could have a lot more time to take advantage of this savings vehicle than boomers. The federal government has increased the annual contribution limit from $5,500 to $10,000. If a Gen Xer hasn’t yet put a dime into a TFSA since its launch in 2009, the total contribution room to date would be over $40,000 including the current year’s potential deposit of $10,000.11 As a savings vehicle for short- and long-term goals, a TFSA provides a flexible solution for saving money, with the advantage that clients won’t be taxed on earnings or withdrawals.
TFSAs are also becoming a popular option for saving for retirement. Your clients may not know that withdrawals don’t affect other federal income-tested benefits, such as Old Age Security (OAS).
Gen Xers share many of the financial concerns of boomers, but in many cases, they need your help even more — for managing debt, generating retirement savings, especially through their personal investments, and creating a written plan of action to meet their financial goals. Opportunities to connect with new clients and map their financial goals exist in abundance, especially in Generation X.
A series of Gen X ideas
- If you haven’t read Part I of this series, you can learn more about Gen Xers and what they need from you. See the table showing areas where Gen Xers want your help and recommended resources to work with them.
- In the third and final part of our Gen X series, we’ll look at Gen X as a way to build your business for the future; we’ll help with specific strategies to start conversations and provide solutions.
- If you have ideas about how to approach and successfully help Gen X or other groups of your client base, please send an email or talk to a member of Sun Life Financial’s Sales Team.
You might also like…
- Generation X: Who are they – really? And what do they really need from you?
- The Gen X opportunity
- The value of advice for the pre-retirement sandwich generation caught in the squeeze
1 Derek Miedema, The trouble with Gen-X and Gen-Y families, Institute of Marriage and Family in Canada, September 2012.
2 2011 Census, Statistics Canada. The average age of women having a first child passed 30 in 2007.
3 The national average housing price registered at $437,135. Canadian Real Estate Association, May 15, 2015.
4 For 2013 and 2014, Statistics Canada, http://www.statcan.gc.ca/tables-tableaux/sum-som/l01/cst01/educ50a-eng.htm.
5 Janet McFarland, “Pension membership takes a heavy hit in private sector,” Globe and Mail, August 24, 2012. According to Statistics Canada, fewer than 3 million Canadian workers in the private sector have a pension plan; that number declined by 2%.
6 Alicia Munnell, director of the Center for Retirement Research at Boston: “Gen-Xers are going to live longer than the current generation of retirees, and the major source of retirement income is going to be smaller.”
7 Median net worth by age figures from Survey of Financial Security, Statistics Canada, modified February 2014.
8 Statistics in charts below comparing boomers to Gen Xers are from the 2015 Sun Life Canadian Unretirement Index.
9 Barbara Shecter, “Canadians losing out on as much as $3-billion in ‘free money’ defined contribution pensions,” Financial Post, December 2, 2014.
10 2015 Sun Life Canadian Unretirement Index
11 Contribution room accumulates only for eligible Canadian residents age 18 and over, who have a valid Social Insurance Number.
Rocco Taglioni, Senior Vice-President, Head of Distribution, Individual Insurance and Wealth, is responsible for the overall leadership of Sun Life Financial’s distribution organizations across its Retail business in Canada. His role encompasses the leadership of the distribution company, as President Sun Life Financial Distributors Inc., as well as the Insurance and Wealth wholesaling sales organizations. Through the various leadership teams he oversees the development, direction, and execution of the Distribution strategies centered on wealth management, protection, retirement, and estate and financial planning.
Since joining Sun Life in 2004, Rocco has held various executive leadership roles, including Vice-President Business Development, Group Benefits; Head of Individual Wealth Management; Senior-Vice-President, Client Solutions; and most recently Senior Vice-President, Distribution and Marketing, Individual Insurance and Wealth. Throughout his tenure at Sun Life, Rocco has led various business strategies centered on building, transforming, and evolving organizations and teams to drive higher levels of performance and success.
Rocco has 36 years of experience in strategic leadership in the insurance and investment industries. He has served on and is a member of a number of boards. Rocco is currently President and Chair, Sun Life Financial Distributors (Canada) Inc. and is a member of the Sun Life Financial Investment Services (Canada) Inc. board. He is a member of various industry associations, including Advocis, GAMA Canada, the Canadian Pension and Benefits Institute, and the Association of Canadian Pension Management.
Rocco holds a Bachelor of Arts in Economics from York University.