Download the 02.13.25 Dynamic Portfolio Perspectives for advisors’ use with clients

By Lucas Felbel, CFP®, CIMA ®, Director, Dynamic Asset Management

Generation X, individuals born between 1965 and 1980, are approaching retirement age but face significant challenges in their financial preparedness. According to the Schroders 2024 U.S. Retirement Survey[1], only 14% of Gen Xers feel they have saved enough for retirement. On average, they anticipate needing approximately $1,069,746 to retire comfortably but expect to have only $602,944 saved, leaving a substantial shortfall of $466,802.

Sandwiched between two massive generations, the Baby Boomers and Millennials, Gen X’s retirement savings are notably lower compared to previous generations. According to Fidelity, the average retirement account balance for Gen X clients is $178,500[2]. This doesn’t include balances held elsewhere, such as 401(k) accounts; however, only about 55% of Gen Xers participate in employer-sponsored retirement plans, further hindering their retirement readiness.[3]

Despite these challenges, Generation X presents a significant opportunity for professional guidance from financial advisors. The Schroders survey also reveals that Gen Xers are the least likely to engage with a financial advisor — just 27% of Gen Xers surveyed are currently working with an advisor compared to 37% of Baby Boomers and 31% of Millennials — making them a prime demographic for client-first advisory services. By offering tailored guidance, advisors can help bridge the retirement savings gap for this segment. Deb Boyden, head of U.S. Defined Contribution, Schroders, noted this silver lining:

“It’s never too late to seek the services of a financial advisor or explore investment solutions tailored to help retirees grow and safeguard their savings.” With more than half of Generation X worried about outliving their assets, a plan for generating income in retirement that includes an informed decision about when to apply for Social Security benefits could provide much-needed peace of mind.”

SECURE 2.0: Key Provisions that Can Help Gen X Catch Up

The recently introduced SECURE 2.0 Act has useful provisions that could assist unprepared Gen Xers in enhancing their retirement savings:

• Super Catch-Up Contributions (2025):
  On Jan. 1, 2025, individuals aged 60 to 63 were eligible to increase their catch-up contributions to their retirement plans. They can contribute up to $10,000 or 150% of the standard catch-up limit ($11,250 maximum on $7,500 standard catch-up), whichever is greater. This adjustment allows for a higher accumulation of retirement funds during these critical years.
• Mandatory Roth Catch-Up Contributions for High Earners (2026):
  Initially, SECURE 2.0 required that, starting in 2024, catch-up contributions for employees earning more than $145,000 annually be made on a Roth basis, meaning these contributions would be taxed upfront. However, the IRS has delayed this requirement until January 1, 2026, giving advisors and clients more time to adjust their planning strategies.[4]

What Advisors and Their Clients Can Do Now

Advisors play a pivotal role in helping Gen Xers course-correct their retirement planning. Here are a few strategies to implement immediately:

• Encourage maxing out retirement contributions — especially for clients who haven’t been consistent in their savings.
• Educate clients on SECURE 2.0 provisions so they can take full advantage of expanded catch-up contributions.
• Plan for Roth catch-up contribution changes and discuss potential tax implications for high earners before the 2026 deadline.
• Offer personalized financial roadmaps to help Gen Xers make informed decisions about investments, taxes and retirement income planning with taxable, pre-tax and tax-free income streams with consideration to Social Security and Medicare impacts.

A Call to Engagement and Education

While Generation X faces significant retirement challenges, the SECURE 2.0 Act offers solutions that can help them get back on track during their prime earning years. However, many Gen Xers lack financial guidance, making this an ideal time for advisors to step in and provide the knowledge needed.

By proactively educating clients, optimizing savings strategies and preparing for upcoming legislative changes, financial advisors can help Gen Xers secure a more comfortable retirement — before it’s too late.

Now is the time for both advisors and Gen X clients to engage, build trust and discuss how to take advantage of these new provisions. The right financial strategies today will make all the difference in their future.

Invest with intention.

For more information, contact Dynamic’s Asset Management team at (877) 257-3840, ext. 4 or investmentmanagement@dynamicadvisorsolutions.com.

As Director, Asset Management, Lucas Felbel, CFP®, CIMA®, leads the implementation, monitoring and evaluation of trading activities at Dynamic Advisor Solutions.

Disclosures

For advisor use only. This commentary is provided for informational and educational purposes only. The information, analysis and opinions expressed herein reflect our judgment and opinions as of the date of writing and are subject to change at any time without notice. This is not intended to be used as a general guide to investing, or as a source of any specific recommendation, and it makes no implied or expressed recommendations concerning the manner in which clients’ accounts should or would be handled, as appropriate strategies depend on the client’s specific objectives.

This commentary is not intended to constitute legal, tax, securities or investment advice or a recommended course of action in any given situation. Investors should not assume that investments in any security, asset class, sector, market, or strategy discussed herein will be profitable and no representations are made that clients will be able to achieve a certain level of performance, or avoid loss.

All investments carry a certain risk and there is no assurance that an investment will provide positive performance over any period of time. Information obtained from third party resources are believed to be reliable but not guaranteed as to its accuracy or reliability. These materials do not purport to contain all the relevant information that investors may wish to consider in making investment decisions and is not intended to be a substitute for exercising independent judgment. Any statements regarding future events constitute only subjective views or beliefs, are not guarantees or projections of performance, should not be relied on, are subject to change due to a variety of factors, including fluctuating market conditions, and involve inherent risks and uncertainties, both general and specific, many of which cannot be predicted or quantified and are beyond our control. Future results could differ materially and no assurance is given that these statements or assumptions are now or will prove to be accurate or complete in any way.

Past performance is not a guarantee or a reliable indicator of future results. Investing in the markets is subject to certain risks including market, interest rate, issuer, credit and inflation risk; investments may be worth more or less than the original cost when redeemed.

To the extent that this material concerns tax matters, it is not intended to be used by a taxpayer as tax advice. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.

Investment advisory services are offered through Dynamic Advisor Solutions, LLC, dba Dynamic Wealth Advisors, an SEC registered investment advisor.

Photo: Adobe Stock

[1] Schroders 2024 U.S. Retirement Survey, Schroder Investment Management, Dec. 12, 2024

[2] Fidelity Workplace Thought Leadership, Q3 2024 Building Financial Futures, as cited in U.S. News & World Report Money, July 23, 2024

[3] National Institute on Retirement Security, The Forgotten Generation: Generation X Approaches Retirement, July 2023, as citied in Yahoo Finance.

[4] CPA Practice Advisor, IRS and Treasuring Department Proposal Regs on New Roth, Catch-Up Rule, 401(k) Auto Enrollment, Jan. 14, 2025