For Gen X, it's time to grow up and get a broker

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Generation X may have shed the slacker image over the past decade as its members moved beyond coffee shop jobs and into the suburbs, SUVs and corporate boardrooms. But when it comes to saving for retirement, the description still fits.

Most Gen Xers, the oldest of whom are heading into their 40s, are woefully behind in saving for retirement. Nearly half of the 5,000 Gen Xers surveyed by Charles Schwab this year said they are so saddled with debt or live on such tight budgets they can’t even think about saving.

“They’re not a saving generation — they’re spenders,” said Gio Van Remortel, a 36-year-old who studies her generation as a futurist at Social Technologies, a research and consulting firm in Washington.

Melanie Keller, 35, admits that fact. She worries about retirement because she only has $3,000 put away in a 401(k) plan and has no other investments. But instead of socking away money for retirement, the pharmaceutical saleswoman is trying to save $60,000 so she can buy a starter home where she lives in San Jose, Calif.

“I am worried, but I don’t feel like after I pay all the bills — with rent, car payment — I have enough money” for savings, she said.

Indeed, the expenses of a house, car and all the other possessions that go along with being an adult often leave Gen Xers very little to sock away in a 401(k) system that grows money incrementally, said Van Remortel. Even if they are not supersizing their lives and living beyond their means, she said, many Gen Xers — generally defined as those born from 1965 to 1980 — carry significant debt due to college alone. Once they have kids, they begin to worry about saving for their college educations, and retirement planning often drops in priority.

Recognizing those pressures, investment firms are offering new incentives tailored to get Gen Xers to invest. The Principal Financial Group, which runs 401(k) plans for 47,000 employers and their 3 million workers, offers free music downloads to people who boost their contributions to retirement accounts. The company also sends financial counselors to the offices of their clients to offer free advice on 401(k) planning.

Broker Charles Schwab meanwhile has lowered its minimum balances to $100 for people opening new investment accounts and offers high-yield checking accounts linked to brokerage accounts. “If they can start with a checking account, they can invest easily over time,” said Jonathan Craig, a vice president at Schwab.

Still, Gen Xers may face bigger financial challenges than their parents and grandparents did. On top of the big mortgages, college loans and the rising child education costs, they face the fact that few employers offer traditional pensions anymore, meaning they take on more of the burden of retirement. Plus, the future of Social Security is more uncertain than ever. Unless Congress makes changes, the trust fund that helps pay for the federal entitlement is likely to be exhausted by 2040 — about the time most Gen Xers hit retirement.

Credit card debt, too, remains another big roadblock to many people. As many as 40 percent of Gen X women and 58 percent of men said they carried a credit card balance of $5,000 or more, according to a 2006 survey of 300 people by OppenheimerFunds. Nearly half of women interviewed said they would rather buy 30 pairs of shoes than save $30,000 for retirement.

Waiting to pay off that debt before saving for retirement could be a big mistake, said Doug Charney, president of the Charney Investment Group of Wachovia Securities in Harrisburg, Pa.

“Pay yourself first,” Charney said. He advises people to set aside at least 15 percent of their income into a retirement account. If that’s too much, people should start small with maybe 4 percent or 5 percent and gradually increase the contribution as they get pay raises.

“If you don’t save 10 percent of your income, you won’t be able to maintain the lifestyle you’re used to,” Charney said. For many people, that equates to saving about $2 million by retirement, after accounting for inflation. Those who haven’t put away enough money may have to work into their 70s. (Charney later sent an e-mail raising his target to 15 percent of income.)

Still, many people don’t understand how to invest or what is the best way to invest, and some are spending the retirement money they do save, according to surveys by financial institutions. As many as 40 percent of people cash out their 401(k) money when they leave a job rather than rolling the money over to grow in another retirement account, according to the Principal Financial Group.

Count Robert Betts as one of those people who made that decision. Burned out on his job at a Manhattan advertising agency, the 36-year-old Betts quit his job in 2005 and blew through $28,000 from his 401(k) plan while unemployed for 18 months. Now working for a Denver ad agency, he puts $500 a month into his 401(k) in an effort to catch up.

“When you see your 401(k) grow on top of what you put into it, it’s tough to swallow that you could have been doing that for 10 years,” said Betts. But he doesn’t regret using the retirement money to take time to clear his head.

“I could die poor in the gutter at 60, and I wouldn’t regret taking that money,” he said. “I’m much happier, and my career is on track.”

URL: http://www.msnbc.msn.com/id/21083120/

[Jasman0717 9]

Most of my daughter's generation X friends and herself included, all own houses, have good jobs and are actually thinking about investments and retirement realizing they probably won't be allowed to retire by Social Security until their mid-70s.

I am more concerned with the baby boomers. Many of us are retiring or getting ready to retire but forgot all about saving for that day. There could be a whole generation of people living under bridges

[Kevin and 10]

I don't count on SS when I retire. I have friends that are in their 50's that don't count on SS. The Boomers are going to eat up SS before I even get a wiff of it. I sure as he!! don't want to pay more FICA so some one else can retire. Gov't been siphoning off SS or so long it going to come around bite us.

[Jasman0717 9]

I don't count on SS when I retire. I have friends that are in their 50's that don't count on SS. The Boomers are going to eat up SS before I even get a wiff of it. I sure as he!! don't want to pay more FICA so some one else can retire. Gov't been siphoning off SS or so long it going to come around bite us.

Wise thing because it will probably be gone by the time people in their 30s are ready to retire

[Cassie 8]

We're both 35 now, and in the last two years have become serious about getting rid of debt so we can add to our retirement fund, because Social Security ain't going to be around for us, that's for dang sure! We have our treats, but we don't live like super spenders.

[Jasman0717 9]

We're both 35 now, and in the last two years have become serious about getting rid of debt so we can add to our retirement fund, because Social Security ain't going to be around for us, that's for dang sure! We have our treats, but we don't live like super spenders.

Very wise decision. I dump as much as possible into my deferred comp. One of my younger employees doesn't put anything in it and now is the time he should. Just think of the nest egg you could have if you put 500 a month (tax deferred) into a retirement fund for the next 30 years.

[Cassie 8]

We're both 35 now, and in the last two years have become serious about getting rid of debt so we can add to our retirement fund, because Social Security ain't going to be around for us, that's for dang sure! We have our treats, but we don't live like super spenders.

Very wise decision. I dump as much as possible into my deferred comp. One of my younger employees doesn't put anything in it and now is the time he should. Just think of the nest egg you could have if you put 500 a month (tax deferred) into a retirement fund for the next 30 years.

And that's exactly why we want to get rid of debt! The money we put towards my student loan will be going straight into a Roth IRA instead (only 1.5 years to go until that happens yay!). We just took a hard look at J's old 401(k) from a previous job that wasn't doing squat, so we rolled it over into mutual funds to get a better rate of return, he'll be starting a traditional IRA with matching contributions from his new job once he is eligible, and we have some set up in a "oh ####### we need some money for an emergency" fund. I feel like such a mogul LOL But it's true, take advantage of all the plans that you can while you are younger and save save save -- and stay away from those dang credit cards!

[Jasman0717 9]

We're both 35 now, and in the last two years have become serious about getting rid of debt so we can add to our retirement fund, because Social Security ain't going to be around for us, that's for dang sure! We have our treats, but we don't live like super spenders.

Very wise decision. I dump as much as possible into my deferred comp. One of my younger employees doesn't put anything in it and now is the time he should. Just think of the nest egg you could have if you put 500 a month (tax deferred) into a retirement fund for the next 30 years.

And that's exactly why we want to get rid of debt! The money we put towards my student loan will be going straight into a Roth IRA instead (only 1.5 years to go until that happens yay!). We just took a hard look at J's old 401(k) from a previous job that wasn't doing squat, so we rolled it over into mutual funds to get a better rate of return, he'll be starting a traditional IRA with matching contributions from his new job once he is eligible, and we have some set up in a "oh ####### we need some money for an emergency" fund. I feel like such a mogul LOL But it's true, take advantage of all the plans that you can while you are younger and save save save -- and stay away from those dang credit cards!

You are wise beyond your years

[Cassie 8]

We're both 35 now, and in the last two years have become serious about getting rid of debt so we can add to our retirement fund, because Social Security ain't going to be around for us, that's for dang sure! We have our treats, but we don't live like super spenders.

Very wise decision. I dump as much as possible into my deferred comp. One of my younger employees doesn't put anything in it and now is the time he should. Just think of the nest egg you could have if you put 500 a month (tax deferred) into a retirement fund for the next 30 years.

And that's exactly why we want to get rid of debt! The money we put towards my student loan will be going straight into a Roth IRA instead (only 1.5 years to go until that happens yay!). We just took a hard look at J's old 401(k) from a previous job that wasn't doing squat, so we rolled it over into mutual funds to get a better rate of return, he'll be starting a traditional IRA with matching contributions from his new job once he is eligible, and we have some set up in a "oh ####### we need some money for an emergency" fund. I feel like such a mogul LOL But it's true, take advantage of all the plans that you can while you are younger and save save save -- and stay away from those dang credit cards!

You are wise beyond your years

Fear is a wonderful motivator!!

[w¡n9Nµ7 §£@¥€r 123]

...stay away from those dang credit cards!

Cassie, I agree with everything you said except for that.

Credit cards can be used responsibly, in a manner that benefits you.

For example, I have a 0% for 6 months cash advance loan from a credit card which is sitting in a 4 month-CD in BofA getting 6 1/4 %. I will return the money some time during the fifth month.

Also, don't forget the points you can get from credit card purchases. Cashback is never a bad thing. You just have to make sure you only use the card to buy things you'd buy anyway and that you never pay a penny in finance charges.

I commend you on your overall strategy, however. Hope it works out.

[tweety 1]

...stay away from those dang credit cards!

Cassie, I agree with everything you said except for that.

Credit cards can be used responsibly, in a manner that benefits you.

For example, I have a 0% for 6 months cash advance loan from a credit card which is sitting in a 4 month-CD in BofA getting 6 1/4 %. I will return the money some time during the fifth month.

Also, don't forget the points you can get from credit card purchases. Cashback is never a bad thing. You just have to make sure you only use the card to buy things you'd buy anyway and that you never pay a penny in finance charges.

I commend you on your overall strategy, however. Hope it works out.

Wow that is a really good interest rate you get on your CD there - I haven't seen anything above 5% for a while now....

[w¡n9Nµ7 §£@¥€r 123]

...stay away from those dang credit cards!

Cassie, I agree with everything you said except for that.

Credit cards can be used responsibly, in a manner that benefits you.

For example, I have a 0% for 6 months cash advance loan from a credit card which is sitting in a 4 month-CD in BofA getting 6 1/4 %. I will return the money some time during the fifth month.

Also, don't forget the points you can get from credit card purchases. Cashback is never a bad thing. You just have to make sure you only use the card to buy things you'd buy anyway and that you never pay a penny in finance charges.

I commend you on your overall strategy, however. Hope it works out.

Wow that is a really good interest rate you get on your CD there - I haven't seen anything above 5% for a while now....

It was for platinum account holders, limited time offer. I know the lady who works at our local branch, she called me to tell me about it. Sweeeet.

[tweety 1]

...stay away from those dang credit cards!

Cassie, I agree with everything you said except for that.

Credit cards can be used responsibly, in a manner that benefits you.

For example, I have a 0% for 6 months cash advance loan from a credit card which is sitting in a 4 month-CD in BofA getting 6 1/4 %. I will return the money some time during the fifth month.

Also, don't forget the points you can get from credit card purchases. Cashback is never a bad thing. You just have to make sure you only use the card to buy things you'd buy anyway and that you never pay a penny in finance charges.

I commend you on your overall strategy, however. Hope it works out.

Wow that is a really good interest rate you get on your CD there - I haven't seen anything above 5% for a while now....

It was for platinum account holders, limited time offer. I know the lady who works at our local branch, she called me to tell me about it. Sweeeet.

nice!

But anyway your theory is quite interesting. I will have to look into our new credit cards with 0% and see what ROI after tax I can get with investing the "free" money. May-be I'll be doing some short-term investing then.

[Jasman0717 9]

I think that in 1230 days I will sell my condo, cash in my 401k and 457 and move to the Philippines. Nothing here to hold me here now

[Cassie 8]

...stay away from those dang credit cards!

Cassie, I agree with everything you said except for that.

Credit cards can be used responsibly, in a manner that benefits you.

For example, I have a 0% for 6 months cash advance loan from a credit card which is sitting in a 4 month-CD in BofA getting 6 1/4 %. I will return the money some time during the fifth month.

Also, don't forget the points you can get from credit card purchases. Cashback is never a bad thing. You just have to make sure you only use the card to buy things you'd buy anyway and that you never pay a penny in finance charges.

I commend you on your overall strategy, however. Hope it works out.

I come by my opinion based on how I used to use my credit card (that very quickly got out of control) and my stint as a credit card collector. Scared me off of them permanently!

Now I know there are people out there that can handle credit cards wisely (such as yourself, even though the cash advance plan you outline scare me LOL ), but for the vast majority it's like free money they don't have to really think about until it comes back to bite them in the butt. Hence my cautiousness towards them.

I think that in 1230 days I will sell my condo, cash in my 401k and 457 and move to the Philippines. Nothing here to hold me here now

you ok jasman??