Gen Xers are no strangers to strange financial times. After all, we’ve witnessed the bursting of the dot-com bubble in the early 2000s, the financial crisis of 2007 to 2008, the coronavirus pandemic, and now heightened geopolitical and economic uncertainty. We know how fragile the economy can be and what that means for us as individuals.

In the United States, more than 63 million Gen Xers are living and working through their prime earning years right now.1 As a generation, Xers earn a little over $101,000 per household, making us the highest earners in this country.2 That’s why planning for the future of your money is so vital today.

With this checklist in hand, you’ve already taken a crucial first step. These seven recommendations are the beginning of a complete, thoughtful accounting of your preparations for tomorrow. While no list could ever address all the unique needs of an entire generation of individuals, these seven to-dos are important for all who are mapping out their financial futures.

1. Determine your retirement date using cash flow.

Retirement is all about cash flow, so how much will you need? Determining your retirement date by your cash-flow needs allows you to know if you are on track to retire early, on time, or otherwise. You’ll discover whether you need to save more or spend less than you currently are. It will also help answer the question of whether you need to ask for that raise, get that promotion, or expand your skill set.

If your cash-flow needs haven’t been properly accounted for when determining your retirement date, it could lead to a multitude of problems. Insufficient cash flow in retirement will cost you flexibility in where you live, what type of lifestyle you can maintain, how much you can afford to give (to your community or family), and perhaps even how long you can remain retired.

Knowing how much you need to retire allows you to determine when you can retire or semi-retire to a more fulfilling role. You can be confident that you are doing things the right way and be less stressed about work or finances.

To-do list
• Create your cash flow statement.
• Project your expenditures into the future at a reasonable inflation rate.
• Determine what resources you will have in retirement to meet your cash-flow needs.
• Determine the income gap you need to close or fill.

2. Max out your retirement savings.

Saving isn’t just about how much—it’s also about when. By wisely making use of your retirement accounts and building a comfortable retirement through proper savings levels, you are thinking long-term and foregoing spending now so that you can spend later.

Failing to save at the right level now means you will need to save a larger percentage of your income as time passes. It could also result in not being able to retire on your terms because of a need for reduced expenditures. Alarmingly, an unexpected career or health event would set you even further back.

Taking advantage of retirement savings is key. You will have more control of your life as your assets give you more options for how to live, work, and spend your free time. It’s important to get this part right.

To-do list
• Learn about the retirement accounts you have access to.
• Review the trade-offs between Roth and non-Roth accounts.
• Contribute monthly and take advantage of catch-up contributions.
• Know the distribution rules and when it is prudent to withdraw funds or convert funds to a Roth account.

3. Create and maintain an estate plan.

Your estate plan determines who your assets will pass to upon your death and who will be your fiduciary in the event you are deemed incapacitated. Proper estate planning can eliminate unnecessary fees, taxes, and delays that burden those without the proper plan in place. It can also protect your loved ones from such burdens when the estate is passed on to them.

Estate planning helps ensure that your assets will be disposed of according to your wishes. Planning now also helps ensure your estate will have enough liquidity, and that you and your loved ones will have the proper documents in place during an incapacitation event or untimely illness or death.

With estate planning taken care of, you can be confident that no matter what happens to you, your assets will be managed properly until they are distributed to the people and entities you’ve chosen. Your family will never need to “pick up the pieces” upon your death. That’s a goal worth achieving.

To-do list
• Review how your financial assets are owned and titled.
• Review the primary and contingent beneficiaries on all your accounts. Are any accounts missing beneficiaries?
• Create a will, trust (if appropriate), power-of-attorney documents, and advance health care directives.
• Periodically review and update your health care and financial powers of attorney. If you have young children, ensure your will appoints guardians and conservators.

4. Prepare for children’s education expenses.

The cost of higher education keeps rising, and it’s of vital importance to your family and your finances that you take that into account today. Your children deserve access to the best opportunities, and looking ahead to educational expenses is the best way you can help them get that access.

Practically speaking, leaving educational expenses unaccounted for will harm your children’s ability to pay for school or training. Without financial support, the full cost of education will fall on their shoulders. It’s tough to imagine our kids without a direction or plan—or the assets they need to realize that plan.

You can help your children plan for their own future by planning for yours. With money set aside for educational expenses, your kids can choose affordable schools as well as balance the need for further financial assistance. They’ll also graduate with less student debt to their name, which is a huge gift that is in your power to give.

To-do list
• Explore the methods for saving for higher-education expenses.
• Help your children understand the economics of higher education.
• Help them determine their education path and life after school.

5. Optimize your asset allocation to match your financial needs.

Allocating your assets thoughtfully can play an important role in working toward financial peace of mind. With a well-considered asset allocation plan, you may feel more at ease during market fluctuations, your investments could better align with your risk tolerance and time horizon, you might navigate cash flow disruptions more smoothly, and you may enjoy your money with greater confidence.

If you don’t have an appropriate asset allocation plan in place, the ups and downs of the markets can be unbearable. Being too aggressive could put too much of your financial future at risk and put you out of position to benefit from normal market corrections. Conversely, being too defensive could prevent you from generating high enough returns to reach your financial goals.

Being ready with an asset allocation plan will give you greater financial confidence. Be empowered to focus on the most important areas of life without stressing about whether your money is in the right position. Know that it is by planning now.

To-do list
• Maintain a conservative bucket of cash or cash equivalents for liquidity.
• Create a target stock, bond, and cash range appropriate for your short-term and long-term goals and rebalance as necessary.
• Review your allocation during significant financial and life events (home purchase, inheritance, marriage, divorce, etc.).
• Reassess your risk tolerance and investment objectives periodically and ensure your allocation is appropriate.

6. Talk to your parents about their finances and planning.

It can sometimes be difficult and awkward, but having “the talk” with your parents is important. Talk to your parents about their finances and how they are planning for their future so that both you and they can feel good about whatever the future may hold. This is the way to stop fearing potential curveballs down the road.

Knowing that your parents’ finances and estate planning documents are in good order is helpful in so many ways. But if your talks with them reveal some things that need attention, all the better. Now is the best time to take care of any outstanding issues.

Identify potential pitfalls well in advance and plan to mitigate those risks so your parents and you don’t have to worry. This is one of the most important talks you and your folks will ever have. Do it soon.

To-do list
• Ask your parents if they have a financial plan.
• Ask them if they have the proper insurance policies in place.
• Ask them if they have an estate plan and make sure it has been reviewed within the last 10 years.

7. Take care of insurance needs.

Insurance is an important financial tool. If your insurance coverage is insufficient, it could compromise your family’s financial future. However, knowing you and your family are properly covered and will receive sufficient financial assistance should an accident occur or tragedy strike can help you lead life with fewer worries.

There are multiple kinds of insurance you need to be aware of beyond just short-term health insurance. Property and casualty (P&C) insurance, life insurance, and long-term care plans are also hugely important. Don’t neglect covering these bases:

  • P&C insurance will cover you and your assets in case of accidents.
  • Life insurance helps provide your family with peace of mind.
  • Long-term care plans help ensure you will be taken care of, even when you can’t take care of yourself.

To-do list
• Review your home and auto for proper liability coverage.
• Obtain an umbrella liability policy.
• Review or obtain life insurance coverage.

As you can see, Gen Xers face a host of financial needs, choices, and questions. This checklist is a great starting point for anyone in their prime earning years to begin earnest preparations for the future. Even as a starting point, though, it covers the gamut from investment choices to important family conversations. That’s a lot to do, honestly. But then again, there’s a lot at stake here.

Planning today (or tomorrow) is worth so much more than planning 10 years, five years, or even one year from now. Properly positioning assets, purchasing insurance, laying plans, and talking to your family all open up financial options and flexibility. The sooner you can have that flexibility, the better.

However, planning today (or tomorrow) isn’t always easy. Life can be pretty hectic and doesn’t always leave much room for looking to the future. That’s why Cerity Partners is here to help. Our advisors serve clients by helping them find the surest path to the financial future they’ve always dreamed about. We offer customized plans that fit each client’s individual needs, but every plan has the same goal: helping ensure your ability to live life on your terms. To address all the needs in this checklist—and to get a plan that accounts for your specific objectives—reach out to your Cerity Partners advisor or request an introduction today.

  1. The Forgotten Generation: Generation X Approaches Retirement.”
    https://www.nirsonline.org/wp-content/uploads/2023/07/Gen-X-Report_Final5_flattened-1.pdf ↩︎
  2. “Median Income by Generation: How Do You Compare?” https://www.kiplinger.com/personal-finance/median-income-by-generation ↩︎

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