BakerAvenue Financial Feminism Master Series

Generation X (1965-1979)

Gen Xers experienced the robust stock market of the 90s, but also endured 9/11, the wars in the Middle East, and the dot.com crash. You were the hardest-hit generation by the housing bubble and 2008 recession, but now find yourself in your peak earning years, requiring an adjustment to your financial planning.

You are willing to accept more risk in order to focus on more returns, and although a self-reliant individual with a preference to manage your own assets, you may be open to financial management expertise. Seeking out a trusted advisor may be top of mind to tackle new concerns, such as juggling the care of both your children and your parents.

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Investing | Compensation & Taxes | Life Planning

Meet Gen Xer Jennie, Age 50

As a single mom, it can be hard to juggle all that life is throwing at me. I often feel that while I’m getting everything done, I am not doing anything well. Household finances are no different. I am lucky to earn enough money to cover expenses, save for retirement, and have some extra. I tell myself that I am going to start putting the “extra” into an investment account, but that never makes it to the top of my “to-do list.” I’m glad I started 529 plans for the kids – and have always been diligent about saving for retirement – but I know I need to take a more sophisticated look at my finances.

Top Three Issues for My Financial Future

Am I saving enough for retirement or should I be putting more into that bucket? I’ve had a financial plan run for me and it looked fine. But I’d like to know how much cushion I will have. Will I be able to live wherever I like, travel, and still have money to cover any unexpected medical needs? While I do have money to pay for the kids’ college expenses, I might have to eat into retirement savings if they want to go to private or out-of-state schools. Does that mean I will have to work longer? I just don’t have a clear picture around how financially set up I am for retirement.

I am so busy – I don’t feel organized around my financial life. Early on, I created a trust and healthcare directives, but I haven’t looked at those in years. I am not exactly sure how my assets would be dispersed if something were to happen to me. I know that I will have some inheritance coming to me as well as a potential liquidity event at work. While these are both going to be very helpful for me financially, I am unsure about how to invest the money in order to really get the benefits from it.

How will I manage taking care of my parents when they begin to need my help? They are both healthy but do not have a huge retirement savings. My dad has a lot of dementia in his family and his father lived well into his 90s. I’m concerned about where they will live and if they will have enough to be able to cover extra help as they need it. I feel like I will become an empty nester only to then have my parents to care for.

What would I do differently: I wish I had looked for someone to help me manage my money sooner. Most of my savings is in my 401(k) and I have just let it grow. Now I recognize that my life has become more complex – and I need professional guidance.

Overview of What to Consider

In Your 40s...

You may have children who are nearing college. If you haven't already, it is time to consider setting up a college fund that will grow and compound. While it may be tempting to cover those hefty college loans and assist with your children’s education, now is not the time to pull from your retirement fund. Maintaining your retirement planning efforts is crucial during this period of your life. In order to set yourself up for future financial success as you head closer towards retirement:

Create a college fund for children / grandchildren
Maintain retirement planning

In Your 50s...

Now is the time to start thinking about an approximate retirement date. As you do so, you’ll want to consider accelerating your retirement savings by upping your contribution levels and taking advantage of catch-up contributions. You’ll also want to prioritize reducing as much of your debt as possible as you approach your target retirement date:

Plan an approximate retirement date
Accelerate retirement savings
Reduce your debts

Lifestyle

Produce disposable income and growth to protect purchasing power. These assets have moderate risk and return goals.

Dividend-paying stocks
High-quality stocks
Taxable / municipal bonds
Income-producing real estate

Legacy

Pass on to future generations or beneficiaries. The goal is to protect the purchasing power of the underlying assets, but not necessarily to produce the highest return possible.

Growth equities
Real estate
Bonds
Natural resources / commodities
Absolute return strategies

Growth

A portfolio mix to maximize returns, often with much higher risk tolerance and volatility, that could have higher turnover and less tax efficiency.

Momentum and growth stocks
Emerging markets
Alternative investments: Private equity, venture capital

ESG / Impact

10 years ago, even five years ago, conversations about impact investing would start with financial advisors asking clients, "Is this something you're interested in?" Today, it’s the clients proactively asking how they can back companies committed to best practices for environmental impacts, social responsibility, and corporate governance issues.

👉 Read more on:

How investors are aligning their money with their values
View our white paper on how to get started with impact investing

Life Planning

Divorce, Second Marriage, and Blended Families

Divorce is an extremely emotional and traumatic time, and probably the last thing you want to think about is taxes. It is easy for estranged couples to overlook the serious financial issues that arise as they seek to divide up their assets and establish independent lives. But even in the midst of fraught divorce proceedings, it is important to consider the tax implications of property division, custody arrangements, and child and spousal support agreements.

👉 Read more on 5 Tax Tips to consider in the case of divorce

Charitable Remainder Trust (CRT)

With a CRT, an investor contributes highly appreciated securities to a CRT, sells highly appreciated stock without capital gains tax, and receives an annuity income stream over her lifetime.

👉 Learn more about Charitable Remainder Trusts

👉 Read the top 10 reasons for a CRT

Philanthropy

When life gives you a worthy cause, consider giving back.

👉 Learn about how you can leave your legacy and get started with philanthropy

👉 What Issues Should I Consider When Establishing My Charitable Giving Strategy?

Estate Planning

👉 Understand the importance of considering all the Estate and Gift Tax planning options

👉 Is it too soon to start thinking about an estate plan?

Other Considerations

Create a college fund for children / grandchildren: Read How to Get Started with 529 Plans

Estate planning: View our guide on Estate Planning

Caring for your aging parents:

👉 What Issues Should I Consider for My Aging Parents?

👉 What Issues Should I Consider If My Parent Passed Away?

Given the current state, it's also important to factor in inflation as you navigate your future life planning

👉 Here are some issues to consider during times of high inflation

How to Choose the Right Type of Advisory Firm

There are many different descriptions within the financial services industry for financial management companies, including asset management, wealth management, and family office services. So when choosing an advisor, it’s key to understand the differences between these terms and the capabilities that different types of managers offer. View this video or read more on choosing a financial advisory firm.

👉Also, read commonly asked questions on the differences in wealth and financial advisory firms.