Generation X consists of individuals born between 1965 and 1980. As more GenX-ers near retirement, the concern is whether they will outlive their money.

Employees who contribute to a pension plan early in their 20s and 30s and make regular contributions over decades are in a better position to prepare for retirement than those who wait until much later in their careers. It’s a fact that some people put retirement planning on the front burner so late in their careers that they struggle to maintain pension contributions and some are not able to increase the contributions as they age.

It has become increasingly difficult for some GenX-ers to make the maximum 20 per cent contribution of their gross salary to their pension plan. Reasons for the challenges faced range from competing needs, such as mortgage payments, car payments, student loans, increased debts, and household and education expenses for children, parents, and in some instances grandparents.

There are some self-employed GenX-ers who see their businesses as their pension. But it’s rather risky for the self-employed to rely solely on their businesses. In many instances they are inseparable from their businesses, which may retire with them. Plus, businesses can fail or suffer losses. Since pension funds are invested tax-free, the self-employed should seek to earn more by investing in a pension plan without delay. They also receive a tax benefit when filing tax returns. Pension offers tax relief on contributions.

Making the maximum contribution stipulated by law can go a long way in growing the pension nest egg that will be required in retirement. Some self-employed individuals don’t make consistent contributions to their pensions and lose out on much-needed pension growth. The self-employed can take advantage of lump sum contributions to their pension, bearing in mind that the total pension contributions for the year must not exceed 20 per cent of their gross salary. Contributions can be made monthly, quarterly, or annually, and pension plans offer a lifelong income replacement to retirees.

In Jamaica, Generation X employees or pension contributors who were born in 1965 are 5 years from normal retirement, while those born in 1980 are 20 years away. They are known as the “sandwich generation” because they are often sandwiched between caring for their children and aged parents. This sandwiched cohort must make the best use of time by saving and investing more, reducing debts, and cutting back on discretionary spending.

US-based asset company Schroders found that 45 per cent of GenX-ers have not planned for retirement and 66 per cent are concerned about the value of their workplace pension plans. Based on my experience and findings, similar trends exist in Jamaica.

Last week I did a financial presentation for a group of business owners. I explained the benefits of planning for retirement and the advantages of owners contributing to retirement schemes. Streams of income are necessary for retirement as no one can accurately predict the future regarding how much it will cost and how long you may live in retirement.

But what if death happens early? The beneficiaries can derive a benefit, especially dependents who would no longer have the previously available support. It is unfortunate that some healthy and vibrant individuals are of the view that they may not live to see retirement and, instead, place the emphasis on short-term goals, with all attention and plans only on the here and now.

UK financial services company, Just Group PLC revealed that there was a lack of confidence among some GenX-ers with regard to having adequate savings to maintain their standard of living in retirement. Fifty-two per cent are concerned about their lifestyle in retirement, while 38 per cent are not confident about having sufficient funds for retirement. Twenty-nine per cent of GenX-ers are burdened with the responsibility for their adult children — aged 21 and over — while 11 per cent are caring for aged parents or family members.

The financial burden has impeded contributions to pension plans. The Just Group findings showed that GenX-ers are fearful that they will need to work beyond the retirement age to pay off their mortgages. According to the communications director of Just Group, when compared with older generations, it’s a lot harder for GenX-ers to increase pension savings or maintain contributions due to the prevailing economic climate.

GenX-ers will contend with higher prices when they eventually retire. They, however, have the opportunity to save any increase in salaries towards retirement and find part-time work to supplement their income. They may need to live below their means longer and use any bonuses, commissions, or gratuities to reduce expenses and invest long-term for their retirement. It’s not too late to invest long term for retirement.

I have clients who retired more than 20 years ago. Upon retirement, they invested pension lump sums in stock portfolios, as well as in low-risk instruments such as bonds for emergencies. These clients are now in their 80s and 90s and are living comfortably in retirement because their investments provided adequate passive income. One elderly client repaired her roof and covered surgical expenses from her stock portfolio.

There is still hope for GenX-ers to live fulfilling and comfortable lives in retirement. Let your money work for you.

Grace G McLean is a financial advisor and retirement specialist at BPM Financial Limited. Contact her at gmclean@bpmfinancial or visit the website: www.bpmfinancial.com. She is also a podcaster for Living Above Self. E-mail her at livingaboveself@gmail.com.