Key actions for Baby Boomers and Gen X to take now for an excellent retirement

Findex provides 5 investment tips for both Baby Boomers and Gen Xers to help secure their retirement.

A mature-aged couple high-five each other as they celebrate a financial win and early retirement

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Baby Boomers and Gen X Australians both consider superannuation and property as the top investment options for lifetime wealth-building, according to a survey by financial advisory company Findex.

The survey showed that 40% of Baby Boomers and 29% of Gen X rated superannuation as their no. 1 investment option.

Property also scored highly, with 37% of Boomers and 28% of Gen Xers rating it their preferred investment asset class.

Varying approaches to retirement savings

While both age cohorts valued superannuation highly, Findex investment relations head Matthew Swieconek said they typically took different approaches to growing their retirement savings.

Swieconek said Baby Boomers often had a more passive approach.

Having benefited from a strong jobs market and the longest access to compulsory superannuation contributions, they "may prioritise capital preservation and income generation in their investment choices", Swieconek said.

Generation X might feel less confident about their retirement security whilst juggling higher living costs, stagnant long-term wages growth and large mortgage repayments due to higher interest rates.

"They may be more risk-averse and seek a balance between growth and stability in their super investments," he said.

Let's talk superannuation

The Baby Boomers were born between 1946 and 1965, and Gen X was born between 1966 and 1980.

Superannuation was introduced in Australia in 1992. Most superannuation funds are primarily invested in ASX shares and international equities.

Younger Australians may choose to invest in more aggressive 'growth' super funds to maximise their earnings. With a longer runway to retirement, they can tolerate higher risk for higher rewards.

In 2023, Chant West figures showed the standard growth superannuation fund (61% to 80% growth assets like ASX shares), returned a median 9.9%. 'High growth' funds (81% to 95% growth assets) returned 11.4%.

Baby Boomers may switch from growth to 'balanced' or 'conservative' funds to preserve more of their capital. According to Chant West, the standard 'balanced' superannuation fund (41% to 60% growth assets) returned 8.1% in 2023, and conservative funds returned 6.2%.

Key actions to ensure a secure retirement

Findex recommends the following key investment actions for Baby Boomers and Gen X Australians to take now to ensure an excellent retirement down the track.

Baby Boomers  

Findex recommends the following five actions for Baby Boomers to retire well:

  1. Pre-retirement super boost: Maximize your superannuation balance before retirement by utilising catch-up contributions and considering strategies like downsizing contributions.  
  2. Legislative changes: Stay informed about changes in superannuation and retirement income policy to adjust your strategy accordingly.  
  3. Retirement income planning: Engage with a financial advisor to develop a sustainable retirement income strategy, considering the transition to retirement pensions or annuities.
  4. Prepare the next generation: Consider introducing your kids to a trusted financial advisor to help make financial advice more affordable and accessible for them.
  5. Legacy planning: Focus on estate planning and how your superannuation benefits will be managed and distributed.  

Gen X 

Findex recommends the following actions for Gen Xers to retire well:

  1. Maximising superannuation contributions: Enhancing both concessional and non-concessional super contributions can be a great way to build retirement savings toward the peak earning years.  
  2. Review your super investments: Seek advice to refine your superannuation strategy, focusing on investment selection within super, tax planning, and retirement income streams.  
  3. Healthcare and insurance: Review your insurance needs within superannuation to ensure adequate coverage, as health concerns may become more prominent.  
  4. Consider borrowing to invest: Known as gearing, borrowing money to invest can help boost your portfolio. However, due to its high-risk nature, talk to a financial advisor to ensure this is right for you.
  5. Estate planning: Start planning for your wealth transfer to ensure your super and other assets are distributed according to your wishes.  

Motley Fool contributor Bronwyn Allen has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Retirement

A mature age woman with a groovy short haircut and glasses, sits at her computer, pen in hand thinking about information she is seeing on the screen.
Retirement

Should you manage your own superannuation?

Most of us can use an SMSF. But should we?

Read more »

A group of seven young people of different genders and cultural backgrounds stand in a group with serious expressions wearing casual young persons' attire.
Retirement

Key actions for Millennials and Gen Z to take now for a good retirement

Young Australians have time on their side to better plan and execute their investments.

Read more »

Couple holding a piggy bank, symbolising superannuation.
Retirement

4 ASX retirement shares to buy in May

Analysts think these stocks could fit nicely in a retirement portfolio.

Read more »

An older man wearing a helmet is set to ride his motorbike into the sunset, making the most of his retirement.
Retirement

What's the average Australian superannuation balance at age 70 in 2024?

The average super balance at age 70 might shock you.

Read more »

A middle-aged man working from home looks at his mobile phone with a laptop open on the table in front of him.
Retirement

Will you need to keep working after retirement?

Two-thirds of Australians say they plan to continue working beyond their retirement age.

Read more »

parents putting money in piggy bank for kids future
Superannuation

Is the Bank of Mum and Dad now expanding to superannuation?

Three in four Australians are planning to give some of their superannuation as an inheritance to loved ones.

Read more »

Two people smiling at each other while running.
Retirement

Australians overestimate how much they need in retirement: report

A new survey shows Australians think they need $1.6 million to retire.

Read more »

Woman with a floatable flamingo at a beach, symbolising passive income.
Retirement

The best passive income streams to help fund your retirement

Setting up a source of second income could do wonders for your retirement.

Read more »