Gen Xers Get a Rocking-Chair Conversation

Retirement is not one of those topics members of Generation X think about. It's something for the baby boomers to focus on and something for the Millennials to put off for another decade. But Gen Xers—those born from the mid '60s to the early '80s—are hitting a delicate time. They may not want to plan for their later years, but they'd better start.

That's the thrust of the message from Tim Harrington, CEO of the financial-planning site FiPath. This week, FiPath launched its "Save Generation X! Campaign" in which the company promises to donate $1 to reduce the federal Social Security debt for every new member it signs up.

Portfolio.com threw a few questions to Harrington via email about the company's strategy, Gen X retirement attitudes, and FiPath's own business health. Following is an edited transcript:

Portfolio.com: Why should members of Generation X be so concerned about their retirement funds today?

Tim Harrington: The Gen X consumer with less than $500,000 in assets is lost in today’s investment world. This consumer is often overlooked by many financial advisors and faces an uncertain future. Unsure of where to go or whom to trust, especially after the Madoff era, many Gen Xers are at a standstill. Moreover, the 2008 recession impacted their ability to save for retirement, as well as for their children’s education.

In 2010, the Social Security program had a $49 billion deficit. When baby boomers got their jobs years ago, they were being told that as long as they came to work on time, worked hard, and followed the rules, that they would be hired for life, receive a pension and a 401(k), and be matched on their 401(k) contributions. This generation, Gen X, is the first one facing the fact that they will not have all of those benefits, so they will need to take it upon themselves to better plan for their financial future.

Compare Generation X with baby boomers at comparable stages in their lives. Were the boomers better off at this point?

Being a baby boomer myself, I can speak about starting my career at IBM fully expecting to being hired for life by a Fortune 100 company. I had a pension, full medical benefits, and at this point in time, Social Security was a sure thing.

In contrast, Gen Xers have a propensity to change jobs eight to 10 times throughout their careers. They often accumulate multiple retirement accounts at various places of work and never really know what they have.

The recession in 2008 also greatly impacted this generation’s ability to not only save for retirement, but also for their children’s education. Many Gen Xers are also now taking on the role of caregiver to their aging parents. According to Fidelity, 10 percent of Gen Xers provide financial support to their parents or in-laws, and the average amount is about $3,500 a year. If you care for an aging parent for 10 years, that could add up to $35,000—not a small chunk of cash.

You’re pledging to donate $1 to reduce the nation’s Social Security debt for every new member who joins the FiPath community. What kind of an impact do you think your campaign will have?

Generation Xers are approximately between the ages of 29 and 49. Even if every single Gen Xer, of the approximately 60 million in this demographic, contributed to the campaign, it would not solve the issue of the Social Security deficit. Our hope is that with this campaign, we can get the word out and start filling the void that currently exists for millions of consumers as it relates to financial planning and retirement oversight.

We launched this campaign to draw awareness to the immense importance for this generation to, if they have not already, wake up and start paying attention to their financial future. We also currently have two political parties with very different views on how to solve the issues behind Social Security. Gen Xers simply can’t afford to wait around for these problems to be solved. This group admits having its head in the sand about planning for the future. Our objective is to give our members the tools they need to sweep away the sand and take control now.

How should Generation X—or even Generation Y—entrepreneurs or small-business owners approach retirement, as opposed to those of us who work for somebody else?

If you start a business, the odds are that your company will fail. Data from the U.S. Small Business Administration shows that, regardless of the year when they are founded, the majority of startups go out of business within five years, and two thirds are no longer operating 10 years after being formed. Startups take a lot of cash and resources to build momentum.

Entrepreneurs take a lot of risks when making the move to start or invest in a company. They never know when they will get funding, and if they do get funding, are always on edge waiting for those funds to possibly run out. Unlike working for an employer, a regular biweekly paycheck is not a guarantee. That’s why entrepreneurs—both Gen X and Gen Y—need to take even better care of their finances. And no matter how risky the deal, business owners should never risk their retirement and always make sure that no matter how small, they are socking away a certain amount of money each month.

Looking at your own business, is FiPath on the path to financial success?

Americans are outliving their savings, and there is a shortfall from traditional sources like Social Security and pensions. There is a general lack of knowledge about long-term financial planning. Dormant 401(k)s have a negative impact on employers and employees. Traditional financial services companies are mistrusted and aren’t interested in individuals having less than $500,000 in retirement assets.

There is a specific void in the Gen X age group in the retirement planning space. FiPath is targeting this demographic (approximately 80 million people) because they: 1) go online for answers; 2) change jobs often; 3) lack educational resources necessary to construct a plan; 4) often mistrust traditional financial services firms; and 5) generally have retirement assets of less than $500,000. This demographic, in the U.S., has over $18 trillion in assets; 64 million Individual Retirement Accounts; and more than $560 billion in new rollovers annually.

With consistent month-over-month membership growth and the recent launches of the Fipath Express Rollover Center and FiPath for Advisors—we’re absolutely on the path to financial success.

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J. Jennings Moss is editor of Portfolio.com.