Retirement is something that many of us start to look forward to when we get older. But for those part of Generation X – those aged between 45 and 60 – it may feel like something of a pipe dream.
In fact, research from Aviva shows that 31% of this demographic think they’ll never be able to completely retire.
The reasons for this pessimism are likely to be down to two key factors: property and pensions.
Baby boomers – those born between the mid-1940s and late-1960s – are said to hold 78% of the UK’s property wealth, the Guardian reports. This generation had arguably the best opportunities to grow wealth and access more affordable housing, which Gen X did not.
Meanwhile, Gen X is also caught in a pensions gap. Many baby boomers were able to take a final salary pension – a type of pension that offers an income for life – but these schemes are rarely offered now.
At the other end of the spectrum, workers from younger generations have benefited from automatic enrolment into company pension schemes, legislation that was introduced in 2012. Gen X will have been brought into these at a later stage in their lives.
Essentially, Gen X has effectively missed out on the best of both worlds in terms of pensions.
Added to all of this is the cost squeeze on Gen X, with financial responsibilities often extending from dependent and adult children to elderly parents. As a result, increases in the cost of living may have hit individuals hard if they have multiple financial dependants. Alongside incrementally higher outgoings, every cost increase leaves them less able to save.
All of this could point to a perfect storm of financial instability, hampering hopes of retirement. However, that doesn’t mean Gen X individuals are destined to work for the rest of their lives.
Fortunately, bespoke financial advice could help Gen X plan effectively for their retirement. Read on for five areas that a financial planner could explore with your Gen X clients to help them stay on the right path towards retirement.
1. Higher pension contributions
This could be as a lump sum into a workplace pension from a bonus payment, for example, or your clients could start a separate pension to make additional payments into.
Alternatively, it could be via an increase in regular employee contributions. In some cases, employers will match these, so even a small increase could make a difference to your clients’ pension pots.
2. Salary sacrifice
Under this government-backed scheme, an employer reduces the employee’s salary and makes additional pension contributions.
This will also reduce the amount of Income Tax and National Insurance contributions (NICs) an employee makes, so could even result in an increase in take-home pay.
3. Claiming higher- or additional-rate tax relief
Regular pension contributions and one-off payments will automatically receive 20% tax relief, up to the Annual Allowance (£60,000 for most earners in 2025/26).
But crucially, earners who pay higher- or additional-rate Income Tax can also claim these increased rates of tax relief back. This needs to be done via self-assessment and isn’t widely known, so a financial planner could explain this fully.
If this is something your clients could benefit from, they can also claim up to four years’ retrospective payments of higher- or additional-rate tax relief.
4. Exploring investment options
A financial planner can work with your clients to make sure their pensions are working as hard as possible for them. They may also explore any other appropriate investments which could bolster their returns.
They will talk to your client about their goals, to ensure the advice is appropriately tailored in line with their tolerance for risk and the results they want to achieve.
5. Phased retirement
This could be a good alternative to a conventional retirement, where an employee stops working completely. Under this method, you gradually reduce your working hours to transition towards retirement, taking part of your pension as you continue to work.
Your Gen X clients may benefit from options such as part-time consulting or reduced working hours, giving them the opportunity to dial down their work as they get older while still contributing to their pension pot.
Get in touch
If you’d like to know more about bespoke financial advice for Gen X to plan for retirement, please get in touch. Email hello@sovereign-ifa.co.uk or call us on 01454 416653.
Please note
This article is for general information only and does not constitute advice. The information is aimed at retail clients only.
All information is correct at the time of writing and is subject to change in the future.
Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.
A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.
The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.
Workplace pensions are regulated by The Pension Regulator.
Approved by Best Practice IFA Group Ltd on 25/04/2025