Finance
‘It Won’t Be Enough’: Financial Experts Warn Gen X About Key Retirement Pitfalls
As the oldest members of Generation X (those born between 1965 and 1980) approach retirement, financial experts warn that many in this group may not be as prepared as they think. Generation X faces unique challenges as they prepare for retired life, from shortfalls in savings to unexpected costs that may arise.
Here’s what experts say Gen Xers need to know to avoid these key pitfalls and ensure a more secure retirement.
Many Gen Xers are significantly behind in their retirement savings. A recent study by Northwestern Mutual found that only 7% of Gen X respondents have saved more than 10 times their annual income–the amount most experts recommend for a comfortable retirement.
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Perhaps even more concerning, over half of Gen X respondents say they have only saved three times their annual income or less. Fidelity recommends having at least three times your annual salary by age 40, six times your salary by age 50 and eight times your salary by age 60 to stay on track for a comfortable retirement.
This shortfall in savings is compounded by the fact that many Gen Xers do not have a retirement income plan. According to Allianz, only 30% of Gen Xers have mapped out how they will fund their post-work years, the lowest rate among all generations surveyed.
A common misconception among Americans is that taxes decrease in retirement. However, financial experts caution that many Gen Xers could face higher-than-expected tax burdens. The reason? Most have their retirement savings in tax-deferred accounts, like 401(k)s and IRAs, which require taxes to be paid upon withdrawal.
“The big problem is that a lot of them are going to be faced with a lot of taxes in retirement,” Jonathan Dane, founder and chief investment officer for Defiant Capital Group in Pittsburgh, told U.S. News. He says one way to mitigate this is to stop putting money in tax-deferred accounts and transition to Roth accounts, which allow for tax-free withdrawals.
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Another concern is healthcare costs. While Medicare provides comprehensive coverage starting at age 65, it doesn’t cover everything. Long-term care expenses, like assisted living, typically aren’t included. Experts suggest considering long-term care insurance or using a health savings account (HSA) to prepare for these costs.
Bank of New York Mellon (BK) CEO Robin Vince joins Yahoo Finance Executive Editor Brian Sozzi at the 2025 World Economic Forum in Davos, Switzerland, to discuss US President Donald Trump’s return to the White House and his expectations for the president’s second term and the impact on the financial sector.
“To see a government that’s really focused on growth and being able to make the economy everything that it can be, because ultimately, as one of America’s leading banks, we are focused on helping our customers to be able to grow and thrive. You know, that’s what our platforms are all about,” Vince says.
As deregulation under Trump is expected to benefit the financial sector, Vince says he’s “not that concerned” about the risks associated with loose regulation. “We have to be vigilant that that doesn’t happen. We need a strong, healthy financial system,” he says, explaining, ” We’ve seen how the strong banks have been able to actually help the system over the course of the events … We’ve been a force for strength in the economy, and that’s actually the role that we should be playing.”
The CEO underlines, “I’m looking forward. I’m thinking about the innovation. I’m thinking about the investment. I’m thinking about helping to make economies grow and our clients be successful.”
Watch the video above to hear more from the BNY CEO on tariff expectations, a potential uptick in merger and acquisition (M&A) activity, and his crypto outlook.
Click here for more of Yahoo Finance’s coverage from the World Economic Forum in Davos.
Check out Yahoo Finance’s Davos interview with Bank of America (BAC) CEO Brian Moynihan here.
This post was written by Naomi Buchanan.
Major global climate finance alliances are increasingly at risk with European lenders reportedly mulling following major US banks in withdrawing from the UN-backed Net Zero Banking Alliance.
The timing of the departures of top US banks including Citigroup, Goldman Sachs, JP Morgan, and Morgan Stanley — as well as four large Canadian counterparts, and potentially top lenders in Europe, too — is significant: US President Donald Trump and other Republicans have led criticism of finance’s role in the energy transition, and the latest departures come months after the COP29 climate summit sought to increase targets for global climate finance.
Finance
Finance & Budget Committee chair Reiches wants city's fiscal level sound – Evanston RoundTable
Shari Reiches is a leader and a go-getter. You may be familiar with her name from earlier RoundTable articles about her work on the city’s Finance & Budget Committee where she is the group’s chair. The committee meets the second Tuesday of every month (except in August) and there is always an agenda provided ahead online. The next meeting will take place at 5 p.m., Feb. 11.
Business founder, author, volunteer
Twenty years ago Reiches co-founded the business, Rappaport Reiches Capital Management. Today the firm employees a dozen people and manages more than a billion dollars in investments for individuals, families and nonprofit organizations.
She enjoys public speaking; one of her favorite topics is financial planning and values. In fact, Reiches wrote a book, Maximize Your Return on Life — Invest Your Time and Money in What You Value Most, that explains her philosophy and vision of investing. Radio programs, television shows, newspapers, magazines and podcasts seek out her point of view when it comes to money matters. She also volunteers with many organizations important to her.
Reiches was previously vice chair and board member of the Illinois State Board of Investments (ISBI), a $23 billion pension system. Gov. Bruce Rauner appointed her on Jan. 30, 2015 and she served four years.
Evanston mayor Daniel Biss knew Reiches from her work with ISBI when he was a member of the Illinois Senate. He nominated her to be one of the Finance & Budget Committee’s three lay leaders. The other two lay leaders are David Livingston, an executive in business development and treasury at ITW, a global manufacturing company, and Leslie McMillan, a private wealth manager. Five council members are also on the committee.
Role of Finance & Budget Committee
The committee’s purview is related to bills, budgets, financial reporting and management, investments, rating agencies, Evanston Police Department and Evanston Fire Department pension boards; and the funding of capital improvements and other long-term obligations.
Under Reiches’ leadership, the committee’s goals for the 2024-2025 year include:
- Identify additional revenue sources
- Review expenses
- Review capital improvement plan
- Establish long-term debt plan
- Review status of pensions
- Utilize benchmarking data
“The Finance & Budget Committee does not have decision authority,” she said. “All decisions are made by the City Council. We give advice and guidance to the City Council. My primary objective for the Finance & Budget Committee is to set policies that will continue beyond our terms.”
Pension policy
Reiches also touched on her commitment to creating policy.
“I want to come up with policies,” she said. “So we’ve already come up with two big policies. The first one was a pension policy.”
“Illinois law requires pension funds to have assets that cover 90% of estimated pension liabilities by 2045,” she said. “Our finance committee recommended, and the city council approved, a proposal to fund pensions so their assets cover 100% of pension liabilities by 2040. As a result of this new policy, the City of Evanston in 2024 increased its funding of our fire and police pensions by approximately $10 million over 2020.”
“A pension is a liability,” she said. “You can’t just say ‘I’m not going to fund the pension.’ We could have kept going at the 90% rate, but then there would be a huge tax to pay in the future,” she said.
“We are proud of this policy because it is sound fiscal policy. It was our first big, big win,” Reiches said.
Going forward, the committee plans to meet at least annually with the presidents of the Evanston police and fire pension boards to review the respective pension plans’ performances as well as updated actuarial reports.
Non-budgeted expenses policy
Sometimes unplanned opportunities arise. One example: last year the city council approved the purchase of Little Beans Café, 430 Asbury Ave., at a cost of $2.6 million. It will become the city’s dedicated site for accessible recreation programs.
This purchase was not on anyone’s radar. The idea for the purchase also bypassed any review by the Budget & Finance Committee.
Reiches said, “Our second big new policy is a non-budgeted expenditure policy. Any expenditure over $500,000 that was not budgeted comes to our committee for discussion before going to the council. The alders have big agendas and a lot on their plates. We have the time to review possible non-budgeted expenditures in more detail.”
The debt level
Another topic that has consumed a lot of discussion time is the city’s debt level. Debt allows the city to purchase goods and services that are beyond the scope of the annual budget, similar to a mortgage for a house or a loan for a car.
As the city contemplates taking on additional debt, it’s important to keep in mind that it’s not an even switch due to inflation. Between what the city needs and the rate of inflation, the new debt could exceed the amount of the debt rolling off. Reiches wrote in an email that, “The committee strongly feels we need to understand the additional debt the city is taking and the future expenses related to the debt in context of the overall budget.”
In Reiches’ view, this is the main reason for creating a debt management plan.
A policy to plan and manage Evanston’s debt
At the November 2024 Finance & Budget Committee meeting, the committee directed staff to include an item on the January 2025 agenda to discuss developing a debt management plan. To begin this discussion, the committee reviewed baseline debt data for the City of Evanston and peer communities.
For this review, the peer communities include Skokie, Oak Park, Park Ridge, Palatine, Bloomington, Arlington Heights and Des Plaines.
Along with its agenda for the Jan. 14 meeting, the committee provided a debt analysis. The analysis shows the amount of General Obligation (GO) Bond principal to be retired by category for all outstanding issuances from 2025 through 2044. (Refer to chart on pages 9-10.) The amount for 2025 is $13.57 million.
The chart below shows the city’s property tax levy and its various components since 2013.
This note from the city document succinctly states the situation: “As shown, from FY 2013 to FY 2025, the Debt Service Levy increased by 13%, the General Fund levy by 14%, and the Public Safety Pension levy by 41%. During this time, the CPI [Consumer Price Index] has gone up 35%, with increases for construction materials outpacing CPI. Given that CPI has far exceeded increases to the levy and that dedicated revenues have not been identified for the CIP [capital improvement projects], the City will be able to complete far less capital work in FY 2025 than in FY 2013 despite growing capital needs.”
Selecting a debt level
Currently the City Council selects the projects to be funded and adds the total amount for estimated costs. The total estimated cost determines the debt level.
Reiches and the committee recommend an alternative process: determine the amount of debt (still to be determined) the city can afford. Decide which projects get funded based on that number. Determining the debt level also provides a backstop for overspending.
“Our biggest expenses are capital improvements, plus we have deferred maintenance with aging facilities and parks,” Reiches said. “We have underground water pipes that are more than 100 years old that need to be replaced and the alleys that need paving.”
Budget management
The committee is also trying to limit projects that go over budget. The city’s finance staff alerts the committee of any expenses that increase 10% or more over budget. The committee is discussing ways to reduce some expenses in 2025.
Last year the city’s finance team was recognized by City Manager Luke Stowe after the city received an award from the Government Finance Officers Association. Evanston received the Distinguished Budget Presentation Award for its fiscal year 2024 budget, with particular acknowledgment for performance measures.
Reiches praised the committee’s working relationship with the City Council and described them as “very supportive.”
The Finance & Budget Committee is a new committee for Evanston. “We’re here for strategy and the big picture. We’re not here to micromanage the staff or the council,” Reiches said. “The Budget & Finance Committee provides the Alderman with detailed information so that they can make prudent decisions. The overall decision are with the Alderman.”
Working toward the future
“When I took over as Chair of the Finance & Budget Committee, I quoted my dad in my initial comments. He taught me, ‘We can have anything we want, but we can’t have everything we want.’”
She added, “Whoever’s going to be here in 2040 will be so happy because the pension will be funded and the deferred maintenance will be done, but it will take a while.”
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