Investment Advice for Different Generations

Copyright: <a href=I love the holiday season. It is usually chaotic and always fun. It’s particularly fun on those rare occasions when we get to visit with extended family. On Christmas Eve, we go to Jill’s Uncle Steve’s house in Taunton. It is a large get-together since he is one of 12 children and I think half of Taunton shows up. I’m always amazed at how quickly the years pass; cousins who were “babies” yesterday are growing into young adults, last year’s “kids” have become parents, and aunts and uncles are now grandparents. Every generation is represented at Uncle Steve’s on Christmas Eve.

At these get-togethers, conversations within generations usually center around certain themes—college, weddings, babies, divorce, and illness. It’s predictable and understandable. With each stage of life, we celebrate accomplishments and we face different challenges.

Driving home I got to thinking as Jill entertained our kids with a masterful performance of Christmas carols. I couldn’t help but think about how the same is true with respect to our financial lives. Each generation faces unique challenges. And with each stage of life, we also hope to celebrate financial accomplishments. Let me share with you, Cutter Family Finance readers, some ideas of how to establish your financial security at each age.

Generation Z

Getting off to a good start—People born around the turn of the millennium now have a name: Generation Z. These kids are just now graduating from high school and college. For better or for worse, many from Generation Z have never worried about finances. But things are about to change for this age group, as they move into adulthood.

In fact, as the first of this group venture out into the world, many are saddled with substantial student loan debt. And although that debt is usually the manifestation of a great accomplishment—graduating from college—managing that debt can be a challenge for some.

If you are a “Gen Z-er,” you should make an effort to understand your responsibility with respect to that debt. You should also focus on managing the basics of financial discipline: paying bills on time, establishing credit, and setting aside a set amount into savings each month is a must.

Establishing good financial behavior from the infancy of adulthood will set the cornerstone to financial security.


Now’s the time—Millennials began reaching adulthood in the 21st century. Now in their 20s and 30s, Millennials are dealing with everything life can throw at them: careers, relationships, kids, and other responsibilities.

Millennials who were not successful in managing debt when they first graduated should focus on debt reduction (especially high-interest debt from credit cards). They should also focus on building assets. Retirement may be decades away, but if a Millennial has not begun saving for retirement yet, it is critical to start as soon as possible. For most, it makes sense to enroll in any available employer-sponsored retirement plan, especially if your employer matches contributions—that’s free, tax-deferred money!

Many employer-sponsored plans actually have an automatic enrollment feature now, where a new employee must opt out of participating, rather than opting in, which I think is a brilliant idea. Most new employees will never miss that small piece of their paycheck that is going toward building their retirement, if they never see it in the first place.

Although the idea of saving for something so far in the future is not always gratifying, it sure does help to open an account statement and see those savings grow as a result of systematic contributions.

Generation X

Slackers no more—Generation X, born from the mid-1960s to the mid-1980s and the children of Boomers, are either approaching or fully entrenched in mid-life issues. (Hey, that’s me!) Our kids are still at home or going off to college, and some of us are preparing to care for aging parents. We’re strapped for cash and focused on our families. We’re sometimes called “America’s middle child” by advertisers and statisticians since we’re a smaller group than Boomers or Millennials.

Gen Xers are also usually in our peak earning years, but that doesn’t mean that we are living on Easy Street. Multiple studies show this generation, more than those on either end, are susceptible to financial insecurity brought on by excessive debt. Many, unfortunately, live beyond their means, even considering those higher earnings. So, if you are a Gen Xer who has still has not reduced debt, it is critical to get that under control.

Many of us have already started saving in employer-sponsored plans and IRAs, but it is important to think about other things we can do to prepare for retirement. Although the temptation is great to spend that disposable income, consider saving money in non-qualified (taxable) accounts to boost those retirement savings.


Transitioning to or in retirement—Baby Boomers, the children of the “Greatest Generation” born from the 40s through the mid-60s, are either retired or are retiring in record numbers. Although market volatility over the years may have caused some to put off retirement until later, and some are enjoying one more lap around the track with a late career change, many have invested for decades and are transitioning from accumulation investment strategies to distribution strategies.

Folks, this is significant because the strategies you may have used in your accumulation years may not be appropriate approaching to or in your distribution years.

Think about it. Boomers are living longer in retirement than previous generations, which means that their accumulated assets must last longer than ever before. An inappropriate investment strategy could become catastrophic. So before making that switch, get educated on your strategy.

Also, develop a budget that works in those later years. Be careful not to underestimate health care costs, as well. Calculations you made only a few years ago may need to be revised upward, thanks to surging premiums and the cost of long-term care. Guaranteed income from sources such as Social Security and pensions should be evaluated to determine whether there is an income shortfall and this analysis should be incorporated into any investment plan.

By creating a retirement plan that covers fixed expenses, your most rewarding accomplishment will likely be the peace of mind that you will not outlive your assets, or become a burden to your family.

As I always say, “Be vigilant and stay alert, because you deserve more.” No matter what stage of life you’re in, be vigilant about your finances because you do deserve more.

I want to wish all of you a healthy and prosperous 2018.

Happy New Year!

Jeff Cutter, CPA/PFS, is president at Cutter Financial Group, LLC, with offices in Falmouth, Duxbury, and Mansfield. Cutter Financial Group provides private wealth and investment management advice incorporating low-risk, low-volatility financial strategies. He can be reached at jeff@www.cutter-copy.dev.

Cutter Financial Group LLC (“Cutter Financial”) is a registered investment advisor.

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