The Truth About Retirement: 5 Harsh Realities Gen X Needs To Know
With the current state of Social Security, saving for retirement is vital, but Generation Xers are not ready for their golden years. According to a Schroders survey, 61% of Gen X are not confident that they will have enough set aside.
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“The size of the retirement savings gap facing Gen X is concerning, as they are the first generation to rely on 401(k) plans instead of pensions and [are] the next in line to retire,” stated Deb Boyden, Schroders’ head of U.S. defined contribution, in the survey report.
Here are other findings from Schroders’ Generation X and Retirement survey that can help you identify and overcome obstacles to saving.
Almost Half of Gen X Has Not Saved for Retirement
Generation X is next in line to retire, yet many haven’t started planning, the survey found. “Nearly half (45%) of non-retired Gen Xers have not done any retirement planning, compared to 43% of millennials and 30% of non-retired baby boomers.”
Many Gen Xers who have saved haven’t saved enough, according to a July 2023 report from the National Institute on Retirement Security. “The bottom half of earners have only a few thousand dollars saved for retirement, and the typical household has only $40,000 in retirement savings.”
Gex X Will Be Short Hundreds of Thousands of Dollars for Retirement
The Gen Xers who have saved for retirement fear they will be significantly short on funds. “Non-retired members of Generation X (ages 43-58) say on average it will take approximately $1.1 million in savings to retire comfortably, yet they expect to have just $661,000 saved,” the report stated. “The resulting savings gap is significantly larger than the expected shortfalls facing millennials and baby boomers.”
But it’s not too late to start saving. “Fortunately, even the oldest Gen Xers have some time before reaching their full retirement age,” Boyden pointed out. “Using this time to develop a retirement plan and increase their savings rate is crucial to improving their retirement readiness before it’s too late.”
Gen X Doesn’t Know How To Invest
Learning what investments work for you can be a challenge, which is something Gen Xers are facing. “Underscoring the need for a plan, non-retired Gen Xers are allocating on average 32% of their assets earmarked for retirement to cash despite their time horizon and sizeable retirement saving gap,” according to the report. When asked why they’re keeping their savings in cash instead of investing it, 63% said they’re afraid of fear losing their money and 24% were unsure about the best way to invest their savings.
Gen Xers Worry About not Getting a Steady Check in Retirement
Many people in Generation X are worried about not receiving a steady income, the study found. “More non-retired Gen Xers (84%) are concerned or terrified about the idea of no more regular employment paychecks in retirement than millennials (79%) or non-retired baby boomers (74%).”
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