4 Key Findings on the Retirement Prospects of Generation X

 In Retirement

generation x

Retirement is an important goal everyone needs to plan for. However, in the case of Generation X, it seems as though millions of Americans may have a very hard time reaching this aim.

A Quick Breakdown of Generation X

In case you’re confused about who falls into the category of Generation X, it includes all of those born between 1962 and 1981, with the “core” falling between 1967 and 1976.

Within this group, we find the following statistics:

  • 55% Married
  • 21% Single, Never Married
  • 12% Divorced
  • 75% Working Full-Time
  • 2% Retired
  • 28% Bachelor’s Degree
  • 18% Master’s Degree
  • 17% Have an Annual Household Income of $40,000 to $49,999
  • 23% Have an Annual Household Income of $50,000 to $74,999
  • 17% Have an Annual Household Income of $100,000 or more

Whether you’re a part of Generation X or not, these insights should help flesh out the profile of the average member. Now, let’s look at four key points concerning Generation X and retirement.

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The Recession Hit Generation X Hard

This shouldn’t come as much of a shock to anyone. After all, the recession hit everyone hard. However, due to its timing relative to the ages of Generation X, the recession was especially severe on many of their retirement plans.

Saving enough for retirement is almost always a challenge. Fortunately, if you make it to 55 (and intend to retire at 65), this usually means you can more or less coast into your Golden Years. The idea is to spend this last decade letting your nest egg grow a bit more without taking on any unnecessary risks.

When the recession hit, Gen Xers were caught off guard like the rest of us, but it could not have happened at a worse time for them. As Time’s Dan Kadlec pointed out back in 2014:

“Gen X members are least likely to say they have recovered from the crisis, according to the latest Transamerica Retirement Survey. They are most likely to say they will have a harder time reaching financial security than their parents. Gen X also is far more likely to strongly believe that Social Security will not be there for them and that personal savings will be their primary source of income in retirement.”

401(k)s and Social Security Probably Won’t Help Much

Sadly, those financial resources that many people take for granted may also have failed Generation X. This is from that same article I just mentioned:

“Meanwhile, Gen X is largely pensionless and was something of a 401(k) guinea pig when members entered the labor force. Plans then were untested and lacked many of today’s investment options or any educational material. The plans may have been mismanaged, subject to higher fees or even ignored. Even today, the Gen X contribution rate of 7% lags that of Millennials (8%) and Boomers (10%). Gen X is also most likely to borrow or take an early withdrawal from their plan (27%, vs. 20% for Millennials and 23% for boomers). Some of this relates to their period in life. But they have other reasons to feel glum too.”

Of course, I’ve long warned against trusting 401(k)s too much.

Since 2012, 23% of Generation X as stopped putting money into retirement accounts like 401(k)s and IRAs. That number dropped only slightly to 21% in 2014.
retirement accounts 401K IRA

Generation X Doesn’t Know When to Retire

Generation Xers largely plans to work into their 60s. You could be an optimistic slant on that; after all, just as many plan on staying active into their old age, too. However, the real reason seems to have more to do with the fact that this generation simply doesn’t know when they’ll have the resources to leave work.

Here are two important statistics to look at:

  • 73% of Gen Xers don’t intend to completely quit working right away
  • 46% plan on remaining employed into their mid-60s if not later
  • Roughly 50% plan on staying fit after they retire
  • 23% intend on furthering their education after retiring

Furthermore, the top reason for retiree’s to remain at work is that they want to stay mentally invigorated and enjoy social connections.

Again, while all of this may seem like good news, it’s worth noting that about 25% of Generation X doesn’t know when they will stop working. Out of those who did have an age in mind, that number goes up as the years go by, or this group loses confidence in their original answer.

Savings Are Down for Generation X

While it’s probably true that many people change their retirement age goals because they want to remain active or otherwise enjoy their work, it’s equally easy to appreciate their reasoning when you look at how much Generation X has saved for retirement.

In 2014, the median amount this group had set aside for retirement was $70,400. Two years prior to that, it had been $59,800.

Making matters worse, 77% of Generation X doesn’t use a financial planner to help with retirement. That number was the result of a 2014 survey. Even amongst those who make at least $75,000 a year, only 35% were securing the services of a financial planner.

The number one reason for not working with such a professional? Most thought they needed more money for retirement before this would be a possibility.

Of course, those who work with financial planners save more than half, on average, than those who don’t. In fact, twice as many Generation X members who get help from a financial planner have $200,000 or more in retirement compared to those without professional services on their side.

It should be clear that Generation X needs help when it comes to investing for retirement. While they were once known as the “slacker generation”, this group has shown they are plenty willing to keep working right on through the typical age of retirement.

However, at the very least, they need to secure the help of professional investors to get the most return for their money.

saving for retirement

Sergey Sanko
Sergey had started an IncomeClub after years of being an investment advisor for high affluent investors and managing fixed income securities. He is the lead investment advisor representative and holds a Series 65 license. Sergey earned his Executive MBA degree from Antwerp Management School.
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