Gen X May Require A ‘Miracle’ To Retire

As Generation X approaches the cusp of retirement age, this cohort faces a stark financial reality that sharply contrasts with their reputation for independence and resourcefulness.

Despite being known for their adaptability and pragmatic approach to life, Gen Xers find themselves woefully underprepared for retirement, with average savings falling far short of the recommended amount for a comfortable post-work life.

Raised as “latchkey kids” and witnesses to significant societal changes, Gen Xers developed a strong sense of self-reliance and a value for work-life balance. However, these traits have not translated into financial security for many.

Xem thêm : Arkansas aims for $300M in savings through executive agency cuts

With the average Gen X household having saved only about $150,000 for retirement—a mere fraction of the estimated $1.5 million needed—this generation is forced to contend with the prospect of either significantly delaying retirement or dramatically adjusting their lifestyle expectations.

Gen-X Falls Short

Amid a tough economic environment, Gen X is scrounging to boost their retirement savings.

With ongoing high inflation and rising living costs diminishing their purchasing power, many Gen Xers are struggling to ensure their financial stability. To add to this turmoil, a significant number are balancing the responsibilities of supporting their children while also caring for elderly parents—as part of the “Sandwich Generation”—all while attempting to set aside funds for their own retirement.

This combination of financial pressures creates an extraordinary level of stress for Gen X. According to a 2024 report from global asset management company Natixis Investment Managers, the majority of Gen Xers (82%) acknowledge that they bear the primary responsibility for financing their retirement. While 60% are prepared to extend their working years, nearly half (47%) worry they may not be able to work for as long as they need to secure their retirement.

Unexpected events in the later stages of one’s career can significantly derail retirement savings strategies. This could happen just as financial burdens like mortgage payments or college tuition are ending, potentially freeing up funds for retirement contributions. Similarly, taking time off work to care for an aging parent or an ill child can impact savings plans, as well as personal health issues or disabilities that prevent continued employment.

Xem thêm : Frugal People’s Top Money-Saving Tips

Almost 70% of respondents indicated that inflation has negatively impacted their ability to save for retirement. Additionally, over half (55%) admit they are saving less due to increased daily expenses.

Gen X intuitively understands the difficulties ahead, with 48% expressing concern that they won’t have saved enough to enjoy their retirement. Many are apprehensive about the repercussions of falling short, and 28% fear they may have to re-enter the workforce after retiring, if that option is still available to them.

With rising costs and dwindling savings, some individuals feel they will have to adopt a more frugal lifestyle or relocate to a more affordable area. Nearly 10% of respondents express concern that they may need to sell their homes, while 11% worry they might have to depend on friends and family for support. Forty-eight percent of the Gen X respondents believe that achieving a secure retirement will require a “miracle.”

A separate study by the National Institute on Retirement Security found that around 40% of Gen X have zero retirement savings.

On The Bright Side

Gen X has been overlooked compared to the larger Baby Boomer and Millennial generations, earning them the moniker the “Forgotten Generation.” Despite this, they are now in their peak earning years and increasingly occupying positions of power in the corporate world.

Considered early by global standards, Gen X, on average, plans to exit the workforce by the age of 60, according to the Natixis research. Financial advisors recommend that this cohort capitalize on their current high-income years by maximizing retirement savings and taking advantage of catch-up contributions to enhance their retirement financial prospects.