Fortune senior writer Alicia Adamczyk is looking for Gen Xers (ages 43 to 58) to interview about their retirement readiness for a future story. If you’re interested, email her at alicia.adamczyk@fortune.com.
Retirement bites. The oldest members of Generation X are swiftly approaching the traditional retirement age, but few are financially prepared for the next chapter, a new report finds.
Sandwiched between the larger baby boomer and millennial generations, Gen X typically doesn’t get as much attention as its older and younger cohorts despite making up around 20% of the population. But America needs to start paying attention: Born between 1965 and 1980, the Gen Xers on the cusp of their seventh decade are, theoretically, just a few years away from leaving the workforce.
And according to new research, many are not prepared for a comfortable retirement. They have the largest wealth gap of any generation, according to the Schroders 2023 U.S. Retirement Survey. On average, these workers say it will take a bit over $1.1 million in savings to retire comfortably, but expect to have around $660,000 saved. Over 60% of non-retired Gen Xers are not confident in their ability to achieve a dream retirement, compared to 49% of millennials and 53% of baby boomers.
Of course, that’s only perception. But Schroders is far from the only report that finds Gen X isn’t financially prepared for retirement. A recent study from theNationalInstitute on Retirement Security (NIRS), a nonprofit research organization, found the typical Gen X household has $40,000 in retirement savings, while the average has $153,300,according to Fidelity Investments,far less than the $1.1 million they think they’ll need. (Averages are often skewed by a few wealthier account holders.)
As the difference between the typical amount and the average indicates, retirement savings is highly concentrated among top Gen X earners, according to NIRS’s report: The top 25% has $250,000, on average, while the bottom quartile has around $35,000. The median is more striking, with the bottom quartile having just $200—“almost nothing.”
In fact, Gen X is the only generation in which a majority believe they won’t be financially prepared for retirement, according to Northwestern Mutual’s2023 Planning & Progress Study. They also report “markedly lower” feelings of financial security than other generations.
The stakes are high for Gen X
Underfunding retirement isn’t unique to Gen X. Every generation has challenges when it comes to saving for the future, and over half of workers feel behind on building up their retirement accounts, according to a recent Bankrate study. But Gen X is most likely to feel this way, according to the survey.
And Gen X is also notable because “they are the first generation to rely on 401(k) plans instead of pensions and the next in line to retire,” says Deb Boyden, head of U.S. defined contribution at Schroders. Only about 14% of Gen Xers have a pension; broadly speaking, Gen X is on the hook for saving for a lot more of their retirement on their own than boomers. While millennials get a lot of the attention for this shift in the retirement landscape, Gen X will be the pioneers of managing the changes. “The stakes are higher for Generation X and the margin for error is lower,” Boyden says.
They also faced the rise of student loan debt, as well as higher health care costs than the generations before them. They are projected to live longer than boomers, meaning they will likely need even more saved.
That said, not all is lost for the “forgotten generation.” Some 71% own their homes, according to Redfin, and many still have decades until retirement, giving them plenty of time to put a plan together and still reap the benefits of compound interest. It’s normal for many people to start saving for retirement in their forties and sometimes even fifties.
But that would require a big shift in behavior: According to the NIRS, only around half of Gen Xers are actually participating in a workplace retirement plan, a statistic that may be difficult to improve with the rising cost of living and other financial headwinds (many Gen Xers are also likely to be caring for both children and older relatives).
“Most Gen Xers don’t have a pension plan, they’ve lived through multiple economic crises, wages aren’t keeping up with inflation, and costs are rising,” Dan Doonan, executive director of the NIRS, said in a statement. “The American dream of retirement is going to be a nightmare for too many Gen Xers.”
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FAQs
Gen X has the largest wealth gap of any generation, and it means 'the American Dream of retirement is going to be a nightmare' for them. Retirement bites. The oldest members of Generation X are swiftly approaching the traditional retirement age, but few are financially prepared for the next chapter, a new report finds.
Does Gen X have the largest wealth gap? ›
Another study from the National Institute on Retirement Security found that Gen X also has the largest wealth gap: The top 25% have $250,000, on average, while the bottom quartile have around $35,000. For its part, Allianz said that retirement is more than just saving and hitting a certain amount of money.
What is the retirement wealth gap for Gen X? ›
Gen X (1965 – 1980)
Although they have maintained higher rates of savings over the years, stagnant wages and stubborn debt mean there is growing unease about their retirement prospects. Gen Xers need $1.1 million to retire comfortably at 67, but currently fall short at $660,000.
What was the American dream for Generation X? ›
Amid these societal dynamics, Generation X was more likely to see the “good life” as “having lots of money,” “having a college education,” “traveling abroad,” “having really nice clothes,” and “owning a vacation home.” Their aspirations could be explained, in part, by their consumer values.
Why could retirement dreams be a nightmare for many in Gen X? ›
"Most Gen Xers don't have a pension plan, they've lived through multiple economic crises, wages aren't keeping up with inflation, and costs are rising.
Will Gen X be able to retire? ›
Generation X feels less prepared for retirement than other generations despite approaching it sooner. Nearly half of Gen Xers, or 48%, say they won't have enough money to enjoy retirement. Much of Gen X is in the “sandwich generation,” taking on the financial burden of caring for both adult children and aging parents.
How is Gen X doing financially? ›
According to the Federal Reserve's Survey of Consumer Finances, Gen Xers hold about 38% of liabilities, aka debt, in the US; they're the group holding the most debt, at about $7.1 trillion.
Why is Gen X the forgotten generation? ›
For all the research we've conducted on Gen Z and millennials — and even Gen Alpha — we have written very little about Gen X. Our data suggests it's called the "Forgotten Generation" for a reason, as there are very few elements that distinguish the group from the general population.
Are Gen X struggling? ›
But in other ways, Gen Xers are struggling. In 2015, the year the oldest Gen Xers turned 50, Federal Reserve data show the generation held 17% of the nation's wealth. Compare that to the Boomers, who held 31% in 1996, the year they turned 50. Today, Gen Xers hold 29%, versus 53% held by Boomers.
Will Gen Z be able to retire? ›
But financial experts say Gen Zers who want to exit the workforce early are, to put it mildly, facing an uphill battle. While workers of all ages struggle to save enough for retirement, it may prove even more difficult for younger Americans.
Generation X is known as the “middle child” generation because of its small size in comparison with the baby boomer and millennial generations. Gen Xers are typically described as resourceful, independent, and good at maintaining work-life balance.
What is the concept of the American dream? ›
No less an authority than the Oxford English Dictionary defines the American dream as “the ideal that every citizen of the United States should have an equal opportunity to achieve success and prosperity through hard work, determination, and initiative.”
How did Generation X change the world? ›
Generation X—so named because of the generation's refusal to be defined—witnessed some of the world's greatest advancements, including space exploration and the development of the computer. Generation X is a relatively smaller generation than those that surround it.
Why are Gen Xers depressed? ›
When Gen Xers have time to think about themselves, they're often worried about money. Gen X can't afford to put the same trust their parents did in benefit programs like Social Security to provide for them in their old age. Saving for retirement is a huge source of stress.
Are Generation X wealthy? ›
Second Wealthiest Generation: Gen X
The Federal Reserve found that people born between the years 1965 and 1980 hold a total of $39.09 trillion. So why is their wealth only about half of the generation just before them, the baby boomers?
How long is Gen X expected to live? ›
It is a known fact that lifespan increases with each generation. For baby boomers, the average life expectancy is 70 years, for Gen X its 85, and newer generations like Gen Z and Alpha will likely exceed the 100-year mark.
What generation holds the most wealth? ›
Wealthiest Generation: Baby Boomers
In aggregate, their total net worth is $78.55 trillion.
Why does Gen X have the most debt? ›
Members of Gen X — born roughly from 1965 to 1980 — have the highest average debt stemming from student loans, credit cards and more. Why does Gen X owe so much money? It's mostly due to their current circ*mstances rather than particular personal finance decisions.
What generation made the most millionaires? ›
Baby boomers have the highest household net worth of any US generation. Defined by the Federal Reserve as being born between 1946 and 1964 (currently in the ages between 59 and 77), baby boomers are in often in the sunset of their career or early into retirement.
