Gen X Is Getting a Retirement Reality Check

By: Jenny Montoya · October 03, 2023 · Reading Time: 3 minutes

Savings Snapshot

A recent study by the National Institute on Retirement Security has thrown a spotlight on Gen X’s retirement preparedness — or potential lack thereof — indicating many Gen Xers are set to fall short of the savings required to maintain their current lifestyle post-retirement.

This generation, currently in their 40s and 50s, represents roughly 20% of the U.S. population.

Pensions to Portfolios

In order to better understand the challenges that Gen X workers face, it’s important to consider broader changes impacting retirement planning.

Gen X was the first generation to enter the workforce following the major shift in the labor market from employer-driven pension plans to 401(k)-style accounts. According to the NIRS report, just 14% of working Gen Xers are beneficiaries of a defined benefit pension plan — meaning a significant portion of their retirement planning has been self-directed.

The figures show that even high earners are not saving enough, with the average Gen X retirement savings balance standing at nearly $130,000 for individuals and $243,000 for households. Meanwhile, data from the NIRS study revealed 35% of Gen Xers have less than $10,000 saved, while 18% have nothing saved at all.

Retirement Ready

For Gen X and younger generations thinking about their retirement years, there are several ways to help mitigate a savings shortfall and enhance retirement readiness.

First, it’s essential to evaluate financial health and set clear retirement goals. Harnessing early savings, prioritizing retirement in budgets, and utilizing an employer-sponsored plan such as a 401(k) can be beneficial.

Other potential methods of increasing your retirement savings include catch-up contributions — made on either a pre-tax or after tax basis — IRAs, and diversified income through side hustles or real estate.

Finally, it’s important to watch for common missteps, such as neglecting structured retirement plans or underestimating future expenses.

It’s never too early to begin saving for retirement. In fact, the best time to start is when you receive your first paycheck — and the second best time is now.

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