Gen X Faces Tougher Challenges When Saving for Retirement

Gen X Faces Tougher Challenges When Saving for Retirement

The generation between the Baby Boomers and the Millennials is all grown up, with young families, mortgages and other financial responsibilities. Yet they’re also caught in a retirement planning twilight zone of sorts; according to the Social Security Administration, Gen Xers are less likely to have enough income in retirement to maintain their standard of living compared with current retirees.1 For a generation that may have watched their parents retire after 40 years at the same job with a gold watch and a pension, this is tough to swallow.

As Gen Xers edge closer to their 50s, the reality is stark: two-thirds of Gen Xers expect to work past the traditional retirement age of 65 out of necessity, and 18% say they’ll never retire.2 They’re the first generation to experience a significant shift from traditional pension plans to 401(k) and IRAs. Add in the financial challenges of day-to-day living—saving for children’s college educations, paying mortgages and handling other financial obligations—and it’s not surprising that many Gen Xers have a tough time saving for retirement. Still, it needs to be a priority; even the youngest Gen Xers are less than 30 years away from traditional retirement age.

Some Gen Xers may have the luxury of an employer-sponsored 401(k) plan. But those who don’t, because their employers don’t offer one or they are alternatively employed, may need to explore other retirement saving options such as an IRA. If Social Security really does run dry, Gen Xers will also need to consider how much they were projected to get when planning for retirement.

The good news for Gen X is that, while the financial obligations of midlife may seem counterintuitive to saving for retirement, it is possible. It is also important to begin now. It’s time to review existing sources of income in retirement, make a plan and work toward saving as much as possible in investment vehicles that are appropriate for retirement.


1 https://www.ssa.gov/policy/docs/ssb/v72n1/v72n1p37.html
2 https://www.northwesternmutual.com/about-us/studies/planning-and-progress-2015-study