A recent analysis shows that millions of Americans born between 1965 and 1980, collectively referred to as Generation X, are approaching retirement age, completely unprepared for retirement financially.
The typical Generation X family with a private retirement plan has $40,000 in savings, according to a report released this week by the National Institute for Retirement Security (NIRS). The numbers are even more troubling for low-income Gen Xers who managed to hide no more than $4,300, and often even less, the group found. Among all representatives of the generation, about 40% do not have a penny set aside for retirement.
“Generation Xers are rapidly approaching retirement age, but data shows that the vast majority don’t even have close enough savings to reach retirement,” NIRS chief executive Dan Dunan said in a statement. “Most Gen Xers don’t have a retirement plan, they’ve been through multiple economic crises, wages haven’t kept pace with inflation, and costs are rising. The American dream of retirement will be a nightmare for too many generations. – Xers.
Polls show that many Americans estimate they need to save at least $1 million to comfortably retire.
Barriers to Savings
A major concern for Generation Xers is their limited access to a retirement or 401(k) plan due to their work: Only 55% of Generation X workers participate in an employer-sponsored plan, NIRS found. The group noted that other barriers to saving money include higher student loan debt than baby boomers, while Generation X wage growth has been the same for most of their careers.
To help people save, NIRS is supporting an increase in the number of states across the country offering retirement plans, noting that Minnesota, Missouri, Nevada, and Vermont offer programs for residents who don’t have access to a retirement plan. Together, these states helped residents save $838 million in 680,000 retirement accounts, the study notes.
Congress should also consider giving Americans tax credits for care work, the researchers say. This would be of particular benefit to Gen Xers, many of whom are “caring for aging parents on the one hand and raising children on the other,” the NIRS said.
“Building savings takes time, and Social Security alone will not provide enough retirement income,” NIRS director of research Tyler Bond said in a statement. “Therefore, it is imperative that we quickly change course. The status quo means we’re looking at older people’s poverty for many Gen Xers and putting pressure on their families for support.”
The study used data from Prudential Financial, T. Rowe Price, Vanguard, and Fidelity Investments, as well as research from Pew Research Center, AARP, the Federal Reserve Bank of San Francisco, and the US Department of Labor.
Gen Xers—the roughly 64 million Americans wedged between baby boomers and millennials—are not the only ones struggling to meet retirement goals. While boomers say they need $1.1 million to retire, according to a recent study by Natixis Investment Managers, the average retirement savings for this generation is $120,000.