Gen X is behind on retirement savings more than any other generation. Here’s how to catch up and secure your future
While much ink has been spilled on boomers and their retirement savings, a new report is sounding the alarm on their successors, who may be even worse off when it comes to retirement: Generation X.
A report by the Retirement Income Institute’s Alliance for Lifetime Income (ALI) has found that Gen X has “a fragile retirement foundation,” and that without taking certain measures, Gen Xers will be “entering retirement less secure than any generation before them.”
In fact, the median retirement savings for this group is shockingly low, with women saving $6,000 and men saving $13,000. Only 14% of Gen X have access to traditional pension, much less than the boomer generation, with 56% covered by a pension (1).
Generation X includes people who were born roughly between 1965 and 1980. In other words, they’re between the ages of 45 and 60 today — prime time when it comes to ramping up retirement savings.
However the “sandwich generation” is supporting both aging parents and their own children, with the result that they are among the least financially prepared for retirement.
Here’s why they’re facing a crisis, and what you can do if you find yourself way behind on your retirement savings track, including tips for increasing your savings.
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Gen X facing a number of obstacles
Generation X has, according to the ALI report, lived through eight recessions, increases in the cost of higher education and student loan borrowing costs, and six of the 19 biggest U.S. stock market corrections.
In Gen Xers’ lifetimes, the way that most Americans saved for retirement also underwent “seismic” shifts, the report notes, with changes in the law during the 1970s that allowed employers to offer an alternative to pensions, known as defined contribution plans, essentially “placing the retirement savings responsibility onto the worker.”
In other words, the retirement savings methods of the past no longer apply to Gen X. As the report says, “The old metaphor of the three-legged stool of retirement planning — employer pensions, personal savings, and Social Security — no longer holds.”
Social Security, the report notes, is a program facing “structural shortfalls.” They project that Gen X will rely heavily on Social Security, with many people perhaps not knowing that “Social Security was only designed to replace approximately 40% of a retiree’s pre-retirement income.”
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