Gen X workers believe they’ll need to save $1 million to guarantee a secure retirement, yet the number they expect to accumulate is much lower.
New findings from Schroders’ 2024 U.S. Retirement Survey finds that while Gen Xers on average say they’ll need $1,069,746 in savings, the reality is that most expect to save $602,944 by the time they retire. The savings gap is the largest out of all generations, at $466,802 compared to $322,128 for Millennials and $353,069 for Baby Boomers.
Such a gap could present problems in retirement for the Sandwich Generation, said Deb Boyden, head of US Defined Contribution at Schroders. Gen X workers were among the first to witness a decline in traditional pension plans and a rise in retirement plans like 401(k)s, leaving many to secure retirement savings on their own.
Plus, without the help of today’s features like automatic enrollment and auto-escalation, many have not caught up with their projected savings, Boyden explains. Competing life priorities, like caregiving needs, have also attributed to the derailment.
“If planning and saving don’t become higher priorities, Gen X could become the lost-retirement generation,” she said. “As the first generation to come of age with 401(k) plans rather than traditional pensions as their primary retirement savings, many Gen Xers missed out on the automation features that were not available in the early years of 401(k)s, such as auto enroll, auto escalate and QDIAs for a good part of their savings.
“However, even the oldest Gen Xers have several years left to better prepare financially before reaching their full retirement age,” Boyden added.
This includes organizing a plan that pulls from multiple income streams like Social Security, workplace savings, and even a potential annuity option. When asked what their top income sources are in addition to Social Security, 60% of workers expect to pull from cash savings, 48% will rely on a workplace 401(k), 403(b), or 457 plan, 37% will live off their spouse’s retirement savings, 36% expect to rely on investment income, and 27% will be dependent on their spouse’s pension plan.
A small number of Gen Xers will play the waiting game in order to maximize savings—just 10% of Gen X plan to wait until age 70 to begin taking Social Security benefits. Others (43%) say they are planning to take benefits before 70 because they are concerned Social Security may run out of money or stop making payments, compared to 24% of Boomers and 37% of Millennials.
Working with an advisor can mitigate some of these concerns, Boyden adds. Just 27% of Gen Xers surveyed are currently working with a financial advisor compared to 37% of Boomers and 31% of Millennials.
“It’s never too late to seek the services of a financial advisor or explore investment solutions tailored to help retirees grow and safeguard their savings,” she said. “With more than half of Generation X worried about outliving their assets, a plan for generating income in retirement that includes an informed decision about when to apply for Social Security benefits could provide much-needed peace of mind.”
SEE ALSO:
Gen X to Inherit Major Wealth Transfer Over the Coming Decade
Gen X Planning to Retire Later Due to Caregiving and Inflation
Gen X Anticipates Needing Same Income or More for Retirement
Amanda Umpierrez is the Managing Editor of 401(k) Specialist magazine. She is a financial services reporter with over six years of experience and a passion for telling stories and reporting news. Amanda received her degree in journalism and government and politics at St. John’s University. She is originally from Queens, New York, but now resides in Denver, Colorado with her partner. In her free time, Amanda enjoys running, cooking, and watching the latest drama show.
