Generation X workers are increasingly doubting their ability to achieve a dream retirement in the future.
Latest findings from Schroders’ 2023 U.S. Retirement Survey found that non-retired Americans between the ages of 43 and 58 face shortcomings with their future retirement income. On average, respondents said they would be comfortable with $1,112,183 in retirement savings, yet they expect to have just $661,013 saved—the largest gap of the three age groups surveyed.
Millennials (ages 27 to 42) say it would take $1,280,892 to retire comfortably, but expect to have $877,266 saved, while Baby Boomers (ages 59 to 77) believe they would need $924,897, but in reality, anticipate saving $663,401.
It’s no surprise then that Schroders found Gen Xers lacked assurance in their retirement savings: 61% said they were not confident in their ability to achieve a dream retirement, compared to 49% of Millennials and 53% of non-retired Boomers.
Additionally, 66% of Gen Xers say they worry about their ability to grow their workplace retirement plan to the level they had hoped; compared to 61% of non-retired Baby Boomers and 64% of Millennials.
It’s a severe problem for the sandwich generation, notes Schroders, as more Gen Xers are forced to rely on their own retirement savings rather than pensions afforded to previous cohorts.
“The size of the retirement savings gap facing Gen X is concerning, as they are the first generation to rely on 401(k) plans instead of pensions and the next in line to retire,” said Deb Boyden, head of U.S. Defined Contribution at Schroders, in a statement. “Fortunately, even the oldest Gen Xers have some time before reaching their full retirement age. Using this time to develop a retirement plan and increase their savings rate is crucial to improving their retirement readiness before it’s too late.”
Getting this message across to Gen Xers may prove difficult, however, as 45% say they have not made any efforts in retirement planning, compared to 43% of Millennials and 30% of Boomers.
Furthermore, this group was found to allocate, on average, 32% of their assets to cash instead of towards retirement. When asked about the reasons for investing their retirement assets in cash, almost two-thirds of Gen Xers (63%) say they fear losing their money and nearly one-quarter (24%) report they are not sure how best to invest their savings.
This fear of losing cash is deeply embedded into this generation, Schroders finds. Eighty-four percent of Gen Xers reported being concerned or terrified about the idea that their regular employment checks will cease in retirement.
“As the first generation to head into retirement without the safety net of a pension plan, the stakes are higher for Generation X and the margin for error is lower,” said Boyden. “Not only are Gen Xers facing a formidable savings gap, our findings suggest a knowledge gap is a formidable headwind that’s threatening to prevent many from reaching their dream retirement.”
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