Gen X Predicts Retiring $400,000 Short of What They Think’s Needed
Generation X—the first generation heavily dependent on 401(k) plans—expects to be about $400,000 short of what they think they’ll need when they retire, according to new research released today from the Schroders 2025 US Retirement Survey.
On average, Gen Xers (currently between the ages of 45 and 60) expect to retire with $711,771 saved—far short of the $1,116,747 they believe will be necessary for a comfortable retirement. That equates to a $404,976 savings gap, which is the largest among all generations surveyed. The research found just 16% of Gen Xers believe they have saved enough money.
“The oldest Gen Xers are roughly 10 years from full retirement age, and that provides a window for them to cut this savings gap and explore solutions…”
Deb Boyden, Schroders
The savings gap facing Baby Boomers (ages 61-80) totals $356,684, as non-retired members of this generation expect to have $603,367 saved upon leaving the workforce and believe they need $960,051 to retire comfortably. The shortfall for Millennials (ages 29-44) is the smallest, but still sizeable, as this generation expects to retire with $785,200 saved, which is $353,721 short of the $1,138,921 they think they’ll need.
“While many Baby Boomers have defined benefit pension plans that provide a set income for life, Gen Xers entered the workforce as pensions were being replaced by defined contribution plans and before key features like auto-enroll and auto-escalate became common,” said Deb Boyden, Head of US Defined Contribution, Schroders. “The oldest Gen Xers are roughly 10 years from full retirement age, and that provides a window for them to cut this savings gap and explore solutions that can improve their transition from asset accumulation to asset decumulation.”
Gen X needs a plan
Schroders also found Gen X is the least likely to have spent time estimating their expenses in retirement and determining how much income they will need to generate, as more than half (53%) report they have not done any retirement planning, compared to 49% of Millennials and 43% of Baby Boomers. Just 26% of Generation X report working with a financial advisor.
With the majority of Gen X approaching retirement without a plan or advisor, Schroders reports it’s perhaps not surprising that 53% of them are concerned about outliving their assets, and 61% are not confident they will be able to achieve their dream retirement.
“Approaching retirement without a plan or professional advice is a huge mistake,” Boyden said. “Given the number of unknown factors involved, retirement can seem impossible to plan for, but there’s no question that those who take the time to determine how much income they’ll need to cover their expenses, then create an investment strategy to meet these needs, will be far closer to achieving their dream retirement.”
A recent Nationwide survey found recommendations from advisors carry significant weight in Gen Xers’ eyes, with 28% saying a financial planning session or advice from an advisor prompted them to make retirement planning a priority.
Gen X borrowing at higher rate
Additionally, the new Schroders research found that among those currently participating in a workplace retirement plan, nearly one-quarter of Gen X participants (24%) borrowed from the plan compared to 17% of Millennials and 21% of Baby Boomers.
The top reasons Gen X borrowed money from their plan were:
• Paying for unforeseen family or personal emergencies (29%)
• Bringing down credit card or other debt (23%)
• Keeping up with the increasing cost of living (18%).
Click here to check out the Schroders 2025 US Retirement Survey.
SEE ALSO:
• Workers Consider Needing $1M to Retire
• Gen X Didn’t Prioritize Retirement Saving Until 50—Can They Catch up?
• Non-Retirees Unwilling to Delay Social Security Benefits
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.