The oldest members of Generation X are about 10 years out from traditional retirement age. From the looks of a new report, it appears they have some catching up to do on the financial side if they want to retire comfortably.
A new SOA Research Institute report authored by Greenwald Research focuses specifically on Generation X—including their financial situation, planning behaviors, and retirement readiness (or lack thereof).
Instead of displaying the financial security and retirement readiness of the Boomer and Silent generations, the report finds many Gen Xers align closer with the financial behaviors and status of Millennials.
The report defines Gen X as those born between 1965 and 1980, who were between the ages of 40 and 56 when the survey was conducted. That puts them in a period where workers often find themselves in a crucial “make-or-break” time when it comes to retirement planning. But instead of displaying the financial security and retirement readiness of the Boomer and Silent generations, the report finds many Gen Xers align closer with the financial behaviors and status of Millennials.
Considering both how Gen Xers fall within normal working age and their proximity to retirement, Gen X is of unique and important interest when it comes to evaluating retirement readiness and financial security.
It appears obvious that they are in a different situation than the group before them—they face higher student loan debt, have less access to defined benefit plans, and many are looking ahead without much savings for retirement. Add to that the fact that many are caring for—and sometimes financially supporting—aging parents while also trying to help their kids afford college.
“As a whole, they seem to be not as prepared for retirement when compared with older generations. Rather than resembling Boomers and those of the Silent Generation, Gen Xers report negative feelings about their financial status and report a lack of financial security that is more similar to Millennials,” the report states. “Even though Gen X is generally doing better than Millennials, they are also closer to retirement which makes higher financial insecurity more concerning.”
Gen Xers are less confident as a group when it comes to their own financial situation. When asked if they agreed or disagreed with the sentiment that their finances are under control, only 57% of Gen X respondents agreed—the lowest of any generational group. Additionally, only 54% say they feel on track for a financially secure retirement—again the lowest of any generational group.
Remember that Gen Xers are less likely to have defined benefit pension coverage than older generations. Among survey participants, 33% of Gen Xers report they (or their spouse/partners) will receive pension benefits compared to about half of Boomers who say the same.
Despite many Gen Xers being in the middle of their careers and nearing crucial decisions around retirement, Gen Xers report the lowest level of interaction with financial professionals (27% vs. 31% of Millennials, 35% of Boomers, and 34% of the Silent Generation).
In terms of saving for retirement, the report finds savings among Gen Xers is very widespread. “In total, 22% of Gen Xers have over half a million dollars in their savings and investments,” the report states. “However, a quarter say they have less than $10,000, virtually the same as Millennials. Despite this, Gen X anticipates a median retirement age of 65.”
Given the findings, perhaps it’s not surprising that six in 10 Gen Xers are concerned about not being able to maintain their standard of living, the financial impacts of a major health issue, savings not keeping up with inflation, paying for health care, and paying for a nursing home.
The report did include some recommendations for Gen Xers to help with retirement preparation. They include:
• Have a specific goal to work towards
• Increase savings for the next few years and don’t tap into retirement savings prematurely
• Save enough in an employer-sponsored retirement plan to obtain maximum employer matching contributions
• Work longer, possibly on a modified basis
• Plan to claim Social Security at a later age
• Keep skills and contacts up to date to improve employability
• Increase financial and retirement literacy, including investment basics and longevity
• Take advantage of financial wellness programs and resources offered by employers
• Look for ways to reduce expenses
• Avoid high-cost debt, e.g., credit card debt or “pay day” type loans
• Maintain health and consider the potential need for and benefit of health, life, and disability insurance
SEE ALSO:
• Lacking Pensions, Gen X Turning to Annuities
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.