Just a few years away from retirement, many Gen Xers have very little—and sometimes nothing—saved for their post-work years, according to a new study.
An analysis from the National Institute on Retirement Security (NIRS) found the typical Gen X household has just $40,000 in retirement savings in private accounts. Only about half—55%—of Gen Xers are participating in an employer-sponsored retirement plan.
Additionally, savings are highly concentrated among high earners. For the top quartile, the mean retirement savings are $250,000, but for the bottom quartile, the mean shrinks to just $35,000, found NIRS in its research. Looking at median savings, the outlook gets worse. The bottom quartile has just $200 saved, and the second quartile has only $4,290 put away.
“Gen Xers are fast approaching retirement age, but the data indicates that the vast majority are not even close to having enough savings to retire,” said Dan Doonan, NIRS executive director, in a statement. “This really isn’t surprising given the terrible retirement hand that has been dealt to the latchkey generation. The American Dream of retirement is going to be a nightmare for too many Gen Xers.”
Gen Xers—those born between 1965 and 1980—were the first generation to mostly enter the workforce after the shift from defined benefit (DB) plans to defined contribution (DC) plans. Just 14% of Gen X are covered by a defined benefit plan. Stagnant wages, rising costs, and multiple economic crises over the years have placed many would-be Gen X savers at a disadvantage, Doonan said.
Hispanic and Black Gen Xers are particularly unprepared. Only a third of Hispanic Gen Xers (35%) are participating in an employer-sponsored retirement saving plan, and nearly all Black and Hispanic Gen Xers are at less than half of their retirement savings targets. The median retirement savings balance for Black Gen Xers is $1, and the median for Hispanic Gen Xers is $0.
“A big part of the problem is that far too many Gen Xers don’t have access to a retirement plan through their employer,” said Tyler Bond, NIRS research director, in a statement. “As a result, a large share of Generation X has virtually nothing saved for retirement, and most who are saving are not close to savings targets that will enable them to retire with their current standard of living. Accruing savings takes time, and Social Security alone won’t provide enough retirement income. So it’s critically important that we change course quickly. The status quo means we are looking at elder poverty for many Gen Xers and pressure on their families for support.”
An impoverished generation of retirees could have substantial economic impacts. Gen X represents almost 64 million Americans, or nearly 20 percent of the population, and the oldest group of Gen Xers are 58, just four years away from retirement age. The report suggests shoring up Social Security and other legislative measures to help ensure that Gen X retirees receive the support they’ll need.
SEE ALSO: