Many working adults feel they are lagging behind in retirement savings.
A new report shows that, when evaluated by generation, Gen X is the least prepared for retirement in almost every way. This information comes from a study conducted by the Alliance’s Retirement Income Research Institute.
The authors argue that while baby boomers often dominate the conversation, Gen X faces an even more severe crisis regarding retirement.
This “sandwich generation,” supporting both children and aging parents, has weathered eight recessions and grappled with rising costs in education, healthcare, and housing. They often juggle considerable family responsibilities alongside hefty mortgages, car loans, and student debt.
“We’ve held onto our parents’ traditional values, but maybe that has delayed our ability to save for retirement,” comments Ryan Schaeffer, a financial advisor at Advance Capital Management in Southfield, Michigan, who appears on the CNBC 100 Financial Advisors list.
Rethinking the “tripod stool”
“There are broader challenges out there, as well as personal ones,” explains Jason Fichtner, executive director of the Retirement Income Institute and co-author of the research.
The report indicates that only 14% of Gen X workers benefit from a traditional pension, a stark contrast to 56% of baby boomers.
Fichtner suggests that a successful retirement strategy now calls for “rethinking the traditional retirement planning triad” of pensions, Social Security, and personal savings. “Today, your pension plan is your 401(k), and it needs to provide additional safeguarded income,” he elaborates.
Meanwhile, Social Security is facing funding issues. The trust fund that supports retirement payments may run dry by 2033, according to recent statistics. A report from the Social Security Board suggests that 77% of benefits might still be available unless Congress intervenes.
“I will be eligible for Social Security when that fund is depleted,” Fichtner, a former deputy commissioner of the Social Security Administration, reflects, making it a personal concern as well.
The risk of outliving your savings
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Other studies have highlighted that Gen X faces disadvantages due to fewer safety nets.
Currently, the average Gen X household has saved just $40,000 for retirement, according to a 2023 report from the National Institute for Retirement Security.
In general, 69% of Gen bank rate, which was published last month.
“Considering different generations and varying income levels, the primary challenge for retirees is properly aligning contributions with realistic long-term needs,” states Mark Hamrick, a senior economic analyst at Bankrate.
According to the Retirement Income Research Institute’s study, only 41% of Gen X…
Given the limited resources, Fichtner voiced that the worry about having sufficient funds for life remains significant. “More than half are concerned they might outlive their savings,” he remarks.
How to set retirement savings goals
Experts generally suggest seeking guidance from professionals. Financial professionals can help you find your footing again. They assist in establishing realistic goals and mapping out steps to achieve them.
“Don’t hesitate to reach out,” Schaeffer advises. A vital first step is to engage with a financial advisor who can “diagnose, analyze, and prescribe.”
“Create a plan and work towards it,” he continues. “The earlier, the better.”
Suzanne Norman, director of the Retirement Income Institute and co-author of the report, points out that emotional “numbness” often stops individuals from confronting their financial situations.
For those worried about retirement security, several options remain available, including possibly working longer or pursuing secondary interests during retirement.
