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As older members of Gen X inch closer to retirement, pressures to save for retirement are mounting, especially for those caught between the financial burdens of supporting both aging parents and adult children.
Nearly half of Gen Xers, or 48%, say they won’t have enough money to enjoy life in retirement, according to a 2024 report from global asset management firm Natixis Investment Managers, while 31% of those surveyed said they worry they’ll never have enough money. Save enough Retire.
Gen X is generally defined as people born between 1965 and 1980. Its oldest members still have a few years until retirement, but they’re already starting to think about where they’ll live in their 70s, 80s and even 90s.
“I find it very stressful. [Gen X] “They’re caught in a tug-of-war between saving for retirement and helping their aging parents,” said Marguerita Chen, a certified financial planner and mother of Gen X. “Even if their parents aren’t elderly, they’re healthy and the tug-of-war between saving for retirement and helping their children’s education is still on.”
Gen Xers are the first generation of American workers to come of age with 401(k) plans as their primary retirement plan, following a major shift by employers away from traditional pension plans in the 1980s.
Gen Xers are feeling the financial squeeze as they approach retirement, but financial planners say there are still ways to maximize their savings.
“Generation X is the guinea pig for 401(k)s,” says Preston D. Cherry, CFP, founder and president of Concurrent Financial Planning.
Both Chen, CEO of Blue Ocean Global Wealth, and Cherry are members of the CNBC Financial Advisor Council.
The survey, conducted by CoreData Research in March and April 2023, involved 8,550 retail investors from 23 countries.
Mr Chen said Gen Xers experienced political turmoil and social change during their childhood in the 1970s, and then entered the workforce without the security of the pensions their parents enjoyed.
“We’re very rude, latchkey, independent and a little skeptical,” she says. “I feel like Gen X is the middle child. As Rodney Dangerfield said, ‘They don’t get any respect.’ People talk a lot about millennials and baby boomers, but Gen X is like the middle child and gets forgotten.”
As Gen Xers begin to think about retirement planning, they’re faced with decisions their Baby Boomer parents never had to consider: how much to put into their 401(k)s and what to put into them, Cherry said.
“They constantly have to decide how much to contribute to their 401(k),” Cherry said, “so now they have auto-enrollment because for years they were contributing too little.”
The average age that Gen X workers start saving for retirement is 30, according to a research nonprofit. Transamerica Institutewhich is considerably older than subsequent generations.
More than half of Gen Xers, or 55%, Save more A recent report from Allianz Life Insurance Company of North America on retirement savings is based on a survey of 1,000 respondents conducted in March and April 2024. Of those who said they would like to save more, 55% said in the report that everyday necessities, credit card debt and mortgages prevent them from doing so.
Often referred to as the “sandwich generation,” most members of Gen X are now caring for aging parents and helping with college funding for their children as they get older.
This sacrifice is expected to impact the financial freedom of almost half of this generation, with 46% expecting to live frugally in retirement, according to the Natixis report.
Cherry says Gen Xers can take advantage of their peak earning years in their 40s and 50s by maximizing contributions to tax-advantaged accounts such as 401(k) plans and individual retirement accounts.
In addition, individuals who are 50 years of age or older as of the end of the calendar year may be permitted to make annual catch-up contributions of up to $7,500 to their 401(k) plans in 2023 and 2024.
Cherry said the more you save towards retirement from your income, the sooner you’ll retire.
“Your retirement savings rate will determine your retirement date,” he said.
For Gen Xers who don’t have a lot of spare cash to put away, advisers say there’s not much they can do to make up for lost time, but they say it’s not too late to start saving and make the most of existing savings accounts.
Cherry said Gen Xers could also consider delaying taking Social Security until age 70 to maximize their monthly benefits. If possible, they could also consider working past the normal retirement age of 65, he added.
