Generation X, the often overlooked demographic that includes approximately 64 million Americans born between 1965 and 1980, faces a grave financial challenge as they approach retirement, warns a recent study.
The National Institute on Retirement Security (NIRS) report highlights the distressing state of retirement prospects for this generation, with an overall “dismal retirement outlook.”
The study underlines that Generation X was the first generation to navigate the labor market during the transition from traditional benefit pension plans to 401(k)-style contribution accounts. Tyler Bond, the NIRS research director and author of the report, emphasized that median retirement savings levels for Generation X are alarmingly low.
The typical Gen-X household with a private retirement plan has $40,000 in savings…for low-income Gen-Xers…about $4,300, and often even less, the group found. Across all members of the generation, some 40% don't have a penny saved for retirement.
— S.C. Evans (@LadyCie) July 14, 2023
The document reveals that the lower half of earners possess meager retirement savings, often amounting to only a few thousand dollars, while the typical household has a mere $40,000 saved for retirement. Astonishingly, the study discloses that approximately 40% of Generation Xers have not saved a single penny towards their retirement.
To compile the report, the NIRS relied on data from the Survey of Income and Program Participation — a comprehensive and nationally representative survey that accounts for critical information such as income, employment status, household structure, and government program participation.
Additional key findings from the report indicate slightly over half (55%) of Generation X participants are enrolled in employer-sponsored retirement savings plans. However, the majority of Generation Xers, irrespective of race, gender, marital status, or income, are falling short of meeting retirement savings targets.
Dan Doonan, the Executive Director of NIRS, expressed concern about the situation, stating, “Most Gen-Xers don’t have a pension plan, they’ve lived through multiple economic crises, wages aren’t keeping up with inflation, and costs are rising. The American Dream of retirement is going to be a nightmare for too many Gen-Xers.”
Earlier this year, another study earned Generation X the moniker of the “Broke Generation.” In that study, a staggering 64% of respondents admitted that they had stopped saving for retirement not due to a lack of desire but because they simply couldn’t afford to.
The predicament faced by Generation X encapsulates a multifaceted challenge: the absence of pension plans, the enduring impact of economic downturns, stagnant wages in relation to inflation, and escalating costs. As this generation approaches retirement, the likelihood of a secure and fulfilling future looks distressingly dim.