For Gen Xers, fears of a future retirement savings shortfall are finally hitting them in the gut.
With the first of this cohort turning 60 this year, decades of scrapping retirement savings have come back to bite them.
Two new surveys focus on their angst, why they’re in this mess, and how they’re taking steps to dig themselves out.
Let’s start with the handshake. More than 8 in 10 are worried they won’t have enough money for a comfortable retirement, according to Schroders 2025 US Retirement Survey, which provided an exclusive first look at the report to Yahoo Finance.
On average, Gen Xers expect to retire with $711,771 saved — below the estimated $1.2 million they think they’ll need.
“Many Gen Xers entered the workforce just before the dot-com crash, then endured the global financial crisis and 2020 pandemic-triggered bear market,” Deb Boyden, Schroders’ US head of defined contributions, told Yahoo Finance.
This is also the test generation for employer-provided 401(k) plans, which appeared just as they were entering the workforce.
As I explain in my last book, “Retirement Bites: A Gen X Guide to Securing Your Financial Future,” little financial education was initially provided to help workers understand these plans, investment options were limited, and relatively small investments were allowed. Basic features to boost savings, such as automatic enrollment for employees and automatic escalation of the amount saved each year, were absent, so savings were set in stone.
Gen Xers are also operating with high levels of credit card debt and student loan debt, making saving for retirement one of many pressing priorities. Among those currently participating in a workplace retirement plan, nearly a quarter of Gen Xers have borrowed from their account, compared with 17 percent of millennials and 21 percent of baby boomers, according to Schroders data.
The top three reasons were paying for unforeseen personal or family emergencies, paying off debt, and keeping up with the rising cost of living.
Read more: 4 Ways to Increase Your Cash Flow and Pay Off Debt Faster
Gen Xers were “repeatedly encouraged to save for retirement, but that advice wasn’t always easy to follow amid an array of competing priorities ranging from childcare to student loans and caring for aging parents,” Boyden said.
The good news: there’s still a track ahead.
Right now, many Gen X workers are in their prime earning years, so boosting retirement savings with catch-up contributions can provide a significant boost, combined with a focused budget focus to highlight lifestyle evolution. This due diligence exercise is the best way to reduce expenses and free up money for additional contributions.
Next year, workers can save up to $24,500 in 401(k)s; catch-up contributions can add an extra $8,000, while 60 to 63-year-olds have super catch-up contributions that can add up to an extra $11,250.
This is the key to righting the ship.
“Less than one in six American workers between the ages of 45 and 54 are maxing out their 401(k) accounts,” according to Torsten Sløk, chief economist at Apollo. “Coupled with rising costs, inadequate savings and the looming depletion of the Social Security trust fund, these factors underscore a retirement crisis that requires a pension crisis in their stable home to reach stable U.S. savings.” and sufficient retirement income.” (Disclosure: Yahoo Finance is owned by Apollo.)
Here is another shocking statistic. According to a new study published by the Nationwide Retirement Institute and The Harris Poll, the majority of non-retired Gen Xers surveyed did not consider retirement an urgent priority until age 50 or later.
That said, they are now reducing discretionary spending and increasing retirement contributions. About 15 percent now plan to retire later than they originally hoped, and 26 percent believe they would have to return to the workforce within 12 months if they retired today because of inadequate savings.
Planning to work a few more years is generally a good idea if you have the ability to do so. Many people retire earlier than planned due to health problems or the need to care for an elderly relative.
Having the ability to continue to earn a little more can be a two-fold solution: adding to your retirement accounts and avoiding withdrawals from them, allowing them to continue to grow.
“Gen Xers — myself included — are the first generation of workers who didn’t have access to traditional company pensions and were largely responsible for saving for retirement on their own,” Suzanne Ricklin, vice president of Nationwide Retention and Sales, told Yahoo Finance. “This helped establish a do-it-yourself mentality.”
Have a question about retirement? Personal finance? Something career related? Click here to send Kerry Hannon a note.
After realizing retirement is approaching, 4 in 10 Gen Xers surveyed said they reduced discretionary spending, 34% increased their contributions to retirement accounts, 23% sought professional financial advice and 19% changed their investment strategy to reduce risk.
Read more: Retirement Planning: A Step-by-Step Guide
“This,” Ricklin said, “can be a game changer.”
Kerry Hannon is a senior columnist at Yahoo Finance. She is a career and retirement strategist and the author of 14 books, including “Retirement Bites: A Gen X Guide to Securing Your Financial Future,” “In Control at 50+: How to Succeed in the New World of Work”, and “Never too old to get rich.” Follow her further Bluesky and X.
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