Gen X has the largest wealth gap of any generation: ‘Retirement is going to be a nightmare’
The more than 65 million Americans in Generation X — ages 43 to 58 — have the largest wealth gap of any generation, according to new research.
According to asset management company Schroders’ 2023 US Retirement Survey, Gen Xers say it will take just over $1.1 million to retire, though most expect to have just $660,000 saved when they hit age 67.
That’s $440,000 less in savings than workers in this generation say they want in order to retire comfortably, according to the research — and a dismal $1 million less than the average adult in this generation actually has set aside for retirement.
A recent study from the National Institute on Retirement Security (NIRS) echoed the grim findings, determining that the typical Gen X household has even less — a mere $40,000 — set aside for retirement.
“The American dream of retirement is going to be a nightmare for too many Gen Xers,” Dan Doonan, the executive directors of NIRS, said in a statement released along with the organization’s report, titled “The Forgotten Generation: Generation X Approaches Retirement.”
Over 60% of non-retired Gen Xers — born between 1965 and 1980 — admitted that they’re not confident in their ability to achieve financial security in retirement, compared to 49% of millennials and 53% of baby boomers, per Schroders.
For reference, millennials are currently aged between 27 and 42, while baby boomers are 59 to 68 years old.
NIRS’s research director, Tyler Bond, pointed to employers as a big reason for why 43-through-58-year-olds may not be prepared to enter their non-working years.
“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,” Bond said, per the statement.
“A big part of the problem is that far too many Gen Xers don’t have access to a retirement plan through their employer. Only 14% of Gen Xers have a pension plan, and only about half are participating in a retirement plan at their job.”
Without these plans, it becomes increasingly more difficult “to meet retirement savings targets that will enable them to retire with their current standard of living,” Bond said.
“Accruing savings takes time, and Social Security alone won’t provide enough retirement income,” he added. “The status quo means we are looking at elder poverty for many Gen Xers and pressure on their families for support.”
Social Security’s bitter end has long been looming over Americans, especially after the government announced that it would be cutting benefits come 2034 — a year earlier than previous forecast — according to an annual report released in 2021.
The two Social Security funds that the Treasury Department oversees, the Old-Age and Survivors Insurance and the Disability Insurance Trust Funds, are designed to provide income to retired workers and to those who can’t work due to a disability.
The Old-Age and Survivors fund is now only able to pay full benefits until 2033, one year earlier than expected, the programs’ trustees said in a report Tuesday.
The Disability Insurance fund is expected to be able to pay full benefits through 2057, eight years earlier than reported last year by Treasury officials.
If the funds were to be combined, the benefits would be able to pay out as scheduled until 2034, a year earlier than previously forecasted.
At that point it would only be able to pay out 78% of promised benefits to retirees and disabled beneficiaries, Treasury officials said at the time.
The COVID-19 pandemic was blamed for the drop in revenue from payroll taxes that hastened the depletion of Social Security funds, one of the biggest drivers of debt.
