The Reasons Why Retirement Is Going to Be a Nightmare for Gen X

And while every generation is worried about the future, for Generation X (the generation born between 1965 and 1980), retirement seems almost unobtainable. Can Gen X retire comfortably? If so, what will they need? Let’s get into it.

Sadly, Schroders assumes that most people within that generation will barely meet half that goal.

And it’s not just the investment experts who understand the trouble Gen Xers are in; they know it, too.

However, Gen Xers are certainly the most pessimistic, as 61% do not feel that they will be able to achieve the ideal retirement.

While one in four Gen Xers don’t have a savings account, the concern for those who do have a savings account is still high. Schroders’ research shows that those who are saving for retirement have roughly a third of their retirement accounts filled.

When we look at the average savings for U.S. Gen Xers, the median account balance is $10,000. Out of 65 million U.S. Gen Xers, 35% have less than $10,000 saved. Even worse, 18% have zero savings.

Millennials (people born between 1981 and 1996) are seeing a savings gap of about $403,626, while non-retired Baby Boomers (people born between 1946 and 1964) clock in at $491,496.

Why does the Forgotten Generation’s future look so bleak?

The vast majority of Baby Boomers received a traditional pension, so when they retired, they received a fixed monthly payment for the rest of their lives.

For the first time, they had to put their own money away for the future. And whether they didn’t fully understand or didn’t have enough income to save some, many Gen Xers simply didn’t utilize this saving tactic.

Boyden discovered that two-thirds of Gen X workers are afraid of losing their money (with 24% of that slice not understanding how to invest their savings.)

So it’s no surprise that people with high financial literacy tend to have a better chance of reaching their retirement savings needs (via Goldman Sachs Asset Management and Syntonic).

And even those who do recieve their Social Security benefits early because they desperately need them are actually decreasing the amount they would recieve if they waited just a few more years.

However, waiting until 70 to receive Social Security benefits would mean they’d earn delayed retirement credits, which will allow an 8% increase to all benefits each year before the 70-year-mark.

They didn’t take the time to understand long-term financial planning, their 401 ks, or even their Social Security benefits. But not everyone believes it was all Gen X’s fault.

From the dotcom bubble to the Great Recession and the housing market crash of 2008, this generation has had several setbacks that made it much more challenging to save than previous generations encountered.

Thanks to inflation, groceries, utilities, gas, rent, mortgages, and everything else a person may want or need to purchase is more expensive than ever before.

“Gen Xers are hitting crunchtime for retirement preparation,” Kelly LaVigne, vice president of Consumer Insights at Allianz Life, told Yahoo Finance.

First and foremost, if Gen Xers don’t have excess money to spend on non-necessities in their senior years, certain industries will see decrease in profits which could lead to layoffs, closings, and even a plummeting stock market.

When this happens, there will be less jobs for the next generation, and unemployment could reach record highs.

But they also say that it’s never too late to learn. If Gen Xers who don’t have sufficient retirement savings want to get where they need to be within the next few years, financial gurus say they need to invest as soon as possible.

“It’s a cliché because it is true, if you’re failing to plan, you’re planning to fail,” Deb Boyden, Schroders’ head of U.S. defined contribution, told Yahoo Finance.

So, to any Gen Zers reading this: Start thinking about saving for retirement and improve your financial literacy!

Whatever is saved today will be there for you in retirement when you really need it. So invest, create a savings account, and stop frivolous spending today. You will thank yourself later!