Gen Xers Are (Really) Bad Retirement Savers: Report

It’s a massive gap. Generation X says it will take $1,112,183 in savings to retire comfortably, yet they expect to have $661,013 saved. The $451,170 difference tops the expected shortfall facing Millennials and Baby Boomers. 

According to a new Schroders survey, 45% of non-retired Gen Xers say they have not done any retirement planning, compared to 43% of Millennials and 30% of non-retired Baby Boomers.

And 61% of non-retired Gen Xers are not confident in their ability to achieve a dream retirement compared to 49% of Millennials and 53% of non-retired Baby Boomers.

Underscoring the need for a plan, non-retired Gen Xers allocate an average of 32% of their assets earmarked for retirement to cash despite their time horizon and sizeable retirement saving gap. 

When asked about the reasons for investing their retirement assets in cash, almost two-thirds of these Gen Xers (63%) say they fear losing their money, and nearly one-quarter (24%) report they are not sure how best to invest their savings.

“The size of the retirement savings gap facing Gen X is concerning, as they are the first generation to rely on 401k plans instead of pensions and the next in line to retire,” Deb Boyden, Head of U.S. Defined Contribution at Schroders sain in a statement. “Fortunately, even the oldest Gen Xers have some time before reaching their full retirement age. Using this time to develop a retirement plan and increase their savings rate is crucial to improving their retirement readiness before it’s too late.”

When asked about the reasons for investing their retirement assets in cash, almost two-thirds of these Gen Xers (63%) say they fear losing their money, and nearly one-quarter (24%) report they are unsure how best to invest their savings.

Not surprisingly, Generation X, also known as the latchkey generation due to independent childhoods that resulted from working parents, is preparing to make do with less support from Social Security in retirement. 

Just 11% of non-retired Gen Xers say they will wait until 70 to receive their maximum Social Security benefit payments, with 47% reporting they were concerned Social Security may run out of money. This tops the proportion of non-retired Baby Boomers (38%) and Millennials (44%) who fear potential insolvency for Social Security.