Gen X’s Retirement Problem

Forty-five percent of non-retired Gen Xers said they have not done any retirement planning.


Illustration by RIA Intel

Generation X is struggling. According to a new survey by Schroders, the London-based asset manager with nearly $1 trillion in assets under management, almost half of Gen Xers have not done any retirement planning and the majority believe it is out of reach.

According to the survey, 61 percent of non-retired Gen X’ers –– ages 43 to 58 –– said they are not confident in their ability to achieve a dream retirement, compared to 49 percent of Millennials and 53 percent of non-retired Baby Boomers.

Additionally, 45 percent of non-retired Gen Xers said they have not done any retirement planning, compared to 43 of Millennials and 30 percent of non-retired Baby Boomers.

Gen X’s lack of planning has hurt them.

According to Schroders, Gen X faces the largest retirement savings gap among all age cohorts. Gen X’ers said that on average they will need $1.1 million to retire comfortably, yet they expect to have just $661,013 saved by retirement. The $451,170 savings gap this creates is higher than that for both Millennials and Baby Boomers.

Millennials said they would need about $1.3 million to retire comfortably and expect to have $877,266, a savings gap of about $403,000. And non-retired baby boomers said they will need about $925,000 and expect to save $633,000, a savings gap of about $291,000.

“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,” said Deb Boyden, head of U.S. Defined Contribution at Schroders, in a statement.

Schroder also found that Gen Xers are allocating, on average, 32 percent of their assets earmarked for retirement to cash despite their time horizon and retirement saving gap. Fear of losing their money as well as a lack of understanding about how best to invest their savings is a big motivator for cash, said Schroders.

“As the first generation to head into retirement without the safety net of a pension plan, the stakes are higher for Generation X and the margin for error is lower,” said Boyden. “Not only are Gen X’ers facing a formidable savings gap, our findings suggest a knowledge gap is a formidable headwind that’s threatening to prevent many from reaching their dream retirement.”

Advisors are uniquely suited to help investors prepare for retirement and help fill this knowledge gap.

According to a recent Natixis survey, retirement planning assistance was one of the most requested services by investors of their advisor and another report published this year by Schroders found that retirees with a financial advisor had on average nearly double the monthly income of those without a financial advisor.

Related Articles