Generation X Faces ‘Dismal Retirement Outlook,’ Researchers Say

As its youngest members enter their mid-40s and the oldest are rapidly approaching retirement age, a troubling trend is emerging about Generation X.

Whereas their parents’ generation could generally rely on pensions to provide a relatively comfortable retirement, those in Generation X were largely expected to save via 401(k) and similar contribution accounts. A new report determined that the unreliable nature of this model combined with economic pressure that prevented many Americans from contributing to such accounts has resulted in a “dismal retirement outlook” for a majority of people born between the mid-1960s and 1980.

National Institute on Retirement Security research director Tyler Bond wrote the report, which he said concluded “that the bottom half of earners have only a few thousand dollars saved for retirement, and the typical household has only $40,000 in retirement savings.”

Dan Doonan, the institute’s executive director, put the situation in stark terms, advising: “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. The American Dream of retirement is going to be a nightmare for too many Gen-Xers.”

Furthermore, data supplied by the Survey of Income and Program Participation indicates that two-fifths of the generation has not contributed anything toward retirement.

Although a slim majority of those in Generation X have a retirement savings account created by their employer, most have fallen far short of amassing sufficient savings to meet their projected retirement income needs. Bond concluded that lawmakers need to take action before it is too late to prevent a catastrophic situation.

“Accruing savings takes time, and Social Security alone won’t provide enough retirement income,” he said. “So it’s critically important that we change course quickly. The status quo means we are looking at elder poverty for many Gen-Xers and pressure on their families for support.”

Looking ahead even further, millennials appear to be even less prepared for the future. One study found that one-third of Americans between 25 and 34 have not started saving and one-third have less than $10,000 set aside for retirement. Among those between 35 and 44, those percentages are 40% and 21%, respectively.

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