One Generation Needs $400K More in Savings for a Comfortable Retirement
The classic American dream of going to school, getting a good job, buying your first home, having a family, and then retiring comfortably is one that many people aspire to. But, one generation in particular will have a much harder time than others, especially in regards to retirement: Generation X.
According to Schroders’ 2023 US Retirement Survey: Generation X and Retirement Report, non-retired Americans between the ages of 43 and 58, otherwise known as Gen Xers, face significant challenges and fears — often greater than those of both millennials and baby boomers — when it comes to retirement.
Gen X Is Not Prepared for Retirement
On average, Gen Xers say they need $1,112,183 in savings to have a comfortable retirement. At the same time, they only expect to have just $661,013 saved by the time they retire. That’s a large $451,170 retirement savings gap.
The wide saving gap with Gen X retirement isn’t too much of a surprise. Alarmingly, almost half (45%) of the Gen Xers surveyed confessed to not having done any retirement planning. This exceeds millennials (43%) and non-retired baby boomers (30%).
“It’s a cliché because it is true, if you’re failing to plan, you’re planning to fail. The size of the retirement savings gap facing Gen X is concerning, as they are the first generation to rely on 401(k) plans instead of pensions and the next in line to retire,” said Deb Boyden, Schroders’ head of US defined contribution, who spoke with Yahoo Finance.
To add, 66% of Gen Xers are also worried that they won’t grow their workplace retirement place as high as they’d hoped.
How Gen X Compares to Other Generations
The $451,170 Gen X retirement savings gap is significantly greater than the expected retirement gaps facing both millennials and non-retired baby boomers, which are estimated at $403,626 and $291,496, respectively.
Gen Xers have more saving and investing to do for more time in order to lessen their retirement savings gap and hopefully retire securely.
Gen X Is the First Generation To Head Into Retirement With the Least Security
“As the first generation to head into retirement largely without the safety net of a defined benefit pension plan, the stakes are higher for Generation X and the margin for error is lower,” said Boyden in Schroders’ latest report.
Pension plans held by prior generations are becoming a thing of the past for Gen Xers and beyond. This can be shown by the fact that only 11% of Gen Xers will wait until age 70 to claim maximum Social Security benefit payments. At the same time, 47% fear Social Security may run out of money, which exceeds the same proliferation of concern held by millennials (44%) and non-retired baby boomers (38%).
Careful and early financial planning is key to ensuring a smooth transition to retirement. Boyden went on to express some positive thoughts on the matter:
“Fortunately, even the oldest Gen Xers have some time before reaching their full retirement age. Using this time to develop a retirement plan, increase their savings rate, and invest more appropriately is crucial to improving their retirement readiness before it’s too late.”
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This article originally appeared on GOBankingRates.com: One Generation Needs $400K More in Savings for a Comfortable Retirement