While much ink has been spilled about boomers and their retirement savings, a new report sounds the alarm about their successors, who may be even worse off when it comes to retirement: Generation X.
A report from the Retirement Income Institute’s Alliance for Lifetime Income (ALI) has found that Generation
In fact, the average retirement savings for this group is surprisingly low, with women saving $6,000 and men saving $13,000. Only 14% of Generation X have access to a traditional pension, much less than the boom generation, with 56% covered by a pension (1).
Generation
However, the “sandwich generation” supports both aging parents and their own children, with the result that they are among the least financially prepared for retirement.
Here’s why you’re facing a crisis and what you can do if you’re too far behind on your retirement savings, including tips to boost your savings.
According to the ALI report, Generation X has experienced eight recessions, increases in the cost of higher education and student loans, and six of the 19 largest US stock market corrections.
During the lifetime of Generation
In other words, the retirement savings methods of the past no longer apply to Generation
Social Security, the report notes, is a program that faces “structural deficiencies.” They project that Generation
Speaking to CNBC, Jason Fichtner, former SSA deputy commissioner, CEO of the Retirement Income Institute and co-author of the report, said the impact is likely to be felt by the entire generation.
“I will be eligible for Social Security the year the trust fund runs out. It also becomes a personal matter.” (2)
Read more: Vanguard reveals what could happen to US stocks and is ringing alarm bells for retirees. Here’s why and how to protect yourself
If you’re also behind on your retirement savings, a good first step to get on track may be to estimate how much retirement income you’ll need to maintain your standard of living.
According to the ALI report, a general rule of thumb for retirement assets is that they should provide between 70 and 75% of pre-retirement income.
You can also use the calculator on the Social Security Administration website to get an estimate of what your benefits might be.
Of course, this will require you to know at what age you want to retire. A Corebridge Financial survey cited in the ALI report found that four in 10 members of Generation
The SSA website also has a life expectancy calculator, so you can estimate approximately how long your retirement will last.
People over age 50 are eligible to receive up to $7,5000 in catch-up contributions to their 401(k), and in 2025, a new rule will allow workers ages 60 to 63 to make higher catch-up contributions; This year the limit is $11,250 (3).
Gen Xers should also make sure that if their employer offers any retirement savings matching programs, they take full advantage of it.
They can also look into a health savings account (HSA), which is tax-advantaged, with contributions made on a pre-tax basis and withdrawals for qualified medical costs tax-free.
It’s also important to remember that as you approach retirement, experts generally recommend gradually rebalancing your portfolio to increase the proportion of lower-risk investments.
We rely only on verified sources and credible third-party reports. For more information, see our editorial guidelines and ethics.
Retirement Income Institute Alliance for Lifetime Income (ALI) (1); CNBC (2); Treasury (3).
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
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