Report Highlights Gen X Retirement Savings Gap: $451,170 Shortfall Raises Concerns for the Future

A recent report has brought to light a concerning trend in retirement savings, revealing that Generation X faces the largest wealth gap in comparison to other generations. According to Schroders’ 2023 U.S. Retirement Survey, individuals between the ages of 43 and 58, commonly known as Gen X, are grappling with a significant shortfall in retirement savings, raising questions about their financial well-being in the later stages of life.

The survey indicates that Gen X individuals believe they need $1,112,183 for a comfortable retirement but expect to have only $661,013, resulting in a substantial gap of $451,170. This shortfall surpasses the estimated savings gaps faced by both millennials and baby boomers, shedding light on the unique challenges faced by Generation X.

The study emphasizes that Gen X is the first generation to approach retirement largely without the safety net of a defined benefit pension plan, elevating the stakes and reducing the margin for error. Schroders Head of U.S. Defined Contribution, Deb Boyden, remarked in the study that this generation faces heightened challenges due to their unique position in the retirement landscape.

A significant concern highlighted in the report is that 45% of Gen X respondents admit to not having engaged in any retirement planning, a higher percentage compared to both millennials (43%) and baby boomers (30%). Furthermore, two-thirds of Gen X respondents express worries about not growing their workplace retirement plans as much as they had hoped.

Financial experts weigh in on the situation, with John Lonski, President of Thru the Cycle, urging Gen X individuals to cut back on spending and increase savings. Lonski suggests that delaying such actions could have repercussions, particularly if the current consumer spending spree diminishes in 2024.

The report also draws attention to the fact that 32% of Gen X survey takers have all their assets in cash, and only 11% plan to wait until age 70 to receive the maximum Social Security benefits. Fear appears to be a driving force behind these trends, as Gen X individuals express concerns about losing their cash or the potential insolvency of Social Security.

Despite these challenges, there is a glimmer of hope. Deb Boyden of Schroders notes that even the oldest Gen Xers have some time before reaching their full retirement age. Boyden encourages individuals to utilize this time to develop a comprehensive retirement plan, increase their savings rate, and make more prudent investment decisions to enhance their retirement readiness.

As the retirement landscape evolves, it remains to be seen how Gen X will navigate these challenges and whether proactive measures can close the widening wealth gap, providing financial security for this generation in their later years.