Gen X Is Not Ready For Retirement

The oldest members of Gen X begin turning 59 1/2 this month. That is the earliest age when they can start withdrawing retirement assets without a penalty. But many members of Gen X are far from prepared with almost half saying it would take a “miracle” for them to be able to retire.

That’s left Gen Xers largely on their own to plan for retirement, and many are turning out to be woefully underprepared. They are short not only in the amount of assets they have saved but also in their comprehension of key financial information. The average retirement savings of Gen X households is about $150,000 — far from the roughly $1.5 million that Americans say they need to retire comfortably.

Gen X also finds itself as an overlooked generation. The larger baby boomer and millennial generations grab more attention. Not only was Gen X known for being the kids left alone after school, they have also been on their own in retirement too.

A study found that 1 in 5 Gen Xers worry they won’t be able to afford to step back from work even if they were able to save $1 million for retirement. And about one-quarter is concerned a shortage of savings will force them to return to work after they retire.

Other recent studies have also found that Gen X is in dire shape for retirement, with the National Institute on Retirement Security finding earlier this year that the typical Gen X household with a private retirement plan has $40,000 in savings. About 40% of the group hasn’t saved a penny for their retirement, that study found.

However, that’s not keeping Gen Xers from dreaming about retirement, with survey participants telling Natixis they plan to retire at 60 on average. They also believe their retirement will last about 20 years — shorter than what many retirees actually experience.

Such expectations may seem unrealistic, especially given the lack of retirement savings. Researchers chalked up the conflicting views on retirement, with half of Gen Xers thinking they need a miracle to retire even as they want to stop working at 60, to “wishful thinking.”

Researchers say this disconnect comes from stress about retirement. However, they add that having your head in the sand isn’t a great strategy for anything.

Gen X also has some unrealistic views of their potential investment performance, with the group saying they expect their retirement assets to have long-term returns of 13.1% above inflation. At today’s inflation rate of about 3.3%, that would imply an investment return of 16.4% — well above the typical annual return of roughly 10% for the S&P 500.

Meanwhile, only about 2% of Gen Xers fully understand key aspects of investing, such as the impact that higher interest rates have on bond prices. Researchers advise Gen Xers to learn as much as they can and be realistic about what you can accomplish at this point.

They also need to understand that there are some aspects to retirement that are out of workers’ hands, which can add to people’s anxiety. About 4 in 10 Gen Xers worry they won’t be able to work as long as they like — and that, by contrast, is grounded in reality. One 2018 study from the Urban Institute that tracked workers from their early 50s through at least age 65 found that the majority had to stop working before they reached retirement age, with 28% stopping work after a layoff, while another 9% retired because of poor health. Only 19% said they retired voluntarily.

So, learn from others’ mistakes and use patience and discipline to make a better retirement for yourself than what many in Generation X are finding for themselves.

On another note, if you are looking for a gift for the young reader in your life, you can find some great children’s books on Amazon. Just go to these links The Desert Fairies of Oylara, The Rainforest Fairies of Oylara, and The Artic Fairies of Oylara and order them.

Additionally, check out this very cool podcast on Spotify called Gen X Dad and his Gen Z Teens. Entertaining!

Finally, check out some pretty cool music on YouTube if you have a few minutes: Introduction , Mosh, Smoke, Watch Out , and First Day Out. Enjoy!