Members of Generation X — those born between 1965 and 1980 — have a “dismal retirement outlook,” according to a new report from the National Institute on Retirement Security.
“Gen Xers are fast approaching retirement age, but the data indicate that the vast majority are not even close to having enough savings to retire,” Dan Doonan, NIRS executive director, said in a statement.
As of December 2020, Gen X represented almost 64 million Americans, or almost 20% of the population, according to NIRS. The nonprofit refers to the cohort as the “forgotten generation” because it follows the large and culturally powerful baby boomers, those born between 1946 and 1964. Although so-called boomers are starting to consider downsizing or moving into senior living communities, Gen Xers are coming up right behind them.
“While many Gen Xers entered the workforce during the relatively strong economy of the 1990s, they also joined the labor market as globalization truly took hold and as the shift from defined benefit pensions to defined contribution plans in the private sector began in earnest,” the report noted.
Gen X also is the first whole generation to enter the labor market following the shift from defined benefit pension plans to 401(k)-style defined contribution accounts, according to NIRS. Looking at median retirement savings levels, the report notes that the bottom half of Gen X earners have only a few thousand dollars saved for retirement, and the typical Gen X household has only $40,000 in retirement savings. The top quartile holds almost $250,000, whereas the bottom quartile holds only $35,000.
Additionally, retirement savings for Gen X are highly concentrated among the highest earners, whereas Blacks and Hispanics have substantially lower savings and access to retirement plans compared with whites, the report authors state.
In a previous survey by Fidelity Investments, 38% of Gen Xers expressed that they are worse off finncially than a year ago.
According to NIRS study co-author Tyler Bond, NIRS research director, only 14% of Gen X earners have a pension plan, and only 55% who are eligible are participating in retirement plans via their workplaces. For Hispanic Gen Xers, only 35% participate in an employer-sponsored retirement plan.
“As a result, a large share of Generation X has virtually nothing saved for retirement, and most who are saving are not close to savings targets that will enable them to retire with their current standard of living,” Bond said.
The analysis for the research relied on data from the Survey of Income and Program Participation, or SIPP, a nationally representative longitudinal survey that provides comprehensive information on the dynamics of income, employment, household composition and government program participation.
