Gen X Retirement Outlook: Only 18% Feel Confident About Retiring Comfortably

Things are not looking good for Generation X. The next generation of Americans to retire is not confident about its financial security heading into the next phase of life. This is what a new report found about the confidence of this generation as they look to retirement.

Gen X Expresses Concern About Ability to Retire Comfortably

A report from the Transamerica Center for Retirement Studies found that just 18% of Gen X workers feel very confident that they will be able to "fully retire with a comfortable lifestyle." The study also found that just 25% of Gen X workers report feeling strongly that they have the nest egg needed to fund their retirement. Over half of this generation says they will need to keep working in retirement.

The report was released on October 28, using data from surveys of over 6,100 workers taken late last year. Titled "Stressed and Strained: Four Generations Strive for Retirement Security," the data looks at four generations of workers. However, the most startling findings came within the Gen X section.

Why is this generation struggling with retirement compared with other generations? Experts say that Gen X did not readily lean into investing in personal 401(k) accounts early in their careers. Gen X encompasses Americans born between 1965 and 1980, meaning they entered the workforce in the '80s and '90s, just as pensions were becoming a relic of the past.

Because a large part of the country was not yet familiar with the power of a 401(k) as a savings tool, the average Gen X worker did not adopt the plan until they reached about age 30. This compared to the average millennial, who began saving at age 26.

Catherine Collinson, president of the Transamerica Center, explained that "even among Gen X workers who were offered a 401(k), back in the late '80s and early '90s, chances are they were unaware how crucial those savings would be down the road, when they retired."

Today's typical Gen X worker has $113,000 saved in a household retirement account. As a result, most people in this generation do not have confidence that these savings will last long. The average Gen X American expects to need at least $750,000 in savings to be financially secure.

When looking at other generations, 23% of millennials and 28% of boomers feel confident of retiring "with a comfortable lifestyle." While 25% of Gen Xers strongly believe they have amassed a "large enough retirement nest egg," 33% of boomers and 29% of millennials believe the same.

Gen X Does Not Plan to Retire Soon

The fears have played into the fact that the average Gen X worker does not plan to retire in the near future. Only 23% of Gen Xers believe that they will be able to retire before age 65. This percentage compares to 36% of millennials and 47% of Gen Z. What is most concerning for Gen Xers is that 36% expect to retire later than age 70.

Collinson noted that "as the oldest [Gen Xers] are entering their 60s, they’re looking for ways to shore up their retirement savings. And a natural way is to work longer and retire at an older age."

The problem is that it is not always feasible to work into your 70s. According to research from Transamerica and the Employee Benefit Research Institute, the average U.S. worker retires at age 62. "And many retire sooner than planned," Collinson said, typically because of a health concern or a job loss.

Concerns About Social Security

So what does Gen X plan to do to get by financially? This generation routinely expresses that they will need to rely on Social Security benefits; however, they are worried that this federal retirement trust fund will run out of money. About 77% of Gen Xers say that they believe Social Security "will not be there for me."

The oldest Gen Xers will hit the traditional retirement age around the year 2032. This is around the time the Social Security trust fund is projected to be depleted if Congress doesn’t act, which would trigger an automatic cut in benefits.

Compounding the problem is the worry that Gen Xers do not have the financial acumen needed to plan for this next stage of life. Just 35% of Gen X workers rely on professional financial advisers to guide these decisions, compared with 46% of boomers. Additionally, only 54% of Gen Xers said that they understand the benefits of 401(k) catch-up contributions. This strategy allows workers age 50 and older to save more in tax-advantaged retirement accounts each year.

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