Study Finds Generation X Is Ill-Prepared For Retirement Years

Only 55 percent have a retirement plan, according to NIRS report

A Social Security card sits alongside checks from the U.S. Treasury in Washington on Oct. 14, 2021. Kevin Dietsch/Getty Images

As people born between 1965 and 1980—also known as Generation X—approach retirement age, a new study finds them unprepared financially.

The study from the National Institute on Retirement Security (NIRS) sees “dismal” prospects for the so-called Forgotten Generation compared with more financially influential baby boomers.

“The leading edge of Generation X will enter retirement in a few years. However, this generation’s retirement preparedness is often ignored in favor of a focus on the baby boomers, who are currently moving through retirement in large numbers, or the Millennials, whose distinct life experiences and life choices so fascinate the news media and researchers,” the report’s executive summary said.

“When looking at median retirement savings levels for Generation X, [the] report finds that the bottom half of earners have only a few thousand dollars saved for retirement, and the typical household has only $40,000 in retirement savings.”

Gen Xers currently number almost 64 million and account for 20 percent of the U.S. population behind boomers at nearly 70 million between ages 58 and 76. 

Millennials include people born between 1981 and 1996, who comprise the largest generational group next to boomers at just over 72 million.

NIRS reported that in terms of net worth, 66 percent of Gen Xers have almost nothing saved for retirement. The TransAmerica Center for Retirement Studies in a 2002 report estimated the median retirement savings of boomers was $202,000. 

The NIRS report found only 35 percent of Hispanic Gen Xers have an employer-sponsored retirement savings plan. 

The body recommends a minimum of $500,000 in savings—across all age groups—to be on a more secure financial footing.

Little to ‘Zero’ Savings

As a group, most Gen Xers fail to meet even the basic financial requirements for a secure retirement, the report found. 

“The typical Generation X household only has $40,000 in retirement savings in private accounts. Most Gen Xers, regardless of race, gender, marital status, or income, are failing to meet retirement savings targets.”

The report found the highest concentration of wealth to be among affluent Gen Xers, coupled with better access to retirement plans.

As the first generation to usher in 401(k)-style retirement funds, the average account balance of Gen Xers was $129,994 in December 2020, according to the NIRS report. 

“That amount is not nearly enough to finance a secure retirement, but it comes with two even more stark warnings.

“First, the median account balance was only $10,000. Second, 40 percent of Gen Xers had accounts with zero balances. 

“These numbers should be alarming for anyone concerned about retirement security because they indicate that many Gen Xers will not be able to maintain their current standards of living in retirement.”

While 55 percent of Gen Xers have access to a retirement plan, the report concludes that strengthening the Social Security trust fund is “critical” to ensure retirement security among Gen X members.

“Other recent policy actions, such as increasing plan access for part-time workers, reforming the federal Saver’s Credit, and the ongoing establishment of state-facilitated retirement savings programs, should help to boost retirement prospects of Gen X.”