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Gen X: Sleeping Through the Retirement Wake-Up Call

Starting to turn 50, they're acting like 30. Here's some advice.

By Richard Eisenberg

In spite of a warnin’ voice that comes in the night

And repeats, repeats in my ear:

Don’t you know, little fool, you never can win?

Use your mentality, wake up to reality.


These Cole Porter lyrics from I’ve Got You Under My Skin could be a callout to Generation X about retirement.

A few new studies show that although Gen X’ers have begun turning 50 this year — the youngest of them are about 35 — this cohort behind the boomers just doesn’t seem to want to wake up to retirement reality.

They’d better.

Backing Away From Retirement

“Gen X is in retirement jeopardy,” warns Catherine Collinson, President of the Transamerica Center for Retirement Studies (TCRS), which just released A Compendium of Findings About American Workers backing that up. “At their age, they need to be more focused on saving and planning for retirement, but our research found that many have backed away from it.”

Similar studies from Northwestern Mutual, Allianz Life and New York Life ring a similar alarm.

TCRS had the Harris Poll survey American workers and compared those results with other surveys it had commissioned since 2011. Among the findings: While Generation X has inched closer to retirement, it has grown increasingly less interested in planning for retirement. Specifically:

  • 45 percent of Gen X workers prefer not to think about or concern themselves with retirement investing until they get closer to their retirement date, up from 35 percent in 2011.
  • While 11 percent of Gen X workers said they had no sources of information for retirement planning or investing in 2011, today 25 percent say that. They’re not using retirement calculators, getting 401(k) advice at work, reading money articles or meeting with financial planners.
  • And although a smaller percentage of boomers and Millennials told TCRS they don’t know as much as they should about retirement investing than said so in 2011 (63 percent of boomers, down from 71 percent in ’11 and 73 percent of Millennials, down from 82 percent), the needle barely moved for Gen X: 66 percent now and 68 percent in 2011.

Highest Level of Financial Insecurity

Northwestern Mutual’s report, The Gen X Retirement Dilemma, noted that Gen X’ers had the highest levels of financial insecurity of all U.S. generations. A striking 82 percent said they won’t have enough saved to retire comfortably; 18 percent don’t think they’ll ever be able to retire.

That may be partly because 37 percent of Gen X’ers told Northwestern Mutual they’ve taken no steps to plan for their financial future. And they concede needing help: 66 percent said they think their financial planning needs improvement; by contrast, 58 percent of Americans overall felt that way.

In the Allianz Life Generations Apart survey that came out in May 2015, when Gen X’ers were asked how they were planning for retirement, 46 percent said they’d “just figure it out when I get there.”

To be fair, Gen X financially has “had one body blow after another,” says Chris Blunt, President of New York Life’s Investment Group.

Tough Financial Times for Gen X

Many were clobbered in The Great Recession of 2008-’09, losing jobs and facing shrinkage in their retirement savings and home values, just as they needed to save for college and retirement (though, for many, their stocks and real estate have bounced back). The first true 401(k) generation, most Gen X’ers missed out on qualifying for pensions. They were too young for the big stock market and housing run-ups the boomers enjoyed.

They’re lugging student loans, mortgages and credit-card debt; the average student loan balance for Americans in their 40s is roughly $30,000. Allianz Life found that Gen X’ers carry about 60 percent more mortgage debt than boomers and 82 percent more nonmortgage debt (student loans and credit cards).

Some are facing caregiving costs for their parents, or expect they will. And looking ahead, the Social Security Trust Fund is forecasted to be exhausted just as Gen X’ers start hitting retirement age in the mid 2030s.

What's Holding Them Back?

It’s precisely because of these challenges, however, that you’d think Gen X would be maniacal about planning for retirement. Why aren’t they?

Collinson says the media is partly to blame.

“Boomers and Millennials are garnering tons of media attention,” but not Gen X, she says. That’s because boomers and Gen Y are bigger generations and, to use Collinson’s word, “flamboyant,” compared with the in-the-shadows, middle-child that is Gen X.

“The generation dubbed X as a function of anonymity may unfortunately live up to that,” said Collinson.


Financially, she says, Gen X is preoccupied with immediate needs, still recovering from the recession and with looming college bills. In Transamerica’s new survey, only 27 percent of Gen X’ers say saving for retirement is their greatest financial priority.

“They may not realize that without balancing immediate needs and retirement, they could jeopardize their long-term financial security,” Collinson warned.

It’s not too late for Gen X to get going, though. “Fifty is not old, but it is an important milestone for buckling down and focusing on retirement savings,” says Collinson.

How Gen X Can Get on Track for Retirement

A few suggestions:

Use a good, free online calculator to estimate how much money you may need in retirement. “Too many Gen X’ers are still guessing their retirement savings needs,” says Collinson. Most mutual fund companies have them; your employer's 401(k) provider might, too.

Save regularly through tax-sheltered 401(k) plans and Individual Retirement Accounts — and save more each year, if you can. A new New York Life survey of 906 people in their 50s with incomes of $80,000 or more found that these pre-retirees got a later start saving than they wish they had. They begun shoveling money into saving at 34, but say they should’ve begun at 26.

“That’s a wake-up call to Generation X, and to Generation Y and Z,” said Blunt. “The people we surveyed realized that in the early going, time is your friend and as you get closer to retirement, time is your enemy.”

Blunt believes many people — including Gen X — could save more than they do. In the New York Life survey, 46 percent of the pre-retirees said it was difficult for them to save additional funds outside of their automatic savings vehicles, given all their financial demands.

“I hate to say, but I think most people say that as an excuse to make themselves feel better,” said Blunt. “It doesn’t take a lot of money; it’s just the discipline of putting money aside regularly."

If you don’t feel knowledgeable enough to choose investments, put retirement money in a target-date fund, either through a 401(k) at work or on your own. These funds offer a diversified portfolio of stocks and bonds, gradually reducing the stocks’ weighting as you near retirement.

“When Gen X’ers started working, they had to pick their 401(k) investments. It was very DIY and was a much more difficult task than it is today,” says Collinson.

When the stock market tanks, as it did in recent days, use that as a buying opportunity. Few do. “If Ford said all its cars were half-off, Americans would rush to the dealership and accelerate purchases, but it’s the exact opposite with stocks,” said Blunt. When stocks plunge, investors tend to sell or get spooked.

For the oldest Gen X’ers, take advantage of the government’s “catch-up” rules. They let people 50 and older save more for retirement under a tax umbrella than those who are younger. In 2015, those 50+ are allowed to save up to $24,000 in a 401(k) vs. $18,500 for others. There are similar catch-up rules for IRAs (an extra $1,000) and SIMPLE IRAs and SIMPLE 401(k)s for small businesses (an extra $3,000).

Hire a certified financial planner. “We found that Gen X was the least likely generation to use the services of financial advisers,” says Collinson. “Even less than Millennials. It’s hard to believe.”

One reason: skepticism. Allianz Life found that 74 percent of Gen X’ers believe that “most financial professionals just want to sell you something.” That’s not necessarily the case, though. A reputable fee-only  financial planner can help steer you in the right direction and educate you about investing, taxes and insurance.

Gen X’ers, says Collinson, are “in a dire need of a wake-up call.” Please set your iPhone alarms.

Photograph of Richard Eisenberg
Richard Eisenberg is the former Senior Web Editor of the Money & Security and Work & Purpose channels of Next Avenue and former Managing Editor for the site. He is the author of "How to Avoid a Mid-Life Financial Crisis" and has been a personal finance editor at Money, Yahoo, Good Housekeeping, and CBS MoneyWatch. Read More
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