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Current discussions around retirement highlight a pressing reality for Gen X, known as the “forgotten generation.” As they approach retirement age, it becomes evident that Gen X’s savings may fall short of what’s needed for a comfortable retirement. The recent Fidelity report cited by US News & World Report indicates that the average retirement savings for Gen X is around $178,500, excluding other financial assets like 401(k)s held with different providers. This figure points to a larger concern about Gen X’s financial preparedness for their golden years.
Why Gen X’s Retirement Savings Fall Short
The journey of Gen X has been marked by a series of economic challenges. Jamie Ebersole, CEO of Ebersole Financial, notes how several crises, from the 1990s recession to the financial crash and the COVID-19 pandemic, have impacted Gen X’s ability to save significantly. As these crises unfolded, Gen X faced job instability, resulting in diminished opportunities to build substantial retirement funds.
Balancing Family Responsibilities
Gen X, often called the “sandwich generation,” is also burdened by caring for aging parents while supporting their own children. This dual responsibility strains their finances, making it challenging to allocate funds towards retirement savings. The escalating healthcare costs are depleting the financial resources of many Gen X individuals, as highlighted by the demands on their time and finances.
No Safety Net: The Decline of Pensions
Unlike their parents, Gen X does not typically benefit from pension plans, which were once a cornerstone of retirement security. Joe F. Schmitz Jr. from Peak Retirement Planning Inc. underscores that the phasing out of pensions has left many Gen X members reliant on personal savings and investments to fund their retirement.
Burdened by Education Debt
Adding to the financial pressure, many in Gen X are still repaying substantial student loans. Reports indicate this generation carries the highest student debt load averaging $44,290 per borrower. This debt burden limits their ability to save for retirement significantly, according to Patricia Roberts of Gift of College, Inc. Roberts suggests exploring employer-based student loan assistance as a potential solution.
Tackling these financial hurdles is crucial as Gen X eyes retirement. Through strategic planning and available support programs, this generation can strive towards more secure financial futures.
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