Gen Xers Are Leery of Retirement: Here’s Why & How to Be More Optimistic
A MoneyGeek survey on Americans’ feelings about their financial situations in 2021 revealed Generation X isn’t as hopeful about retirement as other generations.
Gen X — often called "the 401(k) Generation" due to their preference for 401(k) plans and other employer-sponsored retirement programs — revealed in the MoneyGeek survey they don’t feel retirement-ready compared to other generations. Only 44% of Gen X, composed of adults born between 1965 and 1980, said they felt optimistic or very optimistic about their financial future, while other generations showed nearly 50% feeling optimistic or very optimistic.
Financial Roadblocks That Shaped a Generation
A few factors influenced this generation’s gloomy outlook on retirement, including economic downturns, excessive debt and poor job markets.
1. Being Vulnerable After Economic Turmoil
The Society of Actuaries Research Institute (SOA) reports that at the time of the 2008 financial crisis, Gen Xers were just beginning to build their financial security early in their careers. Then, they faced another economic downturn following the COVID-19 pandemic and its financial impact. Among Gen X, a third reported a decrease in income, and 24% said their assets were negatively affected, according to the SOA study. Furloughs, job losses and pay decreases were among the other factors.
"Gen Xers are facing an interesting challenge at the moment in that many are nearing retirement but in a world with more and more economic uncertainty. So they might be feeling like they're taking steps backward when they should be taking steps forward," said Todd Parriott, CEO and founder of Connect Invest, an investment platform.
2. Managing Debt That Exceeds the National Average
According to Experian, a credit reporting agency, the typical member of Generation X has an average debt of $134,323, which includes mortgages, credit cards, auto loans, student loans and personal loans. In comparison, the average consumer debt for an adult in the U.S. is $93,466.
In fact, 35% of Gen Xers are more likely to say that their debt is complicating their finances, according to a 2022 survey by the SOA Research Institute.
"The best way to feel better about your money is to have a plan for it, a strategy to support your goals, and another party helping you stay the course and be accountable to your vision," said Brian Haney, founder and vice president of The Haney Company, a financial services and solutions company.
3. Lacking Confidence in How to Approach Finances
According to SOA, approximately a quarter (22%) of Gen Xers feel depressed when financial planning. In addition, more than 60% are concerned about maintaining their standard of living, paying for major medical problems, keeping up with inflation and paying for nursing home care and medical care.
How to Tackle Retirement Concerns
While Gen Xers faced several economic roadblocks, they can still work to improve their retirement outlook and financial future. It takes a bit of reevaluation and reframing. Here are several steps Gen Xers can do today to be more optimistic about retirement.
Start by defining your retirement goals
Imagine yourself in retirement. Consider where you'll live and the source of your income.
“Gen Xers need to be thinking about how they can make adjustments to their savings by incorporating safer and less volatile assets,” said Parriott. “We surveyed American investors this year and found that Gen Xers were more likely than any other generation to state they don’t know where to start with diversifying their investments. Fixed-income investments that generate predictable monthly returns can be a very safe choice for them as they near retirement, while they still have time to make adjustments.”
Decide when you will retire
Many Americans are contemplating their retirement timeline and whether it's affordable after the great U.S. resignation of 2021.
Do a complete review of your finances
Matt Stratman, a financial adviser with the South Bay Planning Group at Western International Securities in Southern California, recommends taking a serious look at your budget, sources of income, cash flow and savings.
“In this process, you may identify areas where you're spending money unnecessarily and opportunities to save more for the future,” Stratman said.
Multiply your current income
Consider your current sources of income and how you can expand them. Can you turn a hobby into a freelance business? Is it possible to teach your special skill online? Also, find ways to decrease your debts and maximize your earnings.
Find and work with a financial expert
The right financial advisor will listen to your needs and help you reach your goals with recommendations that make sense for your life.
“A financial advisor can help with projections for how likely you are to achieve your financial goals based on your current savings and investment strategy and possibly identify areas for improvement,” Stratman said. “Whether you realize you're on track to hit your goals or not, you should feel more confident after learning which actions you need to take to reach your aspirations.”
About the Author
- Experian. "Generation X: Caught in the Middle of Heavy-Debt Years." Accessed June 15, 2022.
- PEW. "How Generation X Could Change the American Dream." Accessed June 15, 2022.
- Society of Actuaries Research Institute. "Generation X: Ready for Retirement?." Accessed June 15, 2022.