Home etftrends.com The Retirement Reality Facing Generation X

The Retirement Reality Facing Generation X

Generation X, arguably the most overlooked generation, comes of retirement age as early as this year. Natixis Investment Managers surveyed 2,928 individuals born between 1965 and 1980 globally to get a pulse check on their retirement reality.

Generation X holds more than half (51%) of business leadership roles worldwide. Yet they remain forever caught between the larger baby boomer generation and the more outspoken millennial one.

“These latchkey kids, who learned self-reliance fending for themselves in the hours between school and dinner as children, came of age as investors with the E-Trade baby and the democratization of online investing,” wrote Natixis Investment Managers in its Generation X report.

By the Numbers

The eldest of Gen X turn 59½ this year, the age at which they may begin withdrawing penalty-free from retirement plans. However, “many Gen Xers find themselves sandwiched between the financial pressures of supporting their kids and caring for elderly parents.”

Their confidence in navigating a secure retirement reflects these challenges. Nearly half (48%) of all Gen Xers surveyed believe it would take nothing short of a miracle to retire securely. Half (49%) also believe retirement may not be in the cards for them. And 60% are prepared to work longer to achieve retirement goals, while 47% worry about an inability to work long enough.

Image source: Natixis Investment Managers

“On average, the Gen Xers surveyed say they plan to retire at 60, which is early by many global standards,” Natixis wrote. What’s more, “they anticipate retirement will last 20 years, which is shorter than many retirees experience.”

Generation X as a whole saves an average of 17% of their annual income for retirement currently. However, given the median income of $150,000, this translates to average retirement savings of $150,000 right now.

Generation X Faces Inflation and Public Debt Worries

Inflation creates challenges for Gen X at a time when they’re hitting preretirement. Eighty-three percent of those surveyed (conducted in the first half of 2023) reported recent inflation shaping their perspectives on the threat of higher prices on retirement savings. A full 69% reported inflation is negatively impacting their ability to save for retirement.

Alongside the impact of lingering inflation in the short term, the specter of public debt looms large in the long term.

“Long a fiscal problem for policymakers and a pressure on the calculus behind public retirement benefits, public debt exploded to all-time highs during the global pandemic,” Natixis wrote. Public debt increased from 79% in 2019 to 89% in 2021, as measured by percent of GDP.

Chart of the debt to GDP ratio of OECD counties compared to worries of debt impact by Gen X survey respondents from those countries

Image source: Natixis Investment Managers

The increased levels of public debt create a vast array of funding challenges looking ahead. For Gen X, on the cusp of retirement, those worries coalesce around retirement benefit funding reductions.

More than three-quarters of Gen Xers surveyed worry about the impact of public debt. Perhaps more telling, over half (58%) reported concerns of an inability to make financial ends meet without the aid of retirement benefits. It paints a grim picture from the perspective of the latchkey generation.

“Generation X is feeling alone and exposed on retirement funding,” observed Natixis. “Overall, 82% have realized that it is increasingly their responsibility to fund retirement on their own.”

Stay tuned for Part 2, which delves into Gen X investment habits and advisor opportunities.

For more news, information, and analysis, visit the Portfolio Construction Channel.

newETFs.io respects the hard work of others and gives all credit to the remarkable folks at ETFTrends.com. This excerpt/article was pulled from their RSS feed; click here to view the original. Please note that on occasion, the RSS feed will not have the author. When this happens this site defaults the author to "News". Make no mistake, this excerpt/article was not created by newETFs.io, it was simply shared with you.