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For Gen X, fears of a future retirement savings shortfall are finally hitting in the gut.
With the first of this cohort turning 60 this year, decades of kicking retirement savings down the road have come back to bite them.
Two new surveys zero in on their angst, why they’re in this mess, and how they’re taking steps to dig themselves out.
Let’s start with the hand-wringing. More than 8 in 10 are worried that they will not have enough money for a comfortable retirement, according to the Schroders 2025 US Retirement Survey, which provided an exclusive first look at the report to Yahoo Finance.
On average, Gen Xers expect to retire with $711,771 saved — below the estimated $1.2 million they believe they’ll need.
“Many Gen Xers entered the workforce just before the dot-com crash, then endured the global financial crisis and the 2020 bear market that was sparked by the pandemic,” Deb Boyden, Schroders’ head of US defined contribution, told Yahoo Finance.
This is also the test generation for employer-provided 401(k) plans, which emerged just as they were entering the job market.
As I explain in my latest book, “Retirement Bites: A Gen X Guide to Securing Your Financial Future,” little financial education was initially provided to help workers understand these plans, investment options were limited, and only relatively small amounts were permitted to be invested. Core features to boost savings, like auto-enrollment for employees and auto-escalation of the amount saved each year, weren’t around, so savings inertia set in.
Gen X is also operating with high levels of credit card debt and student loan debt, making retirement saving one of numerous pressing priorities. Among those currently participating in a workplace retirement plan, nearly one-quarter of Gen Xers borrowed from their account, compared to 17% of millennials and 21% of baby boomers, per the Schroders data.
The top three reasons were paying for unforeseen family or personal emergencies, paying down debt, and keeping up with the increasing cost of living.
Read more: 4 ways to increase cash flow and pay off debt faster
Gen Xers have “repeatedly been encouraged to save for retirement, but this advice wasn’t always easy to follow amid an array of competing priorities, which ranged from childcare to student loans and caring for aging parents,” Boyden said.
The good news: There’s still runway ahead.
Right now, many Gen X workers are in their highest-earnings years, so pumping up retirement savings with catch-up contributions can provide a significant boost, combined with a drilled-down focus on budgeting to spotlight lifestyle creep. That due diligence exercise is the best way to trim spending and free up money for additional contributions.
Next year, workers can save up to $24,500 in their 401(k)s; catch-up contributions can add an additional $8,000, while those 60 to 63 have super-catch-up contributions that can add up to $11,250 extra.
This is key to righting the ship.
“Fewer than one in six US workers aged 45 to 54 contribute the maximum to their 401(k) accounts, according to Torsten Sløk, Apollo chief economist. “Coupled with rising costs, inadequate savings, and the looming depletion of the Social Security trust fund, these factors underscore a retirement crisis in the US, requiring many households to boost their savings to achieve stable and sufficient income in retirement.” (Disclosure: Yahoo Finance is owned by Apollo.)
Here’s another shocking statistic. According to a new study published by the Nationwide Retirement Institute, a majority of non-retired Gen Xers surveyed did not view retirement as an urgent priority until age 50 or later.
That said, they’re now cutting discretionary spending and increasing retirement contributions. Around 15% now plan to retire later than they originally hoped, and 26% believe they would need to return to the workforce within 12 months if they retired today due to inadequate savings.
Planning to work a few extra years is generally a good idea if you have the capacity to do so. Many people retire earlier than planned due to health issues or having to care for an aging relative.
Having the ability to continue to earn a bit longer can be a double shot: adding to retirement accounts and staving off withdrawing from them, which allows them to continue to grow.
“Gen Xers — myself included — are the first generation of workers who didn’t have access to traditional company pensions and were largely responsible for saving for retirement on our own,” Suzanne Ricklin, vice president of Nationwide Retention and Sales, told Yahoo Finance. “This helped establish a ‘do-it-yourself’ mentality.”
After realizing retirement was nearing, 4 in 10 Gen Xers surveyed said they cut discretionary spending, 34% increased their contributions to retirement accounts, 23% sought out professional financial advice, and 19% shifted their investment strategy to reduce risk.
Read more: Retirement planning: A step-by-step guide
“This,” said Ricklin, “can be a game changer.”
Kerry Hannon is a Senior Columnist at Yahoo Finance. She is a career and retirement strategist and the author of 14 books, including “Retirement Bites: A Gen X Guide to Securing Your Financial Future,” “In Control at 50+: How to Succeed in the New World of Work,” and “Never Too Old to Get Rich.” Follow her on Bluesky and X.
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