Generation X (also known as Gen X) is approaching retirement and facing concerns that it won’t become a reality. This would be the same crisis that Baby Boomers (born between 1946-1954) and Generation Jones (born between 1955-1965) are facing. Someone born between 1966 and 1976 would be classified as part of Generation X.
In a recent survey conducted by TD Ameritrade, 37% of Americans under the Gen X definition want to retire but are not able to afford going down that route.
The survey also revealed that 43% of Generation X are behind in their savings goals. From the survey, 17% of respondents stated that they are not setting any money aside for their retirement. Only one in three people feel that they will be in a strong financial position when it comes to retirement.
The most concerning part of the survey was in reference to running out of money in retirement. Nearly half of the survey takers feel that they will run out of cash once they have left their workplace and are only relying on the retirement nest egg.
Why Is Generation X Not Ready for Retirement?
When an American is looking to retire, they tend to look at real estate or the stock markets in order to meet their investment goals. The intent, of course, is to make investment capital grow as more time is spent on the investment.
In the case of Generation X investors, they have been involved in three down markets. The first was in 1987, which saw markets tanking along with interest rates. This even saw safe investments such as certificates of deposit (CD) and savings accounts deal with lower interest returns as time passed. This, in the end, resulted in investors of all risk levels being punished by all investable assets.
Then came the technology bubble of 2000, which saw billions of dollars wiped out of company market caps. This then led to an economic recession in the country. More recently was the financial crisis of 2008, which felt like an economic depression. All of these negative stock markets were also reflected in the real estate market.
In some unfortunate cases, investors could not take the volatility and cashed out at a market low. This then resulted in there being investable capital but no potential of high rates of return. Therefore, these investors lost out on the bounceback from the market bottoms.
Also, it does not help that employers have reassessed their own financials and retirement plans offered to employees. In many cases, there has been a decrease or outright elimination in the offerings of retirement plans to employees. This then forces employees to figure out their retirement funding on their own.
The last reason why Gen X is not achieving their retirement goals has come down to changes in lifestyle compared to previous generations. This has come from the rise of divorces amongst families, which has resulted in there being a split in assets and there being a change in an individual’s financial position. This would also include the demand for credit products in order to purchase various things such as real estate, vehicles, and other consumer goods.
Another reason for a person not saving for retirement is because of the large cost their child’s education. Over the decades, the cost of receiving a post-secondary education has soared.
All of these rising costs and turmoil of the markets have negatively affected Generation X’s retirement savings plans. This is why the responses to the survey are very negative. Americans in other age groups, such as Baby Boomers, are sitting in the same boat. It is safe to say that America is in a retirement crisis.
“Retirement crisis: 37% of Gen X say they won’t be able to afford to retire,” USA Today, January 10, 2018.
“Generations X,Y,Z and the Others,” WJSchroer, last accessed January 15, 2018.