Gen Xers – 'America's Forgotten Middle Child' – Are The Experiment Generation For 401(k)s But Experts Say Results Are 'Gloomy'

Generation X, often referred to as "America's Forgotten Middle Child," is now grappling with a harsh reality: They were the experiment generation for the 401(k). Unfortunately, the results are not looking too rosy.

As the first generation to primarily rely on 401(k) plans rather than traditional pensions, Gen Xers have had a front-row seat in the shift to self-directed retirement savings. However, according to a Goldman Sachs Retirement Survey, nearly half of this group admitted their retirement savings are off track, so the experiment hasn't been a smooth ride.

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According to the survey, about 45% of Gen Xers fall short on their retirement savings goals. And with the oldest of this generation turning 60 next year, time is running out to catch up.

Gen Xers were the first to experience the widespread shift from employer-sponsored pensions to self-directed 401(k) plans. As employers began pulling back from the costly pension system, Gen X was left to figure out how to plan for their retirements – a challenge they had no blueprint for.

A report from the Spokane Journal of Business summed it up perfectly: the retirement outlook for Gen X is "gloomy." While younger generations have had more time to adjust to the 401(k) system, many Gen Xers didn't start saving until later. Combine that with market fluctuations and the responsibility of managing their retirement savings and it's no wonder nearly half of this group feels behind schedule.

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Chris Ceder, a senior retirement strategist with Goldman Sachs Asset Management, pointed out to Yahoo Finance that many in this generation "got a late start" with their 401(k) savings, which only compounds the problem. Without the safety net of a pension, they've had to shoulder the responsibility for saving and investing wisely, but for many, it hasn't been easy.

According to Fidelity Investments, the average 401(k) balance for Gen X is around $178,500. While that might seem like a solid sum, it's far from the $1.5 million that financial experts estimate is necessary to comfortably retire today. And for those Gen Xers already in their late 50s, the numbers are even more concerning: on average, they've saved just $88,000 for retirement.

The gap is significant and many in this group are looking for ways to make up lost ground as they approach retirement age.

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Despite the negative outlook now, not all hope is lost. Financial advisers have noticed two groups within Gen X that have bridged the savings gap. One group consists of people who built successful businesses and were able to sell them, securing a large lump sum for retirement. The other group includes employees at companies like Amazon where stock options are widely available to workers at every level from warehouse staff to executives. For some, these stock options have become the key to reaching that elusive $1.5 million goal. 

Gen X may have been the guinea pigs for the 401(k) system, but their experiences offer valuable lessons for younger generations. The importance of starting early, saving consistently and taking advantage of every available opportunity is more apparent than ever. For those Gen Xers still playing catch-up, it's not too late to make changes and prepare for the future – but the clock is ticking. If you're concerned about meeting your savings goals, consulting a financial advisor can be a great way to ensure you're on the right track. 

Though the road has been rough, Gen X still has a chance to rewrite the end of this story and perhaps that gloomy outlook won't be the final word.

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