Gen X, born between 1965 and 1980, is approaching retirement, but according to recent data from Fidelity, the financial outlook for the average Gen Xer is concerning. Fidelity reports that the average retirement savings for Gen X as of Q2 2024 is only $182,100.
While this may seem like a lot of money to some, it pales compared to what's needed to retire securely. By the time someone reaches retirement age, Fidelity suggests having at least 10 times your salary in retirement savings. So, making $70,000 a year would mean having $700,000 in retirement accounts by the time you stop working.
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Those in their late 40s to mid-50s have much catching up to do. According to Fidelity's recommendation, this age group should already have about six times their annual salary saved for retirement. Sticking with our $70,000 salary example would mean having $420,000 in retirement accounts, a far cry from the average $182,100.
Gen X has experienced several financial setbacks throughout their prime working years. From the dot-com bubble to the 2008 financial crisis and the COVID-19 pandemic, a lot of disruption has affected the ability to save money.
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Many Gen-Xers have also faced layoffs or reduced incomes during critical times. With the stock market's major fluctuations throughout the years, keeping up with retirement contributions has been difficult.
Beyond external economic factors, Gen-Xers – the sandwich generation – are often stuck in the middle, caring for their children and aging parents. Those with this dual caregiver role face emotional and financial strain, from rising health care costs for elderly parents to the expenses of raising children.
This often results in delaying or reducing contributions to retirement funds to cover immediate family needs.
Another financial hurdle for Gen X is personal debt. Education Data reports that the average student loan debt for Gen X is $44,290 per borrower and Gen X has taken on more student loans than any other generation. According to Experian, Gen X also holds the highest average credit card debt of any generation, with $9,255. Between paying off these personal debts and managing other financial responsibilities, retirement savings often take a back seat.
It's not too late for those with less-than-ideal retirement savings to get back on track, though. Boosting contributions to retirement accounts is a good place to start, especially if your employer offers a matching contribution. It's also important to prioritize paying off high-interest debt, which can free up more money for saving. Meeting with a financial planner could be another smart move, as they can help create a tailored plan to balance your current needs with long-term goals.
By taking action now, Gen Xers can increase their chances of securing a comfortable retirement. Talking to a financial advisor can help. They can help you plan for the future with a personalized plan tailored to your needs.
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© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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