Gen X is known for a lot of things. From great music across all genres to flannel chic, pioneering artists and game-changing leaders, Gen X has contributed a lot to the world. Unfortunately, this generation often feels somewhat lost in the cultural discourse, which tends to focus on the divide between millennials and boomers.
Dubbed “the forgotten generation,” Gen X is facing a lot of very present issues, especially when it comes to their personal finances. In a recent report about Gen X and retirement, US News & World Report shared findings from Fidelity, which revealed that the average retirement account balance for Gen X clients is roughly $178,500 — a troublingly low amount, all things considered (though the results don’t include balances held in areas like 401k accounts with other firms).
In a quote to US News & World Report, Michael Collins, a chartered financial analyst and CEO at WinCap Financial, said, “It would seem that members of Gen X are behind on their retirement savings compared to previous generations.”
It’s important to understand the factors that have contributed to this gap with other generations. Their impact will be especially felt in the quality of life Gen Xers experience in retirement, assuming they’re even able to retire at all. Keep reading for a closer look at some of the causes behind the lag.
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It’s a grim joke across many social media platforms: Let me live in more precedented times. But for Gen Xers, it’s a reality. When Jamie Ebersole, founder and CEO of Ebersole Financial, listed off the unprecedented events Gen X has lived through, it’s hard not to feel a bit gut punched.
His Gen X clients came of age during a recession in the 1990s and experienced a crisis about every ten years or so afterward, including the dot.com bubble bursting, the horror of 9/11, the global financial crisis and the coronavirus pandemic.
“While the markets have been able to weather these storms, many Xers were hit with unemployment, underemployment and huge market swings during their peak earnings years,” said Ebersole.
Instead of saving as much as they could, many Xers were simply overwhelmed and not well positioned to weather the emotional and financial storms of those years, leaving them to play catch up now.
Gen X and X-adjacent, older millennials are sometimes referred to as the “sandwich generation” since they’re tasked with caring for their own children along with their elderly parents who could be struggling with their own health needs. This is a trend that Ebersole has seen as well.
“As we all are growing older for longer, Xers are being asked to take on a bigger share of the burden in terms of care for their elderly parents,” he said. “While the Boomers have a lot of wealth collectively, skyrocketing healthcare costs have drained reserves and increasing time commitments have stretched Xers to their limit.”
For many Americans, pensions were a bedrock of retirement planning, but as decades pass, the number of people with pensions are dwindling. According to Joe F. Schmitz Jr., the founder of Peak Retirement Planning Inc., this change is having an impact on Gen Xers’ ability to retire securely.
“Pensions have mostly gone away,” said Schmitz. “Earlier generations relied on pensions to retire, now less than 20% of Americans have a pension, causing people to rely heavier on savings and investments.”
Another reason Gen Xers are stretched so thin financially is the fact that many of them are shouldering significant student loan debt.
In fact, a report from the Education Initiative revealed that Gen Xers have the highest balance of all generations, averaging to roughly $44,290 per borrower. That same study showed that Gen X held most of the national student loan debt — more than half of it, to be exact.
This information, or the fact that student loan debt puts a serious strain on Gen Xers’ abilities to save for retirement, isn’t a surprise to Patricia Roberts, chief operating officer at Gift of College, Inc.
Not only does she encounter this issue at work, but she’s also intimately familiar with the process of paying off student loans while trying to save for retirement and ensure her own kid doesn’t have to take on educational debt. If you ask her, it’s not an easy task.
Fortunately, Roberts has some advice for people in a similar situation — see if your employer offers any form of student loan assistance. If not, you can ask if they’d be willing to add that kind of benefit in the future.
“Employers can offer various forms of student loan support, and this type of benefit can [not only] improve your chances of being better prepared for retirement [but also] help your employer to [both] attract top talent and reduce the cost of turnover. It’s a win/win, and you won’t know unless you ask,” she said.
