September 17, 2018
There’s a lot of discussion about how Americans aren’t prepared for retirement, and Generation X is no exception.
In fact, Generation X may have even less retirement savings than the Baby Boomer and Millennial generations.
A study by TD Ameritrade[i] highlights the problem many GenXers deal with:
- 37 percent say they would like to retire someday, but won’t be able to afford it
- 43 percent are behind in their savings
- 49 percent are worried about running out of money during retirement
- Almost two out of 10 aren’t saving or investing
The shortfall of savings isn’t without reason. In their financial lives so far, Generation X has taken some hard knocks. They have faced two recessions, disappearing pensions, the rise of the 401(k), and dwindling social security benefits.
What Generation X Does Right with Their Savings
With all those financial forces against them and a decidedly laid-back approach to savings, is there anything Generation X has going for them? Turns out, there is – 401(k) investments and a strong recovery from the 2008 recession.
The 401(k) Generation: Generation X was the first generation to enroll in 401(k) savings plans en masse. 80 percent are invested in a 401(k) plan or something similar.[ii] The fact that almost all of Generation X has embraced the 401(k) retirement savings plan is a revelation.
Rebound: If every generation receives a financial gift, for Generation X, it is their solid rebound after the Great Recession. According to a study by the Pew Research Center,[iii] the net worth of a GenX household has surpassed what it was in 2007. Meanwhile, the net worth of households headed by Baby Boomers and the Silent Generation remains below their 2007 levels.
What Generation X Can do Better When it Comes to Savings
There’s always room for improvement when it comes to financial planning. For Generation X, those improvements are best focused on saving and getting out of debt. Here are a few pointers: Ramp up your savings: Commit to socking away at least $50 a month to start and increase that amount over time. Make sure savings is factored in to your monthly budget. Pay off credit card debt: Credit card debt is expensive debt. Commit to getting serious and paying it off. If you need help, consider consolidating, balance transfers, or getting a personal loan at a lower rate.
A Mixed Financial Picture
Like other generations, the savings snapshot of Generation X is a mixed picture. They have some great financial tools in place with 401(k) plans and a growing net worth.
If you’re a GenXer and if you’re serious about financial health, it’s not too late to commit to a savings plan, get out of credit card debt, and seek to improve your long-term outlook!