As Generation X becomes the country’s next generation on deck to retire, a new report finds that many of those born between 1965 and 1980 are woefully unprepared for retirement. 
When looking at median retirement savings levels for Gen X, the bottom half of earners has only a few thousand dollars saved for retirement, and the typical household has only $40,000 in retirement savings, according to the study from the National Institute on Retirement Security (NIRS).
What’s more, the analysis finds that retirement savings for Gen X is highly concentrated among the highest earners, while Blacks and Hispanics have substantially lower savings and access to retirement plans as compared to whites. Why is this important? As of December 2020, Gen X represented almost 64 million Americans or nearly 20% of the population, the study notes.
For the mean, the top quartile holds nearly $250,000 in retirement savings, while the bottom quartile holds only $35,000. When looking at the median, however, the bottom quartile has $200 saved for retirement, and the second quartile has $4,290.
Access Matters
Focusing just on those who have retirement accounts—rather than all working Gen Xers—improved the outlook slightly, the study further shows. For those with IRA/Keogh accounts, the average balance was $148,920 and the median balance was $44,100. For those with 401(k), 403(b) and other employer-sponsored DC plans, the comparable numbers are $173,553 and $50,000, respectively.
“Gen Xers are fast approaching retirement age, but the data indicate that the vast majority are not even close to having enough savings to retire,” says NIRS Executive Director Dan Doonan. “Most Gen Xers don't have a pension plan, they've lived through multiple economic crises, wages aren't keeping up with inflation, and costs are rising. The American Dream of retirement is going to be a nightmare for too many Gen Xers," he adds.
According to the research, a big part of the problem is that too many Gen Xers don't have access to a retirement plan through their employer. Only 14% of Gen Xers have a pension plan and only slightly more than half (55%) are participating in an employer-sponsored retirement savings plan. For Hispanic Gen Xers, only 35% participate in an employer-sponsored retirement plan.
“As a result, a large share of Generation X has virtually nothing saved for retirement, and most who are saving are not close to savings targets that will enable them to retire with their current standard of living,” says NIRS Research Director Tyler Bond, who adds that “it's critically important that we change course quickly.”
Among the population of working Gen Xers, 62% overall worked for an employer that sponsored a retirement plan. On a positive note, take-up rates were high among those who worked for an employer that sponsored a plan at 89% overall.
Yet, across race, gender, marital status and income, the vast majority of Gen Xers are failing to meet retirement savings targets. Nearly all Black and Hispanic Gen Xers have less than half of their retirement savings targets. And in what seems to be an unbelievable statistic, the report shows that for Black Gen Xers, the median retirement account balance is $1, [1] and half have zero balances in their accounts. For Hispanic Gen Xers, nearly two-thirds have zero balances.
The report also offers an analysis of solutions that could improve the retirement outlook for Generation X. In addition to shoring up the Social Security trust fund, the report contends that recent policy actions, such as those contained in the SECURE 2.0 Act, including increasing plan access for part-time workers and reforming the Saver’s credit into a government match, as well as the ongoing establishment of state-facilitated retirement savings programs, should help to boost the retirement prospects of Gen X.
Authored by NIRS Research Director Tyler Bond; Research Associate Celia Ringland; and Stevens Institute Associate Professor and Associate Dean Joelle Saad-Lessler, the report—The Forgotten Generation: Generation X Approaches Retirement—examines a wide range of metrics for assessing retirement preparedness, including sponsorship, take-up and participation rates in employer-provided retirement plans. The analysis for the research relies upon data from the Survey of Income and Program Participation (SIPP).
Footnote
[1] Based on mean private retirement balances, including IRA, Keogh, 401(k), 403(b), and Thrift accounts.
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