Half of Gen X has done no retirement planning, study says

Generation X is often thought of as America's forgotten generation. But in terms of retirement savings, this age group stands out — and not in a good way.

New research shows Gen Xers are particularly far behind on planning and saving for their golden years. Only 14% of Americans aged 44 to 59 believe they've saved enough for retirement, according to a new study by Schroders, a British asset management company. And almost half — 48% — haven't done any retirement planning at all.

"If planning and saving don't become higher priorities, Gen X could become the lost retirement generation," said Deb Boyden, the head of U.S. defined contribution at Schroders.

Of course, this problem is not limited to one generation. In general, 28% of Americans have no retirement savings, a study by GoBankingRates found. And according to researchers at Northwestern Mutual, the average American believes they'll need $1.46 million to comfortably retire — but their savings totals only $88,400.

But even in this context, Generation X is ahead of the pack — or behind it. Schroders found that the average Gen Xer thinks they'll need $1,069,746 to retire, but they only expect their savings to reach $602,944. This savings gap — amounting to $466,802 — is wider than it is for both baby boomers and millennials.

Between pensions and 401(k)s

Why is Generation X so much worse off? Much of the answer, experts say, is a matter of timing. Gen Xers came of age at an unlucky time in American retirement, just after 401(k)s replaced pensions but before automatic features made 401(k)s easier to use.

"The missing link here between [Gen X and] the other generations is they didn't have the full benefit of the default and auto features," Boyden said. "So they missed out on that kind of automation, unfortunately — and missed out on having a pension."

Thanks to federal legislation like the Pension Protection Act of 2006, the Secure Act of 2019 and 2022's Secure 2.0, many Americans are defaulted into good savings habits. They are auto-enrolled in their 401(k)s. Target date funds adjust their portfolios over time. And whenever they get a raise, auto-escalation increases their contributions.

READ MORE: How to guide clients of all generations to their golden years

Gen X Americans — typically defined as those born between 1965 and 1980 — began their working lives long before these features were available.

"People didn't always know to sign themselves up, and yet they were kind of left to figure it all out by themselves," Anne Lester, the former head of retirement solutions at JPMorgan Asset Management, told Financial Planning earlier this year.

The result is a whole generation of Americans who feel insecure about their futures. According to Schroders, 54% of Gen Xers worry they'll outlive their retirement savings — more than baby boomers (40%) and millennials (50%). And 60% of Gen Xers doubt they'll be able to achieve their dream retirement, compared to 52% of nonretired boomers and 48% of millennials.

Social Security safety net

Then there's Social Security. The federal program rewards those who wait, with the biggest monthly benefits available to those who file at 70. But Generation X isn't holding out that long — only 10% of them plan to file at 70. 

In fact, 43% of Gen Xers said they're deliberately filing sooner because they fear the program won't survive much longer — a concern shared by smaller numbers of baby boomers (24%) and millennials (37%).

"I think that there's a wariness about Social Security being around," Boyden said. "I think there's education that could be done there to inform the public a little bit more about the safety of Social Security."

On that front, Boyden said, financial advisors could do a lot to help — if Gen Xers will see them. Only 27% of Generation X is currently working with a wealth manager, compared to 37% of baby boomers and 31% of millennials, according to Schroders.

But for those financial planners who do have Gen X clients, Boyden said, a little education can go a long way. In particular, she recommends sitting down with a client and measuring out how much their total savings would amount to as a retirement income. This can sometimes be a powerful spur to action.

"That really changes the perception," Boyden said. "Individuals can look at a lump sum and say, 'Hey, I'm a millionaire.' But really, what does that translate to in a monthly income, and is that going to be enough for them?"

READ MORE: Will Generation X miss out on the Great Wealth Transfer?

Even when it comes to the default 401(k) features, there may still be time to benefit from a few years of auto-escalation or a well designed target date fund. Nathan Voris, the head of Channel Strategy at Morningstar Investment Management, spoke to Financial Planning in February about alerting Gen X clients to perks in their 401(k)s.

"Maybe add an additional layer of communication to let folks who aren't being defaulted or updated know that these features exist," Voris said. "Then they can take advantage of them, [at least] at a lesser rate than folks that have been defaulted."

The important point is that even with comparatively few years left to work and save, there's still time for Generation X to improve its future.

"It's really not too late for these Gen Xers to make meaningful changes," Boyden said.