By Kathie Rothman of WRAL Tech Wire
While their parents belonged to the “Greatest Generation,” Gen X may soon be carving out a reputation as the “Broke Generation.”
A recent survey conducted by Clever Real Estate polled 1,000 Gen Xers born between 1965 and 1980 to find out how they fare when it comes to personal finances and the road to retirement. A staggering 56% of Gen Xers said they have less than $100,000 saved for retirement, and 22% said they have yet to save a single cent.
While the desire to retire may be there, the money just isn’t. A whopping 64% of respondents said they stopped saving for retirement not because they don’t want to but because they simply can’t afford to.
The reasons for the lagging savings varied, with many citing poor economic conditions and backbreaking student debt as retirement roadblocks. With the eldest members well into their 50s, the reality is that Gen Xers are facing a retirement crisis, and unless they take action now, they won’t be able to retire comfortably, if at all.
Early Financial Setbacks Have Gen X Behind
One of the main reasons why Gen Xers have yet to save enough for retirement is that they have faced several financial challenges throughout their lives. A majority entered the workforce during the recession of the early 1990s, which made it difficult to secure stable jobs and earn decent wages.
They also faced significant student loan debt, with the average amount owed being a whopping $43,438 per borrower. Generation X holds 38.8% of the $1.63 trillion in federal student loan debt, more than any other generation.
Gen Xers have also been hit hard by the housing crisis, many of them purchasing homes at the market’s peak in the mid-2000s. When the market crashed, many of these homeowners found themselves with properties worth less than what they had paid for them, leaving them with negative equity. They could not sell their homes or refinance their mortgages, making it difficult for them to save for retirement.
Additionally, many Gen Xers have not taken advantage of retirement savings plans like 401(k)s and IRAs. According to the Clever Survey, 64% of Gen Xers are saving 10% or less of their monthly income for retirement. Experts recommend that workers save a minimum of 10-15% of their pre-tax income each year for retirement, including any employer match.
Historic Inflation Adds Mounting Pressure
Of all the significant events in their lifetime, Gen Xers say the current inflation crisis has had the most impact on their financial situation, surpassing the COVID-19 pandemic and the 2008 recession.
More than two-thirds of Gen Xers (69%) report that inflation has negatively impacted their retirement plans, and 40% say they have no confidence that they can afford retirement at all.
A Large Majority of Gen X Is in Debt
No matter what your yearly income may be, it’s tough to devote any money to retirement savings when you carry a significant amount of debt. When discussing what prevents them from helping their future selves, 80% of the Gen Xers surveyed said they were carrying some form of debt, with 52% indicating they have at least $10K in non-mortgage, typically credit card debt.
Gen Xers are pinched between two generations. They have to care for their parents from the aging Baby Boomer generation while still shelling out money to help their adult children from the Millennial generation.
Tack on personal expenses, and it’s easy to see why these middle-aged Americans are far from the career finish line.
