Why More Than Half of Gen X Are Worried They Won’t Be Ready For Retirement

Gen X is quickly approaching retirement, and the majority don’t feel prepared.

The oldest members of Gen X (born between 1965 and 1980) turn 60 this year, which means many are planning for or have already decided when they want to retire. However, a new report by Northwestern Mutual found that more than half of Gen Xers don’t feel they have enough money saved to retire.

While many generations may not feel ready when approaching retirement, Gen X faces a few unique financial challenges that keep them from feeling like they are saving enough.

This ‘Sandwich Generation’ Has Too Much on Its Financial Plate

They are moving into the “sandwich generation” as many are reaching the age at which they are caring for both their aging parents and their children. A survey from home construction company Lombardo Homes found 61% of Gen Xers live in multi-generational homes.

Between their kids’ college educations and their parents’ health care costs, saving for retirement has slipped through the cracks for many.

“As parents live longer, Gen X may encounter unexpected caregiving costs, ranging from medical expenses to long-term care,” said private wealth advisor with Northwestern Mutual John Faircloth. “These unexpected expenses can strain their savings and divert resources away from retirement planning.”

On top of this, Gen X’s adult children (who are primarily members of Gen Z and were born between 1997 and 2012) live with them at higher rates than previous generations, according to the Pew Research Center.

Other generations have been put in a similar position before. However, Gen X’s situation is a bit unique.

What Makes Gen X Different?

Unlike many baby boomers who benefited from pensions, fewer members of Gen X have access to these plans, making them the first generation with “the onus on them to save independently for retirement,” Faircloth said.

It’s also likely that Gen X will be the generation first affected by potential changes to Social Security. Funding for the program is expected to fall short beginning in 2034, and even if Congress moves to cover the gap, resulting changes to benefits could affect Gen X first.

In addition to all these factors, Gen X is also unique because, as a whole, they didn’t have a solid financial foundation before reaching the “sandwiched” age. 

Gen X has felt the impacts of other economic downturns on a deeper level than previous generations. Just as many members of this generation were starting a family, buying their first home, or settling into their careers, a curveball was thrown into their path: The Great Recession.

While millennials were graduating from college and entering the workforce for the first time as the recession hit in 2007 and continued through 2009, members of Gen X were trying to hit the next set of milestones, and those milestones aren’t cheap. 

“No generation lost a greater percentage of its net worth between 2007 and 2010 than Gen X households [with] their median net worth falling 38%, from $63,000 to $39,000,” said Chayce Horton, a senior analyst with Cerulli Associates.

As a result of the recession, 12% of Gen X said they were laid off, a quarter said their work hours or wages were reduced, and 37% said the value of their investments declined, according to a 2014 survey by the Transamerica Center for Retirement.

After the recession, many Gen X workers were focused on paying off debt, covering basic living expenses, or just getting by. Only about a quarter said saving for retirement was their greatest financial priority at that time.

Over a decade later, Gen X still feels behind and like other financial needs take precedence over their future.

“This is where having a well-designed and thorough financial plan may help,” Faircloth said. “While retirement may seem daunting for Gen X, especially with the pressures of being in the sandwich generation, addressing these unique challenges head-on can provide Gen X with a clearer path to a stable retirement.”