A retirement nightmare might be on the horizon for those born between 1965 and 1980, as a recent report suggests few have the savings required to stop working.
The oldest in Generation X are set to retire soon, yet an investigation by the National Institute on Retirement Security (NIRS) found that approximately 40% have no retirement savings.
For those with savings, the average among Gen X households stands at roughly $40,000. The actual concentration of savings can be found among those with higher incomes, whereas low-income individuals have saved no more than $4,300 on average.
Married couples tend to have saved more, with Gen X women having greater workforce participation than previous generations. Yet the report found that these savings still fell short of the 10% target.
“Even younger Gen Xers in their mid-forties would struggle to close that savings gap by the time they reach retirement age,” the report read.
Gen X is the first group of workers to come after the shift to 401(k)-style retirement schemes, yet only 14% have a pension plan and 55% have been contributing to employer-sponsored savings plans.
“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,” as explained by NIRS Executive Director Dan Doonan, according to the Dallas Business Journal.
The implications of this bleak retirement outlook are multifold, as Gen X represents nearly 64 million Americans or 20% of the population.
“Accruing savings takes time and Social Security alone won’t provide enough retirement income,” said NIRS Research Director Tyler Bond, according to the DBJ.
The report advises that the federal government take action to shore up the Social Security trust fund and that state governments continue to facilitate retirement schemes that are backed in part by taxpayer dollars, including for part-time workers.
The City of Dallas is currently grappling with the reality of such arrangements, with pension liabilities contributing substantially to a ballooning budget and proposed tax hikes, as covered by The Dallas Express.
As previously reported in The Dallas Express, a report published by the National Bureau of Economic Research late last year suggested that Americans should wait until they are at least age 70 to begin collecting their Social Security to maximize their monthly benefits.
Federal law requires workers to have paid into Social Security for at least 10 years and be at least age 62 to become eligible for benefits.
In 2022, about 45 million retired workers were receiving Social Security benefits, which accounted for roughly 30% of the income of the elderly.
