A recent report from the National Institute on Retirement Security (NIRS) reveals that many individuals from Generation X (Gen X) are not saving enough for retirement. Gen Xers, who are now in their 40s and 50s, were the first generation to enter the labor market after the transition from employer-run defined benefit pension plans to 401(k)-style defined contribution accounts. According to the report, only 14% of working Gen X adults have a defined benefit pension plan, and the bottom half of earners have only saved a few thousand dollars in workplace retirement plans and IRAs. The median amount of retirement savings for Gen X households is just $40,000.
The report also highlights stark racial and ethnic differences in retirement savings. Black and Hispanic workers have the lowest savings accumulations and are the least likely to have access to employer-sponsored retirement plans. On the other hand, Asian workers have the highest average retirement account balances. However, the report emphasizes that regardless of race or income, most Gen Xers are failing to meet retirement savings targets.
To address their retirement savings shortfall, Gen Xers are encouraged to assess their current financial situation, determine what changes they can make, and stay informed about new programs and benefits. Some recommendations include requesting a benefits estimate from Social Security, utilizing online calculators to assess savings progress, and seeking guidance from financial planners or employer-provided financial coaching services. Additionally, there are new programs and laws aimed at making saving for retirement easier, such as auto IRA contribution models and changes to the Saver’s Credit. Overall, it is crucial for Gen Xers to take proactive steps to ensure they have adequate savings for retirement.