A new survey from TD Ameritrade is causing headlines to say that Gen Xers are worried about the possibility that they won’t have enough money to retire.
“Nearly four out of 10 (37%) of Generation X — those born between 1965 and the late 1970s — say they would like to stop working for good and ‘fully retire’ someday, ‘but will not be able to afford to,’ the survey reveals.
The oldest of the roughly 65 million Gen X Americans — those now 39 to 53 — will be the next generation to retire.
Other troubling Gen X retirement findings:
- 43% say “they are behind” in their savings.
- Half (49%) are “worried about running out of money” once they leave the workforce.
- Nearly two out of 10 (17%) say they “aren’t saving or investing for anything.”
- Only a third expect to be “very secure” in retirement — vs. nearly half of Baby Boomers.
The report blames employer-funded pensions being phased out and replaced with an increasing reliance on 401(k) plans and IRAs, which require workers to do most of the saving on their own, as one reason contributing to the problem.
Those in the Millennial generation are also worried about their future finances after having been stung by the Great Recession in 2008-09 and high college costs.
Older Boomers, 47% of which said they expect to be “very secure” in retirement, according to the TD Ameritrade survey, means that more than half of them are also concerned.
Lule Demmissie, managing director of retirement and investment at TD Ameritrade, cites a series of setbacks as the reason for the Gen X savings deficit:
- The 1987 stock market crash;
- The 2000 tech stock meltdown;
- The 2008 financial crisis.
Demmissie notes that beside being the “first 401(k) generation,” the Gen X generation was also more likely to have grown up in a family split by divorce and as latch-key kids. These two factors alone lead to less financial security as adults.
However, Demmissie says that there’s still time for Gen Xers to prepare. “It’s easy to be cynical, but the important thing for Generation X is that all hope is not lost,” she says. “Improving their finances is still very much in their control.”
She advises people take control of their finances now. “Take advantage of your 401(k). Find out how the tax-code changes will impact you. And don’t expect to build your nest egg to $1 million overnight,” she says, adding that it’s a good idea to “break down financial goals into manageable milestones, such as picking a year you would like to retire and figure out how much you need to save each month to get there.”
The TD Ameritrade survey included 828 Gen Xers and 990 Baby Boomers.