Generation X, often referred to as “America’s Forgotten Middle Child,” is now grappling with a harsh reality: They were the experiment generation for the 401(k). Unfortunately, the results are not looking too rosy.
As the first generation to primarily rely on 401(k) plans rather than traditional pensions, Gen Xers have had a front-row seat in the shift to self-directed retirement savings. However, according to a Goldman Sachs Retirement Survey, nearly half of this group admitted their retirement savings are off track, so the experiment hasn’t been a smooth ride.
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According to the survey, about 45% of Gen Xers fall short on their retirement savings goals. And with the oldest of this generation turning 60 next year, time is running out to catch up.
Gen Xers were the first to experience the widespread shift from employer-sponsored pensions to self-directed 401(k) plans. As employers began pulling back from the costly pension system, Gen X was left to figure out how to plan for their retirements – a challenge they had no blueprint for.
A report from the Spokane Journal of Business summed it up perfectly: the retirement outlook for Gen X is “gloomy.” While younger generations have had more time to adjust to the 401(k) system, many Gen Xers didn’t start saving until later. Combine that with market fluctuations and the responsibility of managing their retirement savings and it’s no wonder nearly half of this group feels behind schedule.
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Chris Ceder, a senior retirement strategist with Goldman Sachs Asset Management, pointed out to Yahoo Finance that many in this generation “got a late start” with their 401(k) savings, which only compounds the problem. Without the safety net of a pension, they’ve had to shoulder the responsibility for saving and investing wisely, but for many, it hasn’t been easy.
According to Fidelity Investments, the average 401(k) balance for Gen X is around $178,500. While that might seem like a solid sum, it’s far from the $1.5 million that financial experts estimate is necessary to comfortably retire today. And for those Gen Xers already in their late 50s, the numbers are even more concerning: on average, they’ve saved just $88,000 for retirement.
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