Skip to main content
Join Now

< Back to All

The Gen X Retirement Conundrum

July 10, 2024

Will Gen Xers be able to retire eventually?

Gen X — people born between 1965 and 1980 — is the first generation of U.S. workers to come of age with 401(k) plans as their primary retirement vehicle after employers largely shifted away from traditional pensions in the 1980s. About 1 in 5 Gen Xers worry they won’t be able to afford to step back from work even if they manage to save $1 million for retirement, a study by Natixis, an investment bank, found. Additionally, about one-quarter of Gen Xers are concerned that a shortage of savings will force them to return to work after they retire. On average, this generation has saved around $150,000 for retirement, far from the roughly $1.5 million that Americans say they need to retire comfortably. The National Institute on Retirement Security found that the typical Gen X household with a private retirement plan has only $40,000 in savings, and about 40% haven’t saved a penny for their retirement. Now is a crucial time for financial wellness and planning opportunities for this often-forgotten generation, especially since many want to retire at 60.

How can small businesses help?

Offering retirement plan options can greatly benefit small businesses by attracting and retaining talented employees. Providing 401(k) plans and in-plan annuities can enhance employee satisfaction and financial security. According to J.P. Morgan, 42% of defined contribution plan participants stayed invested in their plan three years after retirement, double the number from ten years ago. A T. Rowe Price survey found that 83% of 401(k) participants expressed interest in staying in their current plan. Additionally, 53% would consider keeping their savings in their employer plan if it offered vehicles like in-plan annuities.

Pew Institute’s survey showed that 35% of near-retirees intend to keep their retirement assets invested in their existing plan after retirement. LIMRA’s 2023 “Retirement Investors Survey” reported that 70% of non-retired plan participants would likely select an in-plan annuity for lifetime income.

Small businesses can play a pivotal role in ensuring their employees’ financial futures by offering these valuable retirement plan options. Talk to your plan administrators about incorporating these investments if you don’t have them already.

Sources: CBS News 6/18/24, Financial Advisor 6/19/24 courtesy SBAM Approved Partner ASE

Share On: