Gen X faced with severe retirement challenges: Schroders

New data suggests that the average retirement savings of Generation X members are falling well short of their expected needs

Members of Generation X — the cohort generally perceived to have been born between 1965 and 1981 — are expected to have average retirement savings of roughly $661,000, which is well short of the $1.1 million figure believed to be required for lifestyle maintenance in retirement.

This is according to the recently released 2023 Schroders U.S. Retirement Survey, which queried non-retired members of Gen X between the ages of 43 and 58 in this profiled data.

These cohort members “say on average it will take approximately $1.1 million in savings to retire comfortably, yet they expect to have just $661,000 saved,” the survey findings said. “The resulting savings gap is significantly larger than the expected shortfalls facing Millennials and baby boomers.”

More than six-in-ten (61%) surveyed Gen X members “are not confident in their ability to achieve a dream retirement, the results found. Both millennials (49%) and non-retired baby boomers (30%) are far more confident in their ability to do so by comparison.

Non-retired Gen X members also outpace both millennials and boomers in the rate of not having done any retirement planning. Nearly half of surveyed Gen X members (45%) have not performed any planning, compared with 43% of millennials and 30% of non-retired baby boomers.

“Underscoring the need for a plan, non-retired Gen Xers are allocating on average 32% of their assets earmarked for retirement to cash despite their time horizon and sizeable retirement saving gap,” the results also found. “When asked about the reasons for investing their retirement assets in cash, almost two-thirds of these Gen Xers (63%) say they fear losing their money and nearly one-quarter (24%) report they are not sure how best to invest their savings.”

The oldest members of Generation X do not yet qualify for Home Equity Conversion Mortgage (HECM) loans, but some have begun qualifying for certain private-label reverse mortgages within the last few years. In some states, offerings of such products open up to borrowers aged 55 and older, with the oldest members of Gen X, on average, turning between 58 and 60 years old in 2023.

That also means that the oldest members of Generation X will begin qualifying for HECM loans in the next two to four years, opening up a new cohort to the reverse mortgage market. Some members of the cohort carry different kinds of financial burdens than their baby boomer parents, including student loan debt.

These differences may necessitate the reverse mortgage industry to change some of its informational and advertising approaches to accommodate the realities of a new generation, though we are many years away from Generation X becoming the dominant demographic the industry will be able to serve.

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