Overview of Gen X Retirement Confidence
As Generation X approaches retirement, a significant portion holds pessimistic views on their prospects, based on a recent nonprobability-based study from Fidelity Investments.
The latest edition of Fidelity's annual State of Retirement Planning study indicates that 45% of Gen Xers—aged 44 to 59—express a lack of confidence in retiring when and how they desire, while 53% feel confident in doing so.
Gen X is most likely to be what we call the sandwich generation right now. They are caring for both children and aging parents, as well as preparing for retirement. That’s pretty costly.
Financial Pressures Facing Gen X
They’re also at a time where higher cost of living, so if they’re helping with children, they most likely have kids in college or maybe they just finished college, and those costs have been much higher. Their day-to-day expenses are much higher. And we also know with aging parents, the healthcare and long-term care costs associated with that as well.
Assaf noted that Gen X being the first 401(k) generation influences these figures. Current retirees primarily use pensions to fund retirement savings, but the study found 61% of Gen X will leverage 401(k)s, IRAs, and individual savings vehicles, marking a significant difference.
Decline in Confidence and Generational Comparisons
Compared to last year’s study, Gen X confidence in retiring as planned dropped 16 percentage points, attributed to higher living costs and proximity to retirement.
The survey highlighted concerns about whether retirement savings will last amid rising costs. Gen X holds the most negative retirement outlook among the four generations studied.
Gen Z and millennials reported the highest confidence at 75% and 71%, respectively, while 68% of baby boomers felt confident. For Gen X, managing children, aging parents, and elevated living costs contribute to this, with anxiety increasing as retirement nears.
Younger generations like Gen Z and millennials have a longer time horizon, allowing more confidence and opportunity to save, invest, and benefit from compound earnings.
Overall Retirement Sentiment and Study Details
Overall, 67% of those in retirement planning years felt positive about retiring on their terms. The study surveyed over 2,000 adult financial decision makers with at least one investment account.
Challenges identified include saving enough money, inflation, high living costs, balancing current expenses with retirement savings, and determining needed retirement funds.
Insights from Current Retirees
Among current retirees, 72% reported their golden years going as planned, with 70% feeling their planning was sufficient. Retirees cited Social Security as their top income source at 77%, followed by pensions at 48% and personal savings at 41%.
Planning does not stop at retirement; it must evolve even in retirement. Seven in 10 retirees have seen their savings impacted by rising living costs.
Additional Retirement Data
A Transamerica Center for Retirement Studies report from August 2024 found the median retirement age for middle-class retirees was 62. Americans believe $1.46 million is necessary for a comfortable retirement, per a Northwestern Mutual study from last year.
