Gen X Retirement Is On the Horizon. Many Won’t Be Ready.

The oldest workers in the Generation X demographic (those born between 1965 and 1980) turn 60 years old this year, but as they approach retirement age, many are far from financially able to stop working.

According to a 2023 analysis by the National Institute on Retirement Security (NIRS), the typical Gen X household has just $40,000 in retirement savings — far less than the more than $1 million financial planners often estimate members of that generation will need to retire comfortably.

But Gen X workers still have time to bolster their retirement savings. Here’s how employers can guide them on the journey.

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‘Flextirement’ May Help Gen X Flex Their Retirement Muscles

Gen X Retirement Readiness: ‘Not Nearly Enough’

Compared to their Gen Z, millennial and Baby Boomer colleagues, Gen X workers are the least confident in their retirement readiness (in fact, many of them have said they fear retirement more than death). Recent research also found:

The average retirement account balance among working Gen Xers was $129,994 in 2020 — “not nearly enough to finance a secure retirement,” NIRS found.
The median account balance among those same workers was just $10,000, indicating that a small number of disproportionately high account balances skewed the higher mean average listed above.
40% of Gen X workers had a zero balance in their retirement accounts.
48% of them (more than millennials or Baby Boomers) have done no retirement planning.
34% are afraid they’ll go broke in retirement due to healthcare costs.
70% believe they’ll retire later than expected or not at all.

What’s Contributing to the Problem?

Often dubbed the “Sandwich Generation,” many Gen Xers are simultaneously caring for their children and aging parents, causing a financial strain.

They’ve also weathered periods of significant economic and political turmoil over the course of their careers that cumulatively have impacted the strength of their retirement savings. Today, 62% of Gen Xers have said they are saving less for retirement because their everyday costs are higher.

The large-scale switch from defined benefit plans like pensions to defined contribution plans such as 401(k)s took place at the start of most Gen X employees’ career journeys, meaning the growing pains of that transition largely fell on this generation, said Tyler Bond, the research director at NIRS.

“Now, it’s more common to have auto-enrollment, auto-escalation, defaulting into a target date fund and other features that are encouraging millennials and Gen Z to be more active savers from an earlier age,” he explained. “But Gen X largely didn’t benefit from that. They entered the workforce when the 401(k) system was still in its infancy.”

How Employers Can Help

Even though many Gen X employees still have anywhere from five years to two decades until they reach retirement age, total rewards (TR) professionals can offer support and improve their financial outlook in several ways:

Help this workforce save for retirement now. Many Gen X employees don’t have access to an employer-sponsored retirement plan at all, Bond said. Organizations not currently offering a plan may want to explore options that are more accessible to small businesses or educate workers on other ways to save. To support employees’ increased savings, consider:
- Offering or increasing an employer match;
- Examining and improving potential inequities in your retirement plan;
- Implementing auto-enrollment, auto re-enrollment and auto-escalation; and,
- Educating workers about making catch-up contributions to an individual retirement account (IRA) or 401(k) (eligibility begins at age 50) and to a health savings account (HSA) (starting at 55).
Paint a picture of their retirement. Offer tools that allow Gen X employees to visualize and project how their current savings patterns will help fund the retirement they are anticipating, said Kevin Crain, the executive director of the Institutional Retirement Income Council (IRIC).
Offer education and resources. “Employers have done a great job overall taking responsibility for the financial wellness of their employees … with more, broader education and planning tools throughout employees’ careers,” Crain said. “But they haven’t done a great job with pre-retirement support. That piece is severely missing.” Provide access to financial planners; seminars on Social Security, Medicare or required minimum distributions; or resources educating workers on potential tax increases in retirement, Roth conversions or the financial benefit of waiting until age 67 or 70 to claim Social Security benefits, Crain said. And, he added, while Gen Xers may not be as digitally fluent as their younger counterparts, it’s a mistake to assume they won’t engage with digital planning tools.
Support their overall financial well-being. Emergency savings support and other financial programs can be helpful, Bond said — particularly when day-to-day costs inhibit additional retirement savings.
Explore other retirement-age work models such as “flextirement.” As Gen X workers approach retirement age, they may find they either want or need to continue working in some capacity. Consider facilitating a flexible framework that allows them to keep working fewer hours, said Jennifer Barnes, the CEO of accounting and HR firm Optima Office, which has a handful of “flextirement” employees. “If you find people who are respected in their trade and skilled in what they do, and you allow them a flexible schedule, they may not have a sense of urgency to retire,” Barnes said. “These people can add a ton of value to your company, and they give a lot of mentorship and coaching to the people below them. Why would you not want those people working at your company?”

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