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Gen X is the 401(k) “experiment generation.” Here’s how that works out.

Generation X has been the alpha tester for the 401(k) retirement system, and the dismal results are pouring in.

Nearly half of Gen Xers say their retirement savings is behind schedule, according to the recently released Goldman Sachs Retirement Survey.

“Many Gen

Even now, half haven’t figured out how much total retirement money they’ll need, how they’ll need to save and invest to reach that goal, or when they can afford to retire.

That’s significant, considering the oldest of this cohort will turn 60 next year.

Read more: How much money should I have saved by age 50?

In many ways, Generation on their own pension.

“They are the first generation to rely primarily on their own individual savings through 401(k)-style plans, which is why we call them the ‘401(k) experiment’ generation,” Ceder said.

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Gen X is the first generation to rely primarily on their own individual savings through 401(k)-like plans. (Getty Creative) (Delmaine Donson via Getty Images)

More than two decades ago, many employers began eliminating traditional defined-benefit pensions and moving to 401(k) retirement plans that employees contribute to with an employer-sponsored allowance.

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While pensions are still the norm for public sector employers and municipalities, they have all but disappeared in the private sector.

Today, only 11% of private employers offer pensions, compared to 35% in the early 1990s. According to the Bureau of Labor Statistics, more than half of private sector workers have a 401(k) plan.

What’s behind the slow savings rate of Gen Xers? Credit card debt and existing loans, especially student loans, plus supporting family members financially, the survey found.

And a big concern is that they will retire earlier than expected.

People often retire for reasons beyond their control, such as health care, caregiving and job loss, Ceder said.

“We see Generation Xers retiring early, and in many cases for the same reasons. Retiring early sounds great, but to the extent that people aren’t financially ready for it, it can have a major impact on their retirement for decades to come. ” he said.

The reality for Gen For example, Gen Xers say they need an average of $1.56 million in savings to retire comfortably, but so far they have only saved an average of $109,600. More than 1 in 3 Gen X workers have used their savings or taken out a loan to pay monthly bills.

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Source: Goldman Sachs Retirement Survey and Insights ReportSource: Goldman Sachs Retirement Survey and Insights Report

Source: Goldman Sachs Retirement Survey and Insights Report (Goldman Sachs Retirement Survey and Insights Report)

According to the Goldman report, employers could help them catch up by offering professional financial planning and advisory services, an emergency savings account and a guaranteed income for their retirement funds.

“We have learned from this generation’s experience with managing challenges, competing priorities, the impact of failed plans, financial education and more,” Ceder said.

The generations following this cohort are reaping the benefits, and more and more plans now offer better options. These include auto-enrollment, professionally managed portfolios or target-date funds as default plan options, and, most recently, auto-transfer, he added.

Auto-enrollment and the rise of target-date funds are undoubtedly changing retirement planning for younger workers. According to Vanguard data, 11% of plans offered auto-enrollment in 2006, but by the end of 2021, half had adopted the feature and about three-quarters of Gen Z and Millennials had plans with auto-enrollment.

Millennials, born between 1981 and 1996, are the most likely to report that their retirement savings are on track or ahead of schedule (69%), and only 28% think they are behind schedule, according to the Goldman report.

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Baby boomers who are still working are also feeling the heat. About half feel they are behind on enough income to retire comfortably, are concerned about future health care costs and are therefore retiring later than previous retirees.

Half of baby boomers also plan to work part-time after retirement as a financial safety net, far more than Generation X and Millennials.

Read more: Retirement planning: a step-by-step guide

A happy mixed race young woman feeling rich and successful while throwing money at home.  Excited Spanish holiday celebration after saving and budgeting finances.  Plan for the future or win a lotteryA happy mixed race young woman feeling rich and successful while throwing money at home.  Excited Spanish holiday celebration after saving and budgeting finances.  Plan for the future or win a lottery

Gen Zers – born between 1997 and 2012 – are already planning for retirement significantly earlier than previous generations, according to a new report from Goldman Sachs Asset Management. (Getty Creative) (PeopleImages via Getty Images)

Gen Zers – born between 1997 and 2012 – are already planning a much earlier retirement than previous generations.

Maybe they’re right. Many are off to a good start, with average retirement savings of about $29,000, according to Goldman.

However, that doesn’t change the playing field for the Gen X cohort. Time is of the essence: Gen Xers are in the second half of their careers.

“Retirement income, longevity risk and healthcare spending in retirement will be just some of the next challenges this generation will face,” Ceder said.

Kerry Hannon is a senior columnist at Yahoo Finance. She is a career and retirement strategist and author of fourteen books, including ‘In control at 50+: how to succeed in the new world of work” and “Never too old to get rich.” Follow her on X @kerryhannon.

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