Generation X is entering the period towards retirement, with approximately five to fifteen years to go until the age of 65. But a growing body of research shows that retiring comfortably can be an uphill battle for many of them.
A new Prudential survey of Americans 55 and older shows that Gen X is falling far short of recommended savings amounts. This is especially true for the group of pre-retirees around age 55, according to the company, who have an average savings of $47,950 – only about 10% of the $446,565 Prudential recommends by that age. (The company’s rule of thumb is that by age 55, you should be putting away eight times your annual salary.)
Previous research has shown similar results, including a 2023 study from the National Institute on Retirement Security (NIRS), a nonprofit research organization, which found that a typical Gen X household had $40,000 in retirement savings, while the average was $153,300 , according to Fidelity Investments. . (Averages are often skewed by a few wealthier account holders.)
“Most Gen Xers don’t have a pension plan. They have experienced several economic crises. Wages are not keeping pace with inflation and costs are rising,” said Dan Doonan, executive director of the NIRS, when the organization’s study was released. “The American dream of retirement will become a nightmare for too many Gen Xers.”
For what it’s worth, Gen Planning and progress study 2023. Gen
‘Significant mental and emotional health problems’
Fortune has discussed Generation In fact, Prudential’s research shows that 55-year-olds are almost twice as likely as 65- and 75-year-olds to rely on something like a 401(k) to fund their retirement.
Gen They are not sure whether they can rely on social security.
It takes its toll. With the combined stressors of family, work and retirement ahead, “55-year-olds face the greatest mental and emotional health challenges, especially if they are financially insecure,” Prudential notes. That age group reported being the least satisfied with their lives of all others, and about two-thirds of them said they expect to outlive their savings.
People over 50 can save more for their pension if they are able to do so. While the standard contribution limit for 401(k)s is $23,000 this year, the catch-up limit is $30,500. For IRAs, the contribution limit for those over 50 this year is $8,000, up from the standard $7,000.
Of course, it remains difficult for many households to maximize their retirement accounts. But creating a financial plan to put away even a little more each month can make a big difference in retirement, says Caroline Feeney, CEO of Prudential’s U.S. businesses.
“The benefit,” says Feeney, “is that with the right planning and strategy to protect their life’s work, we can ensure that this generation is well prepared to live not only longer, but better.”
This story originally appeared on Fortune.com
