Generation X, also known as the “sandwich generation” or “key generation,” is heading toward a pension crisis that many people don’t even realize they’re facing.
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A recent report from Principal found that 59% of employees who didn’t sign up for a 401(k) thought they had signed up through their employer, but they actually had no retirement savings. This problem is even more pronounced among Gen Xers, with 64% mistakenly thinking they had a 401(k) when they didn’t.
With Gen Xers now so close to retirement after the baby boomers, their lack of savings is a serious concern. Many assumed that 401(k)s, which often replaced pensions when they entered the workforce, would prepare them for their golden years. But financial experts warn that this generation’s reality is more complicated.
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In a Newsweek article, financial expert Michael Ryan compared Gen Xers’ retirement situation to “being handed a Rubik’s Cube and saying, ‘Good luck, kid.'” He explains that Gen Xers are also prone to changing jobs, which often results in missed opportunities to save for retirement. It’s a financial “tug of war,” Ryan says. On one side, moms and dads need help, while on the other side, their adult children can’t even afford to move out.
Given the circumstances, it’s no surprise that Gen X is considered the most stressed generation in the world. Saving for retirement isn’t high on their list of priorities when they’re so busy.
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The sandwich generation is caught between caring for aging parents and supporting their own children, leaving little room to focus on retirement. Unfortunately, this responsibility during their prime earning years can have a lasting impact on their financial future.
The confusion surrounding retirement accounts doesn’t help matters either. Many Americans confuse 401(k)s with IRAs, separate accounts with different tax advantages. There’s clearly a need for better education about the differences between various retirement plans, such as Simple IRAs, SEP IRAs and 401(k).
Experts agree that the situation calls for action, not just from employees but also from employers. Ryan stressed the importance of automatic 401(k) enrollment, noting that it should be a standard feature in the workplace. He also encouraged Gen Xers to take a more proactive approach. “Time to channel that lazy mind into something useful, like checking your retirement account more often than once a decade.”
Assumptions about retirement savings can be risky, especially for Gen Xers who often think their current job offers the same retirement benefits as previous roles. As retirement approaches, this can lead to the unexpected realization that the job they’ve held for years doesn’t offer a 401(k) like they’d assumed.
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For Gen Xers, the message is clear: retirement is coming, whether they’re ready for it or not. It’s time to focus more on saving and take steps now to avoid a retirement crisis down the road. If you’re worried about retirement or want to make sure you’re on track, consider consulting a financial advisor who can assess your finances and help you create the perfect plan for your goals.
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This article Gen X’s Looming Retirement Crisis Is Worse Than They Realize – Expert Likens It to Being Handed a Rubik’s Cube and Hearing ‘Good Luck, Kid!’ originally appeared on Benzinga.com
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