Gen Xers Less Likely to Have Any Type of Retirement Plan Than Boomers

It remains to be seen whether or not Gen Xers can change their savings and spending habits to catch up, EBRI says.

Generation X is being called the “sandwich” generation because they are both taking care of their children and their parents, according to a new issue brief from EBRI, “Comparing the Financial Status of Generation X Families.”

In addition, this generation experienced the Great Recession of 2008, when many of them were in their 30s. “Therefore, this generation has experienced disadvantageous economic conditions during prime earning years compared with prior generations and are now faced with these challenges as they move past their prime earning years, which will make it difficult for them to catch up,” the EBRI issue brief says.

Generation X families in 2016 were more likely to have an individual account (IA) retirement plan than families of Millennial and Baby Boomer generations, but they were less likely than Boomer families to own a home or have any type of retirement plan. Furthermore, Generation X families had lower homeownership rates than did prior generations of families when their heads were between the ages of 40 and 51.

However, Generation X families in 2016 were slightly more likely to have owned an IA retirement plan (60.1%) than families with heads ages 40 to 51 were in 2004 (58.7%). Also, the percentage of Generation X families holding debt in 2016 was slightly lower than it was for families of the same ages in 2004 (86.8% versus 88.5%).

The median net worth of families with heads between the ages of 40 and 51 in 2004 was $151,861 in 2016 dollars. This value decreased to $103,130 for families with heads of these same ages in 2016. Further, the median net worth in 2016 was below the 1992 value for families with heads ages 40 to 51.

Median IA retirement plan balances were the only financial status indicator values that were higher in 2016 than they were in 1992 and 2004. Specifically, the median IA plan balances for families with heads ages 40 to 51 were $27,486 in 1992, $43,170 in 2004 and $60,000 in 2016.

“While Generation X overall showed financial status indicators being below what they were for prior generations overall at their ages in 2016, the impact was not universal across Generation X,” the EBRI issue brief says. “The families associated with disadvantaged groups were the driving force for the lower overall financial indicator results. In fact, the families with incomes in the upper two quartiles had nearly equal results to those of prior generations.”

Should Generation X increase their savings, work longer and reduce their debt, they could improve their financial outlook, EBRI says. However, “all these will be difficult for most to achieve, particularly for the low-income families.”

In conclusion, EBRI says, “Generation X is closing in on retirement at a time when they are facing many financial challenges. They are also the first generation to essentially only have defined contribution plans available to them in the private sector for the entirety of their career. Consequently, this generation is faced with the challenge of managing their finances throughout their working careers and retirement in ways that prior generations were not.”

Current indicators, EBRI says, show that Generation X is lagging their older cohorts.