Gen X Faces Hurdles

Art by Ellen Weinstein

Baby Boomers and Millennials are the two age groups most frequently considered by retirement industry research, but an increasing number of experts have stressed that Generation X, also called the “sandwich” generation, should be analyzed on its own.

These Americans, born roughly between 1965 and 1980, established their careers during a period of serious global reform, both politically and economically. Gen X investors faced down both the Internet market crash of the early 2000s and the credit crisis of 2008 relatively early in their careers—leading many to hold off on saving.

“Gen Xers have kind of been on their own to do it themselves,” says Catherine Collinson, president of Transamerica Center for Retirement Studies (TCRS). “They were, in many ways, at the bleeding edge of the use of 401(k)s and of personal retirement savings responsibility.”

While the financial crisis occurred almost 10 years ago, challenges still linger in the future for this group. According to the 2016 report by TCRS “Perspectives on Retirement: Baby Boomers, Generation X and Millennials,” 41% of Gen Xers say they have only “somewhat recovered” from the recession, while 14% have not yet recovered, and 8% believe recovery will never happen.

“It definitely is a generation that was squeezed the most over the past 15 years,” agrees George Walper, president of Spectrem Group.

With such challenges looming, it is no wonder that Gen X workers express less interest in plan participation compared with both the older and younger generations. A study released by Spectrem Group found that Gen Xers were less concerned with active saving/investment participation than were any other generation. Additionally, a study conducted by the Insured Retirement Institute (IRI) reported that about eight in 10 Gen Xers believe they are either somewhat or not very knowledgeable about investing, and two-thirds rate their financial IQ as average or low.

According to the TCRS report, Gen Xers were found most likely to have taken out an early withdrawal, at 30%. Twenty-three percent reported taking out a loan from a 401(k), individual retirement account (IRA) or similar plan, and 15% took an early and/or hardship withdrawal.

“For some steps forward they have taken, many have also taken steps backward with their retirement savings,” Collinson says. “Gen Xers are turning to the retirement account, which can help that short-term need but also can negatively affect their long-term savings for retirement.”