A recent study by Fidelity Investments reveals a troubling outlook for many members of Generation X as they approach retirement age. With this demographic, individuals aged 44 to 59, close to half express significant doubt regarding their retirement prospects.
According to Fidelity’s latest “State of Retirement Planning” study, 45% of Gen X respondents reported feeling “not confident” in their ability to retire “when and how they want.” In contrast, 53% stated they felt confident in their retirement plans.
Rita Assaf, Vice President of Retirement Offerings at Fidelity Investments, spoke on the challenges faced by Generation X, often referred to as the “sandwich generation.” These individuals are balancing responsibilities for both children and aging parents while planning for their own retirement, which can be financially burdensome.
“Many are at a point of higher living costs, helping older children with college expenses, all while managing their daily expenses,” Assaf explained. “There are also substantial healthcare costs related to aging parents that add to their financial strain.”
Assaf further noted that Generation X is on track to become the first “401(k) generation,” which distinguishes their retirement strategy from previous generations who relied more heavily on pensions. The study indicated that 61% of Gen X members plan to use 401(k)s, IRAs, and personal savings for their retirement funding.
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Compared to findings from the previous year, Gen X’s confidence regarding their retirement dropped 16 percentage points. Assaf attributed this decline to increasing living costs and the proximity of this generation to retirement.
The survey revealed that Gen X holds the most pessimistic view regarding retirement among all the generations surveyed. In contrast, members of Gen Z and millennials expressed higher levels of confidence, with 75% of Gen Z and 71% of millennials believing they will retire “on their own terms.” Baby boomers also displayed reasonable confidence, with 68% feeling secure.
As Gen X navigates the complexities of caring for children and aging parents amid rising living costs, Assaf remarked that anxiety tends to intensify as individuals edge closer to retirement.
Younger cohorts, such as Gen Z and millennials, have the advantage of a longer timeframe to save and invest, thus fostering greater confidence in their financial future. The study notes that 67% of those studying retirement planning felt optimistic about their ability to retire “when and how they want.”
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The findings stem from a survey of more than 2,000 adults involved in financial decision-making, each having a minimum of one investment account. Respondents identified various challenges, including the difficulty of saving enough money, coping with inflation, and balancing immediate expenses against retirement savings needs.
In stark contrast, 72% of current retirees reported that their Golden Years are proceeding as planned, with 70% feeling adequately prepared by their retirement planning efforts.
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The study found that 77% of retirees depend on Social Security as their primary source of retirement income, followed by pensions at 48% and personal savings at 41%.
Assaf emphasizes that financial planning should continue after retirement, stating, “You have to keep evolving your planning, even when you’re in retirement.” Moreover, the survey indicated that the rising cost of living has negatively impacted the savings of nearly 70% of retirees.
A 2024 report from the Transamerica Center for Retirement Studies revealed that the median retirement age for middle-class retirees stands at 62. Another study by Northwestern Mutual suggested that Americans believe a total savings of $1.46 million is essential for achieving a comfortable retirement.
