Generation X Is Turning 60, and Many Can’t Afford to Retire
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What is the main topic discussed in this episode?
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Here's your money briefing for Friday, August 23rd. I'm J.R. Whelan for The Wall Street Journal. The oldest members of Generation X will soon turn 60. But as they move closer to the traditional retirement age, many are still struggling to make ends meet.
Who is Generation X and what ages define this cohort?
Gen X often finds itself in what's called a sandwich generation. So they're caring for their older parents who might be aging, who might need financial support. And, you know, people are living longer than they had in previous generations. Meanwhile, their kids are often living with their parents for longer.
We'll talk to Wall Street Journal reporter Hannah Miao after the break.
Why is Generation X often called the ‘forgotten’ or ‘middle child’ generation?
Generation X is approaching retirement, but many aren't in a financial position to stop working anytime soon. Wall Street Journal reporter Hannah Miao joins me. Hannah, when we say Generation X, what age group are we talking about?
Generation X includes people born between 1965 to 1980. So the oldest members of Gen X are 59 this year, and the youngest are 44.
Why is this group often referred to as the forgotten generation?
So Gen X is a relatively smaller generational cohort compared with the folks that are older and younger than them. Obviously, we hear a lot about baby boomers and millennials.
How does Gen X's median net worth compare with baby boomers at the same age?
Gen X is kind of sandwiched in between them. There's about 65 million members of Gen X. So they're often left out of the conversation. Sometimes people call them the middle child of the generational cohorts.
You mentioned baby boomers. How has the experience of people in Gen X compared with that group?
There are some measures that show that Gen X right now is financially worse off than baby boomers were at the same age. So one measure we can look at is household net worth as measured by the Federal Reserve's Survey of Consumer Finances. So for U.S. households that were led by Gen Xers between 45 and 54 years old in 2022, they had a median household net worth that was about $250,000 at that time. And that is about 7% lower than that of baby boomers at the same age in 2007, according to inflation-adjusted Fed data. That was really the only age group where we experienced a drop in median wealth over that 15-year period.
What is it about Gen X's career timeline that's created retirement savings challenges for many people?
Gen Xers were really the guinea pigs of the 401k system.
What role did the rise of 401(k) plans play in Gen X retirement readiness?
The 401k is named for a change in the tax code from 1978, and it really picked up steam in the 80s. So when Gen Xers were entering the workforce and starting their careers, The 401k system was still relatively new, and a lot of the features that are now commonplace with 401ks, such as automatically enrolling employees into those plans, automatically upping those contributions over the years as employees' income increases, those features didn't come about until later in Gen X's career. So it was a new system, and Gen X was really caught in the middle of that transition.
On average, how much money have Gen Xers put away in their retirement accounts?
So one figure we can look at is Vanguard Group, which is a very large retirement plan provider, puts out a study of what those aggregate balances are. So we saw that in 2023, workers between 45 and 54 years old had a median account balance of roughly $60,000 in retirement plans that are like 401ks, an employer-sponsored retirement plan. And if you think about it, for most Americans, that is not a ton of money to get by on for your entire retirement. A lot of financial experts will recommend having roughly six times one salary saved by the time you're 50 years old. So we can see from that measure at least a lot of people have a ways to go in having enough money to supplement their retirement expenses.
You spoke with several people in Gen X. What are they doing to make up for shortfalls in the retirement savings?
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Chapters
8 chapters
1
What is the main topic discussed in this episode?
0:00–0:36
2
Who is Generation X and what ages define this cohort?
0:36–1:29
3
Why is Generation X often called the ‘forgotten’ or ‘middle child’ generation?
1:29–2:08
4
How does Gen X's median net worth compare with baby boomers at the same age?
2:08–3:20
5
What role did the rise of 401(k) plans play in Gen X retirement readiness?
3:20–5:10
6
How much have Gen X workers typically saved in employer retirement accounts?
5:10–6:05
7
What strategies are Gen Xers using to cope with retirement shortfalls?
6:05–7:48
8
What financial pressures—like student loans and caregiving—are squeezing Gen X savings?
7:48–9:04
Speakers
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