Gen X is the 401(k) ‘experiment generation.’ Here’s how that’s playing out.

Gen X is the 401(k) ‘experiment generation.’ Here’s how that’s playing out.

Generation X has been the alpha tester of the 401(k) retirement system, and the grim results are coming.

Nearly Half of Gen Xers Say Their Retirement Savings Are Lagging, According to Goldman Sachs’ new retirement survey.

“Many Gen .

Even today, half have not calculated the total amount of retirement savings they will need, how to save and invest to reach that goal, or when they can afford to retire.

This is important since the oldest in this cohort will be 60 next year.

Learn more: How much money should I have saved by 50?

In many ways, Generation own retirement.

“They are the first generation to rely primarily on their own individual savings through 401(k) plans, and that’s why we call them the ‘401(k) experience’ generation,” Ceder said.

Gen X is the 401(k) ‘experiment generation.’ Here’s how that’s playing out.

Generation X is the first generation to rely primarily on their own individual savings through 401(k) plans. (Getty Creative) (Delmaine Donson via Getty Images)

More than two decades ago, many employers began abandoning traditional defined-benefit pensions and moving to 401(k) retirement plans to which workers contributed themselves with a small amount of employer funds .

While pensions are still the norm for public, state and municipal sector employers, they have virtually disappeared in the private sector.

Today, only 11% of private employers offer pensionsup from 35% in the early 1990s. More than half of private sector employees have a 401(k) plan, according to the Bureau of Labor Statistics.

What’s Behind Gen X’s Low Savings Rate? Credit card debt and existing loans, particularly student loans, as well as financial support for family members, according to the survey.

And what is very worrying is that they could retire earlier than expected.

People often retire for reasons beyond their control, such as health needs, caregiving and job loss, Ceder said.

“We are beginning to see Generation X is retiring early, and, in many cases, for these same reasons. Retiring early sounds good, but to the extent that people are not financially prepared, it can have a major impact on subsequent decades of retirement,” he said.

The reality of Generation X is increasingly highlighted in financial sector reports. For example, Gen Xers say they’ll need an average of $1.56 million in savings to retire comfortably, but so far they’ve saved only an average of $109,600. More than one in three Generation X workers dipped into their savings or took out a loan to pay monthly bills.

Source: Goldman Sachs Retirement Survey and Insights ReportSource: Goldman Sachs Retirement Survey and Insights Report

Source: Goldman Sachs Retirement Survey and Insights Report (Goldman Sachs Retirement Insights Survey and Report)

Employers could help them catch up by providing professional financial planning and advice services, an emergency savings account feature and a guaranteed income option for their retirement plan assets, the report said. Goldman.

“We have learned from this generation’s experience about savings challenges, competing priorities, the impact of plan defaults, financial education, and much more,” Ceder said.

Generations following this cohort are reaping the benefits, with more plans now offering improved options. These include auto-enrollment, professionally managed portfolios or target date funds as plan default options and, more recently, auto portability, he added.

Automatic enrollment and the emergence of target date funds are undoubtedly changing retirement planning for younger workers. According to Vanguard recordkeeping data, in 2006, 11% of plans offered auto-enrollment, but by the end of 2021, half had adopted the feature, and about three-quarters of Gen Z and millennials had automatic enrollment. plans with automatic enrollment.

Millennials, those born between 1981 and 1996, are most likely to say their retirement savings are on track or ahead (69%), and only 28% think they are behind, according to the Goldman report.

Baby boomers who are still working are also feeling the heat. About half believe they do not have enough resources to retire comfortably, are worried about the cost of health care in the future, and are therefore retiring later than previous retirees.

Half of baby boomers also plan to work part-time in retirement as a financial safety net, a much higher figure than Generation X and millennials.

Learn more: Retirement Planning: A Step-by-Step Guide

Happy mixed race young woman feeling rich and successful while throwing money at home.  Excited Hispanic people celebrate after saving and budgeting their finances.  Plan for the future or win the lotteryHappy mixed race young woman feeling rich and successful while throwing money at home.  Excited Hispanic people celebrate after saving and budgeting their finances.  Plan for the future or win the lottery

Members of Generation Z – born between 1997 and 2012 – are already planning to retire much earlier than previous generations, according to a new report from Goldman Sachs Asset Management. (Getty Creative) (PeopleImages via Getty Images)

Members of Generation Z – born between 1997 and 2012 – are already considering retirement much earlier than previous generations.

Maybe they’re right. Many are off to a good start, with median retirement savings of around $29,000, according to Goldman.

However, this does not change the rules of the game for the Gen X cohort. Time is running out: members of Generation X are in the second half of their careers.

“Retirement income, longevity riskand healthcare expenses in retirement will be just some of the next challenges this generation will face,” Ceder said.

Kerry Hannon is a senior columnist at Yahoo Finance. She is a career and retirement strategist and author of 14 books, including “In control at 50 and over: how to succeed in the new world of work » and “Never too old to get rich.” Follow her on @kerryhannon.

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