How Gen X and boomers can secure their future

The retirement landscape is increasingly precarious for Generation X and Baby Boomers, with many individuals in these age groups woefully unprepared for their post-working years. This article delves into the challenges faced by these generations, exploring the factors contributing to their financial insecurity and the potential solutions to mitigate the looming crisis.

A significant number of adults in their mid-50s, often referred to as "silver squatters," are alarmingly underprepared for retirement. According to a Prudential survey, the median retirement savings for individuals in this age group is just under $48,000, with 35% having less than $10,000 saved, and 18% having saved nothing at all. This financial shortfall is exacerbated by fears of outliving their savings, with two-thirds of 55-year-olds expressing this concern—the highest level of fear among any age group surveyed by Prudential in 2024.

Jim Thomas, a 52-year-old lumber mill worker, exemplifies the struggles of many in this cohort. Despite earning "good money," Thomas has faced financial setbacks due to a layoff, divorce, and legal disputes, leaving him with only about $100,000 in savings. "I know I won't be able to retire at 65 unless I win the lottery," he lamented, highlighting the reliance on family or government assistance as a potential necessity.

Unique Challenges for Gen X

Gen Xers, those aged 43 to 59, face unique challenges that have hindered their retirement readiness. Many were in their prime working years during the 2008 financial crisis, which significantly impacted their financial stability. Additionally, this generation often finds itself sandwiched between supporting their children and aging parents, further straining their financial resources.

Dylan Tyson, head of retirement strategies at Prudential, notes that these economic pressures, coupled with low financial literacy, contribute to the inadequate preparation for retirement among Gen Xers. "You're trying to help out here, you're trying to help out there, and then at the end of the day, there's just not enough on the table to really think about what you're going to do for yourself," explained Pete Welch, managing director of retirement and wealth at Inspira Financial.

Boomers: A Generation Holding On

While Baby Boomers generally have more savings than Gen X, they too face significant challenges. Many Boomers are holding onto their wealth, with only 12% of 55-year-olds expecting to receive an inheritance from their family members. This reluctance to pass down wealth, coupled with longer life expectancies, means that Boomers may also outlive their savings.

The financial strain is evident in the story of René, a 50-year-old from Austin, Texas, who, along with her husband, saw their savings dwindle due to a medical diagnosis. "I was like, oh God, how did we get here?" she recalled, highlighting the couple's struggle to avoid foreclosure and their reliance on continued work and 401k contributions to secure their future.

Potential Solutions and Strategies

Addressing the retirement savings crisis requires a multifaceted approach:

Financial Education: Improving financial literacy is crucial. Many Gen Xers and Boomers lack a clear understanding of how much they need to save for retirement, with many not accounting for major expenses like healthcare and assisted living. Educational programs focused on financial planning could help bridge this knowledge gap.

Policy Interventions: Government policies could play a significant role in alleviating the crisis. Expanding access to retirement savings plans and increasing incentives for saving could encourage more robust financial planning.

Workplace Initiatives: Employers can contribute by offering financial planning resources and flexible retirement plans. Encouraging employees to start saving early and providing tools to manage their finances effectively can make a significant difference.

Community Support: Building community networks that offer support and resources for those nearing retirement can help individuals navigate the complexities of financial planning and access necessary services.

The retirement savings crisis facing Gen X and Boomers is a complex issue that requires urgent attention. As these generations approach retirement, the need for comprehensive strategies to enhance financial security becomes increasingly critical. By addressing the unique challenges they face and implementing targeted solutions, it is possible to mitigate the risks and ensure a more secure future for millions of Americans.