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Gen Xers: “Can I Afford to Retire on My Terms?”

Gen Xers: “Can I Afford to Retire on My Terms?”

February 01, 2024

Financial education, planning, lifestyle adjustments and advice are crucial

As Generation X, often referred to as the "forgotten generation," inches closer to retirement, a unique set of challenges and concerns emerges. Born between 1965 and 1980, Gen Xers find themselves facing a pivotal moment, with retirement on the horizon.

However, for many in this generation, the road to retirement is uncharted and fraught with financial uncertainty.

The Financial Landscape

A study by the National Institute for Retirement Security reveals a sobering reality – the typical Gen X household has a meager $40,000 in retirement savings. This places Gen X in a precarious position as they navigate the transition from the workforce to retirement. Experts note that this generation, aged 43 to 58, bridges significant economic, social, and technological gaps, presenting unique challenges distinct from both their older counterparts, the Baby Boomers and the Silent Generation, and their younger peers, the Millennials and Generation Z.

While over 70% of Gen Xers own their homes, showcasing a degree of financial stability, other indicators paint a less optimistic picture. In 2015, as the oldest Gen Xers turned 50, Federal Reserve data indicated that they held only 17% of the nation's wealth. This contrasts sharply with the Boomers, who held 31% in 1996 at the same age. Today, Gen Xers hold 29%, still significantly less than the 53% held by Boomers at a comparable stage in life.

Financial Struggles and Student Loan Debt

Gen Xers face a staggering burden when it comes to student loan debt, carrying 57% of the country's $1.63 trillion student loan debt. On average, Gen Xers have over $44,000 in outstanding student loans, surpassing other age groups. This financial strain adds complexity to an already challenging retirement landscape, as individuals grapple with the dual challenges of supporting their children through education and planning for their own retirement.

The Evolving Job Landscape

Two major financial challenges define the Gen X experience: job security and the shift away from employer-provided pensions. The decline in long-term job stability has disrupted the traditional path to retirement, leaving many Gen Xers concerned about their financial future. Karen Smith, a senior fellow at the Urban Institute in Washington, D.C., emphasizes the interconnectedness of job security and pensions in shaping the financial outlook for this generation.

Retirement Confidence

The repercussions of these challenges are evident in the startling statistic that fewer than a quarter of Gen Xers feel "very" confident about their ability to fully retire. As this generation grapples with the evolving dynamics of work, finances, and family responsibilities, there is a growing need for proactive financial planning and strategic decision-making.

Navigating the Road Ahead

For Gen Xers contemplating retirement, the path forward requires a thoughtful and comprehensive approach. Financial education, strategic planning, and potential lifestyle adjustments are crucial elements in working toward a secure retirement. Seeking guidance from financial professionals, exploring investment opportunities, and considering innovative retirement solutions are steps that can empower Gen Xers to confront their unique challenges head-on.

In the midst of these challenges, it's essential for Gen Xers to recognize their resilience and adaptability. By proactively addressing financial concerns and embracing the opportunities presented by evolving retirement options, Gen X can potentially pave the way for a more secure and fulfilling retirement journey. The time for careful planning and decisive action is now, as Gen X prepares to redefine retirement on their own terms.

Important Disclosures

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

 All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.

This article was prepared by FMeX.

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