3 Ways Gen X Is Outpacing Boomers and Millennials in the Retirement Savings Game
Written by
Laura Bogart
Edited by
Kristen Mae
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Gen X may be known as the “forgotten generation,” sandwiched between the Baby Boomers and Millennials, but this generation certainly won’t be forgotten for their contributions to culture. From Nirvana to Tupac, flannel to “Friends,” and the resurgence of sarcasm, there’s a lot Gen Xers have to be proud of. They should also be proud of how they’re leading the pack in retirement savings.
That’s right — the forgotten generation has definitely not forgotten to feather their nests for their golden years. According to a report by the FINRA Investor Education Foundation, Gen Xers are generally more financially prepared than their younger Millennial and Gen Z counterparts. Of those surveyed, roughly six out of 10 Gen Xers had some sort of retirement account and actively contributed to it.
So how are they outpacing younger generations and giving their parents’ generation a run for their money? Gen Xers have embraced smart savings strategies that anyone can emulate for their own success — even if they don’t love grunge.
1. They Don’t Take Anything for Granted
The FINRA Investor Education Foundation report opens with a heckuva understatement: “Gen X has faced many challenges.” Many Gen Xers were entering the workforce during the aftermath of 9/11, and things only got more difficult from there. The dot-com bubble bursting, the Great Recession occurring during peak earning years, and, of course, the COVID-19 pandemic.
No wonder Gen Xers are keenly aware that the bottom can drop out at any time. That’s likely why their participation in employer-sponsored retirement accounts is at peak levels, and they’re less likely to withdraw from those accounts until they retire.
The report also indicated that, while Gen Xers are mostly likely to have mortgages out of all the generations, they’re also far less likely to make late payments on those mortgages compared to Millennial or Gen Z homeowners. While Gen Xers are no strangers to debt — especially credit card debt — they’re less likely to rely on high-cost borrowing methods, such as auto title loans, payday loans, tax refund loans, purchase credit or pawn shops.
These strategic decisions have helped Gen Xers maintain better financial health, allowing them to save more for retirement. To paraphrase one of the great Gen X anthems, when it comes to retirement savings, they’re looking California because they’ve been feeling Minnesota.
2. They’re Adaptable and Open to Saving More
Once upon a time — what feels like an increasingly long time ago — pensions were a reliable cornerstone of retirement. Baby Boomers in particular often believe that their old ways of doing things, pensions included, are the only ways to reach your financial goals — including a well-funded retirement.
In contrast, Gen X has had to be a lot more flexible in their approach. A U.S. News & World Report article highlighted how Gen Xers are closing the gap with Baby Boomers in retirement savings by relying more on 401(k) accounts than pensions. They’re well-positioned to maximize their savings during high-earning years.
Ironically, because Gen Xers have faced more financial hardships than their parents — such as higher home prices, rising health care costs and significant student loan debt — they’ve developed stronger saving habits overall. Retirement savings are no exception.
The article quotes Dan Bennett, a certified financial planner and founder of Lake Water Advisory, who explains how the shifts away from traditional retirement models has compelled Gen Xers to save more: “Their parents may have gotten away with saving 5% to 10% of their income. Now, a savings rate closer to 15% to 20% and sometimes more is preferred, depending on living expenses and spending habits.”
3. They’re Careful About Spending
While Millennials got a bad rap for frittering away income on avocado toast (was the secret ingredient gold dust?), Gen X didn’t escape accusations of overspending either. Deluxe vinyl collections don’t buy themselves, after all.
However, as retirement looms, there’s evidence to suggest Gen Xers are becoming savvier about spending. A Bank of America report on Gen X and the economy showed that discretionary spending — non-essentials that make life enjoyable but aren’t required — has dropped by 2%, the largest decline among any generation.
For a forgotten generation, Gen X is blazing a bold new trail when it comes to saving for retirement. If you follow their example — honestly assessing your financial situation, remaining flexible with your savings and being cautious about spending — you can also ensure your retirement savings mature and don’t “Smell Like Teen Spirit.”
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