6 Key Signs Middle-Class Gen Xers Might Become Poor in Retirement

Gen Xers were born between 1965 and 1980, meaning they are between 44 and 59 as of 2024. This means that, by and large, they are the next generation to retire, after the remaining baby boomers reach that milestone.

Unfortunately, there are signs that many Gen Xers aren’t quite ready to move into their golden years. A recent study from New York Life shows that Gen Xers have the highest level of anxiety about money among all generations, in part because they feel less able to manage debt and do not feel confident about meeting their financial goals.

The good news is there is still time to make some changes if you are a middle-class Gen Xer concerned with your finances. The first step is to recognize the things that might keep you poor in retirement, and then develop a strategy to deal with them. Here are six of the key signs.

The first sign that you might be poor in retirement is the most obvious. If your retirement savings are well below where they should be, you’re going to have to put a plan into motion to overcome this.

While different surveys have varying results, most point to the fact that the average Gen Xer is hundreds of thousands of dollars short of where they want to be by the time they retire. The Schroders 2023 U.S. Retirement Survey, for example, showed that the median amount of retirement savings for Gen X households was just $40,000, a figure that obviously won’t last for long.

According to projections from Fidelity and other investment firms, you should shoot for three times your earnings by age 40, six times by age 50, and seven times by age 60, topping out at 10 times by age 67.

Generation X is the first to reach the workforce during the transition from pension plans to 401(k) plans — or no plans at all. Whereas many boomers are covered by corporate pensions, most Gen Xers have been left to their own devices, forced to save for retirement via plans like a 401(k) or an IRA.

In fact, according to a report from the National Institute on Retirement Security, only 14% of Gen Xers have access to pension plans. If you’re in this position yourself, consider it a wakeup call that you’ve got to start shuffling as much money as you can into your 401(k) and/or IRA. 

It’s admittedly more difficult to save more money for retirement when the very cost of living is eating up your wages. While all generations are affected by inflation, Gen Xers may feel the pain more acutely, as they are generally in their peak earning years and at a time when they should be contributing the most to their retirement savings.

Workers’ wages didn’t keep up with inflation in 2023. Even though inflation has cooled, prices remain high. As a Gen Xer, it’s important to ensure your income is growing if you want to fund a successful retirement. You may have to ask for a raise, pick up side gigs and/or trim your expenses to make sure your wages are outpacing your household costs.  

Generation Xers are at the age where they’ll likely be retiring sometime over the next decade or two. But that puts them squarely in the sights of Social Security cuts of up to 20% that may potentially arrive as soon as 2034, according to the 2023 Social Security Trustees Report.

By then, Gen Xers will be between ages 54 and 69, and many of them will likely be trying to claim benefits. While Congress may very well enact some changes to beef up Social Security before these cuts materialize, it’s definitely something Gen Xers need to factor into their retirement planning. In other words, if you’re planning on Social Security covering all of your expenses in retirement — which is unlikely even if the program is fully funded — this is now less likely than ever. 

According to data from Experian, Gen X has by far the highest debt levels of any generation. While the average amount of debt across ages is $103,358, Gen Xers have a whopping $154,658 on average. That’s roughly 50% more than the average American, and about $40,000 more than the next-closest generation, the millennials.

To some degree, this is understandable, as Gen X is burdened by a combination of student loans, home mortgages, auto loans and credit card debt. But, if you’re planning to live a fruitful retirement, you’ll want to pay as much of that debt off as possible before you try to live off a fixed income.

Gen X tends to rely on social media and the internet for financial education, according to a 2022 report from Investopedia and a 2024 survey from MarketWatch Guides.

Only 22.2% of Gen Xers rely on financial advisors, according to the MarketWatch Guides survey. This can be something of a double-edged sword. On the one hand, Gen X has grown up during the evolution of online brokerage houses, zero-commission trading and the explosion of access to financial information. But without proper financial literacy training and guidance, those tools can be easily misused.

If you’re still uncomfortable with handling your finances and investments while you’re in your 40s and 50s, it’s time to speak with some financial professionals who can steer you to the right path.