Generation X, consisting of individuals born between 1965 and 1980, is entering a critical phase in their lives as they approach the age of 59 1/2, when they can start withdrawing retirement assets without penalties. Despite this milestone, many Gen Xers are not ready for retirement, with nearly half expressing doubts about their ability to retire comfortably, as indicated by a new Natixis study. This generation is unique in that they are the first to heavily rely on 401(k) plans as a key retirement vehicle after the decline of traditional pensions in the 1980s, placing the responsibility on individuals to manage their savings, investments, and withdrawal strategies.
The average retirement savings for Gen X households is approximately $150,000, falling significantly short of the estimated $1.5 million required for a comfortable retirement. Furthermore, only about 2% of Gen Xers have a solid understanding of key investment concepts, such as bond performance in relation to interest rates. Despite these financial challenges, Gen X individuals have high retirement expectations, with many aiming to retire at 60 and anticipating a retirement span of around 20 years, although the reality of their financial preparedness does not align with these aspirations. The generation's lack of savings, coupled with unrealistic investment performance expectations, paints a concerning picture for their retirement prospects.