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With retirement looming for some and still decades away for others, the question of whether they're saving enough is a pressing one.
Are Gen Xers Saving Enough?
The short answer is: it's complicated. While many financial advisors work with clients who are actively saving for retirement, it's likely that this is a skewed sample. Those who are concerned about retirement are more likely to seek professional advice. However, the reality is that many Gen Xers are simply not thinking about retirement, let alone actively saving for it. This is a troubling trend, as the ability to work indefinitely is becoming less realistic due to factors like health and job market changes.
Unpacking the Numbers
Recent data from Fidelity shows that the average Gen X 401(k) account balance is $178,500. While this figure might seem low at first glance, it's essential to consider several factors.
Multiple accounts: Many people have multiple retirement accounts due to job changes or a combination of Roth and traditional accounts.
Age range: Gen X is a broad age group, and those closer to retirement will naturally have larger balances.
Retirement goals: Everyone's retirement vision is different. While some may be content with a modest lifestyle, others will require significantly more savings.
It's clear that a single average account balance doesn't tell the whole story. As I recently shared in a U.S. News & World report article titled "What Is the Average Retirement Savings for Gen X?" published on July 23, 2024, to truly assess whether Gen Xers are saving enough, we need more detailed information about individual households, including income, expenses, and retirement goals.
A Closer Look at 15-Year Savings
Another interesting data point is that Gen Xers have slightly higher 15-year continuous 401(k) balances than Boomers. While this might seem positive, it's important to remember that this data likely represents a smaller subset of the population, as job stability over 15 years is becoming increasingly rare.
Even with this slight edge, it's crucial to recognize that the rising cost of living means that more and more savings will be needed to maintain a comfortable retirement.
The Bottom Line
Saving for retirement is an ongoing challenge that requires constant attention and adjustment. While some Gen Xers are on track, many others face a significant uphill battle. It's essential to start saving early, diversify investments, and regularly reassess retirement goals to stay on top of financial planning.
If you have any questions or need personalized financial advice, our team would love to talk. Request an appointment and we'll be in touch.
Required Disclosure:
The content presented here is for informational purposes only, is general in nature, and is not intended to and should not be relied upon or construed as a financial plan or financial/investment advice regarding any specific issue or factual circumstance.
Financial and investment advisory services offered through Peters Financial LLC. Brokerage and custodial services offered through Charles Schwab Co. Inc., member FINRA and SIPC. Peters Financial LLC and Charles Schwab Co. Inc. are not affiliated. David Peters also offers tax services through Peters Tax Preparation & Consulting, PC. Peters Tax Preparation & Consulting, PC is not affiliated with Peters Financial LLC and clients or prospective clients are never obligated to use Peters Tax Preparation & Consulting, PC. as part of any financial planning or investment management services offered by Peters Financial LLC.
About the Author:
David Peters, CPA, CFP, ChFC, CLU, CPCU, CGMA, is the Founder and Owner of Peters Professional Education (petersprofessionaleducation.com) and Peters Tax Preparation & Consulting, PC. David Peters is also registered with the U.S. Securities and Exchange Commission (SEC) as an Investment Advisor Representative (IAR) with Peters Financial LLC. He regularly teaches courses in accounting, finance, insurance, financial planning, and ethics throughout the United States, and regularly contributes regularly to various professional publications, including NCACPA’s Interim Report, SCACPA’s CPA Report, and VSCPA’s Disclosures.
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