Amid record-high debt and stubborn inflation, Gen X has struggled to save for retirement, according to a survey by Clever Real Estate.
In fact, 64% of Gen Xers said they stopped saving for retirement because they couldn’t afford to do so, Clever reported. About 35% of Gen Xers said they sacrificed or reduced retirement contributions to afford basic necessities and 26% said they did so to pay credit card bills.
As a whole, Americans amassed a record $17.05 trillion in debt in the first quarter of 2023. But 80% of Gen X reported carrying some form of debt such as credit card balances, student loans or auto loans. And 52% of those said they’re carrying at least $10,000 in non-mortgage debt, according to the survey.
Paying off this debt may become increasingly difficult as the Federal Reserve has forecasted future interest rate hikes – after taking a pause in June – in order to bring inflation to its target 2% range.
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Majority of Gen Xers have less than $100,000 saved for retirement
As Americans face economic turmoil, Gen X has fallen behind on their retirement savings, according to Clever’s survey.
“A majority of Gen Xers (56%) have less than $100,000 saved for retirement compared to the recommended $550,000 Americans need to retire comfortably,” Clever said in its report. In addition, 22% of Gen X said they have nothing saved for retirement.
Financial experts generally recommend that people saving for retirement should have three times their household income by age 40, according to a post by Ally Bank.
Median weekly earnings of full-time workers were $1,100 in the first quarter of 2023, according to data by the Bureau of Labor Statistics (BLS). That translates to about $57,200 a year or $171,600 in three years.
“Most Americans in this generation were taught about the American Dream, but many may be realizing that the American Dream is more expensive than ever,” Clever said in its report.
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Best ways to save for retirement
Regardless of age, there are many ways workers can save for retirement. One approach is through an employer. About 69% of private industry workers have access to a workplace retirement plan such as a 401(k), according to the latest data by the BLS.
A 401(k) allows workers to make tax-deductible contributions to their savings plans. And earnings grow tax-free until participants make eligible withdrawals in retirement. Some employers offer matching contributions to their employees’ retirement plans.
“The average employer 401(k) match is at an all-time high of 4.7%,” Clever said in its report. “This indicates that companies will contribute up to 4.7% of an employee’s income toward their retirement savings if the worker does the same. If Gen X takes advantage of employer matching, they could maximize their retirement savings.”
Nonetheless, those without access to a 401(k) can open an individual retirement account (IRA) through a bank or financial institution. These offer many of the same benefits as 401(k)s.
Small-business owners and freelancers also may have access to options like a Solo 401(k), SEP IRA or SIMPLE IRA.
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