What Is the Average Retirement Savings for Gen X?

Key Takeaways

• Gen Xers are currently in their mid-40s to late 50s, nearing retirement age.
• According to a recent report from Fidelity, the average account balance for the company’s Gen X clients is $178,500.
• Inflation may reduce the real value of Gen X's savings, even if amounts are similar to previous generations.
• Lack of pensions may be a challenge to Gen Xers, relative to some baby boomers.
• Younger Gen Xers may have less savings, as they have more working years ahead.

Generation X, comprised of people born from 1965 through 1980, is often overlooked in discussions of retirement readiness.

Sandwiched between two massive generations, the baby boomers and millennials, Gen X is a relatively small demographic of about 64.5 million Americans. And with an age range from their mid-40s and late 50s, they’re at a point in their lives when retirement is on the horizon.

According to a recent report from brokerage Fidelity, the average retirement account balance for its Gen X clients is $178,500. That doesn’t include balances held elsewhere, such as in 401(k) accounts with other custodians.

"It would seem that members of Gen X are behind on their retirement savings compared to previous generations," said Michael Collins, a chartered financial analyst and CEO at WinCap Financial in Winchester, Massachusetts, in an email.

"Many factors can contribute to this, including starting to save later in life or having competing financial priorities such as paying off student debt or supporting children," Collins said. "Additionally, even if Gen X has a similar dollar amount saved compared to other generations, inflation could make the real value much less."

Challenges to Gen X Retirement Savings

In some ways, Gen X’s retirement challenges aren’t terribly different from those experienced by baby boomers.

"In my experience, the data consistently supports that no generation is saving sufficiently to retire," said Joe Maier, senior vice president and director of wealth strategy at Johnson Financial Group in Milwaukee.

However, Gen Xers may have some additional hurdles to overcome.

For some baby boomers, their lack of savings could be offset by pensions earned during the early portion of their working years along with full Social Security benefits, Maier said.

In addition, Social Security comes with cost-of-living adjustments, as do some pensions, allowing retirees to keep pace with inflation.

"For Gen X, pension income is virtually nonexistent and Social Security is somewhat at risk," Maier said. "Their savings shortfall will have a material impact on their retirement lifestyle."

Are Gen X Account Balances Too Low?

Fidelity’s average Gen X account balance stands at $178,500, which may or may not signal trouble.

"At first, this average balance looks low, but I think a few things need to be considered," said David Peters, a financial advisor and founder of Peters Financial in Richmond, Virginia, in an email.

Peters notes that $178,500 is the average account balance at Fidelity, and not necessarily an individual’s total savings.

"Most people have multiple retirement accounts because they switch jobs or they may have both Roth and traditional accounts. Ultimately, we would want to look at the total average savings per household to evaluate if someone is not saving enough," he said.

In addition, younger Gen Xers may have less savings as they have more working years ahead of them.

However, Peters noted that it’s difficult to ascertain retirement readiness by looking at just that number, despite many people living on their retirement income for two decades or more.

"You certainly could not live on $178,000 for 20 years anywhere in the U.S.," he said. "So it is hard to evaluate this statistic by itself."

Longer-Term Gen X Savings Rates

Fidelity also found that Gen Xers contributing to a single employer’s 401(k) plan for at least 15 years had an average account balance of $543,400, slightly surpassing the 15-year continuous balance for boomers, which was $543,200.

"It is rare to see an employee with 15 years at the same company, and in my experience, those that have moved around will have accounts still scattered in past employers’ plans," said Kyle Kraus, a certified financial planner and senior wealth planner with AlphaCore Wealth Advisory in San Diego.

"Although this data might seem to suggest that sticking with an employer is best for everyone, I believe it’s more an indicator that highly compensated people will tend to stay with a company longer," Kraus added.

He noted that even after 20 years of saving, most people won’t have amassed an amount north of $500,000 for retirement.

"Corporations have taught Gen Xers that hopping jobs is a faster path to higher income than trying to play the internal promotion game with an annual bump that barely keeps up with inflation," Kraus said.

Optimism About Gen X Retirement Readiness

As Gen X account balances begin to overtake boomers’ balances, it may signal that Gen Xers are getting more serious about retirement savings.

"This suggests that once Gen X investors start saving for retirement, they are able to do so consistently over time," Collins said.

Although fewer people these days stick with an employer for 15 years or more, Peters said it’s good news that those who do are saving more. "Inflation continues to go up, so it will take more and more money for people to retire comfortably," Peters said.

As seen in Money.USNews.com