The True Cause Behind Gen X’s Insufficient Retirement Savings and Its Implications for Their Future

Gen X Faces a Significant Retirement Savings Gap

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Changes in the American retirement landscape have left Generation X at a disadvantage when it comes to saving for their later years.

Main Points

• Generation X anticipates being over $400,000 short of the funds they believe are necessary for a secure retirement.
• This shortfall is largely due to the transition from traditional pensions to 401(k) plans, which initially lacked many of the automatic features that benefit today’s younger employees.

According to a recent survey by Schroders, Generation X is currently experiencing the largest gap in retirement savings among all age groups in the United States.

Individuals born between 1965 and 1980 estimate they will need upwards of $1.1 million to retire comfortably, yet expect to accumulate only about $712,000—leaving a deficit exceeding $400,000.

This generation trails both older and younger Americans in retirement preparedness, a consequence of the U.S. retirement system’s evolution over recent decades. The decline of pension plans and the rise of defined contribution accounts, such as 401(k)s, have played a major role.

Deb Boyden, Head of US Defined Contribution at Schroders, explains: “While many Baby Boomers benefit from guaranteed pension income, Gen X entered the workforce as pensions were being phased out in favor of 401(k)s—before features like automatic enrollment and contribution increases became standard.”

What Can You Do?

Although Americans across all generations often fall short in retirement savings, Gen X faces the most pronounced challenge. Fortunately, there are effective strategies to help bridge the gap.

Modern 401(k) plans often include automatic enrollment and auto-escalation, which increase contributions each year without requiring action from the employee. These features were not widely available when Gen X began saving, contributing to their current predicament.

With retirement drawing nearer for many in this group, time is limited—but there are still steps that can help improve their financial outlook.

• Boost your retirement contributions: Consider maximizing your 401(k) contributions in 2025 if possible. The annual limit is $23,500, and those aged 50 or older can make additional catch-up contributions of up to $7,500. For IRAs, you have until tax day to contribute for the current year, with a 2025 limit of $7,000 and an extra $1,000 allowed for those 50 and above.
• Delay claiming Social Security: While benefits can begin at age 62, starting early results in reduced payments. Waiting until full retirement age (67 for those born in 1960 or later) ensures full benefits, and delaying further—up to age 70—can increase your monthly benefit by 8% for each year you wait.
• Consider extending your career: Experts suggest those in their 50s evaluate whether they can continue in their current roles until retirement. If not, transitioning to a more sustainable position may be wise. Learn more about working longer and preparing for later-life employment.