Middle-Aged Americans Short Half-Million Dollars for Retirement

When it comes to retirement savings, Gen X might be in for a rude awakening.

The group of Americans born between 1965 and 1980 will retire after their Baby Boomer elders, but a recent survey found that many are not prepared to exit the workforce comfortably.

Schroders' 2023 U.S. Retirement Survey found that Gen Xers said they needed an average of $1,112,183 for a comfortable retirement. However, they expected to have only an average of $661,013. That means middle-aged Americans are short a half-million dollars for retirement.

It was the largest gap reported among the generations, including Gen X's millennial and Baby Boomer cohorts.

"As the first generation to head into retirement largely without the safety net of a defined benefit pension plan, the stakes are higher for Generation X and the margin for error is lower," Schroders Head of U.S. Defined Contribution Deb Boyden said in the study.

Many middle-aged Americans haven't planned for retirement at all, the study indicated. A whopping 45 percent of Gen X respondents said they hadn't done any retirement planning, while only 43 percent of millennials and 30 percent of Baby Boomers said the same.

As a result of lacking retirement plans, it may not be surprising that only 11 percent of Gen X indicated they would be waiting until age 70 to receive maximum Social Security benefits.

This year, the Social Security and Medicare Trustees report indicated Social Security could effectively run out of money in 2033.

Lindsay Bryan-Podvin, the founder of Mind Money Balance, said it makes sense that Gen X has the largest gap between retirement needs and expectations.

The generation came of age during the dot-com bubble. They were also the first to be thrown off the company pension system, and they also face uncertainty when it comes to future Social Security payments.

"Boomers often could rely on pensions or hearty 401k matches, and millennials/Gen Zers are more likely to know that they have to do the bulk of their saving as pensions are mostly a thing of the past," Bryan-Podvin told Newsweek. "I think Xers got stuck in the middle, of thinking they'd have the same financial support from employers."

Dubbed the "sandwich generation," Gen X has also had to care for both their parents and their own children, often making them even more cash-strapped, Bryan-Podvin added.

"I think they prioritized their children's needs, paying for their kids' college, weddings, or covering their parents' needs over their retirement," Bryan-Podvin said. "My words of wisdom are to prioritize saving and investing now, and to start having hard conversations with loved ones about needing to set some firm financial boundaries while working toward their retirement goals."

To fill the gap between what they need for a comfortable retirement and what they have now, Gen X will be forced to educate themselves about investment options and ways to maximize their savings, financial advisors said.

"This might involve reevaluating their current spending and saving habits, possibly increasing their contributions to retirement accounts," finance specialist and Money4loans founder Josh Michaels told Newsweek.

Working longer might also be necessary to get retirement funds where they need to be.

"Gen X might have been more focused on immediate financial needs and less on long-term planning, which is a trend that needs to be reversed to ensure a comfortable retirement," Michaels said.

While millennials and Gen Z might have more of a heads-up about how much of their retirement funds will need to come from their own savings, the gap for Gen X might still be a sign of what's to come for future generations, according to Jedidiah Collins, the founder and CEO of Your Money Vehicle.

"The Gen X retirement will not be the dream they once hoped and should awaken the world to see that financial literacy is one of the most important life skills you can acquire," Collins told Newsweek.