The retirement crisis in America is a pressing issue that is impacting Generation X, also known as the sandwich generation, and causing much angst among this group. This generation, born between the early 1960s and late 1970s, finds themselves caught between the financial pressures of supporting their aging parents and providing for their own families. Let’s take a look at some of the issues Gen X is facing, and what their retirement just may look like.
One of the major challenges faced by Gen Xers is the lack of pensions available to this age group. Unlike their predecessors, many Gen Xers do not have access to traditional pension plans offered by employers. This means that they are solely responsible for saving and investing for their retirement via personal savings, IRAs, brokerage accounts, and whatever, if any, workplace retirement plan is offered. Most commonly, this is usually a 401(k) plan. However, if Gen Xers are not taking advantage of even these options, their greatest investing asset – time – continues to slip away making the challenge more difficult.
Furthermore, there is a growing mistrust among Gen Xers towards Social Security. With concerns about its long-term sustainability and potential benefit cuts in the future, many individuals are questioning whether they can rely on this government program as a sole source of income during retirement. According to a Northwestern Mutual study noted in AARP The Magazine, only 45% believe Social Security will be available when they need it.
In light of these challenges, Gen Xers are redefining what retirement looks like for them. Rather than envisioning a traditional full-stop retirement, many are considering part-time work or flexible employment options as part of their retirement plan. This allows them to continue earning income while enjoying more leisure time and maintaining financial stability.
Entrepreneurship may also hold the key for many Gen Xers. The ability to create self-employment and part-time income among this group is not uncommon. Many may have to look at ways to create their own income stream in addition to any savings or retirement plan offerings they may already have.
Reducing expenses by moving or downsizing may be common. Gen Xers are, if anything, adaptable and resilient. Many are open to new ways of living such as expense sharing or relocating to reduce housing costs. The big question is, will they want to do this in retirement?
It is crucial for policymakers and employers to step up and address these issues in order to alleviate the retirement crisis faced by Gen Xers. After all, it’s their legislation and policies that have created much of this angst. It needs to be done now while Gen X still has some time to recover. By offering more robust retirement savings options and promoting financial literacy among this age group, we can help ensure a more secure future for Generation X as they navigate their way through this challenging phase of life.
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