Gen X: Running Behind


Working, Gen X Americans, between the ages of 43 and 58, are facing big hurdles on the path to successful retirement. For Gen X, the first generation largely reliant on company sponsored retirement plans and not pensions, gaps in saving money and participating in planning are likely to be challenging to overcome.

Missed Opportunities

Many members of the Baby Boom generation that preceded Gen X had the advantage of pensions (and the pre-gig economy). The Millennial generation that followed Gen X into the workplace are reaping the benefits of improvements to 401k and other defined contribution retirement plans. For example, both  auto enrollment and auto escalation have been shown to improve retirement savings outcomes for workers in company sponsored plans. Meanwhile, as members of Gen X start to ponder their 60s, 

retirement savings are falling short:

Non-retired Americans between the ages of 43 and 58 (Gen X) estimate that, on average, it will take $1,112,183 in savings to retire comfortably, yet they expect to have just $661,013 saved, the Schroders 2023 U.S. Retirement Survey found. The resulting savings gap of $451,170 topped the expected shortfall facing Millennials and Baby Boomers. 

Deb Boyden, Schroders’ head of U.S. defined contribution, says Gen X is the first generation relying mainly on 401(k) and other defined contribution plans in retirement….“They missed the automation features such as auto-enrollment, auto-escalation, default QDIAs and target-date funds that really allow for individuals to have that automation and increase their savings over time…,” Boyden says. “So it’s no surprise that 61% of non-retired Gen Xers are not confident in their ability to achieve their dream retirement.” ….45% of non-retired Gen Xers also said they have not done any retirement planning….

As they begin to think into retirement, Gen Xers, often known to be skeptical, seem to be “confronting a crisis of confidence”across the board, reluctant to invest cash, and also fearful about Social Security: 

11% of non-retired Gen Xers said they will wait until age 70 to file for Social Security, thereby receiving their maximum benefit payments, while 47% reporting being concerned Social Security may run out of money….“Either individuals are going to take [Social Security] as soon as they can, which means they would forgo the full benefits of waiting to take Social Security until age 70, or they’re going to work longer and put off taking Social Security until later.” 

Because every generation has a different relationship to information, technology and communications, retirement industry experts encourage plan sponsors to help close retirement savings gaps by tailoring messages based on what gets the attention of each age range. Additionally, increasing access to financial advice and planning is an important way that plan sponsors can help employees progress with their retirement plans–and decrease the financial stress that is likely interfering with the work day. 

Mind The Gaps: Plan Sponsor Protection

With lots of important issues to attend to in the year ahead, it’s a good idea for plan sponsors to pause for a moment and put protections in place for themselves. Though required by The U.S. Department of Labor, ERISA Fidelity bonds do not protect plan sponsors in the event of allegations of a fiduciary breach. Whether or not a mistake has been made, defense under the high standards of ERISA law becomes costly fast. With both heightened compliance scrutiny and stricter fiduciary standards anticipated, it’s time to minimize risks.

Colonial offers a simple and affordable way to protect yourself and your business: just opt in below to upgrade your ERISA bond to include Fiduciary Liability insurance. You’ll even receive Cyber Liability insurance at no extra cost. You can choose a 1, 2, or 3-year package.

If you already have an ERISA bond package with Colonial, you can even lock in your rates (and protection) by upgrading to the 2 or 3 year package.

Protect yourself, your business and your plan for the go forward:

ERISA Bond+Fiduciary+Cyber Liability HERE

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