Not that GenXers needed the confirmation, but a new report from Schwab Retirement Plan Services provides more data indicating that though they are entering their peak earning years, persons born between about 1968 and 1982 are feeling the squeeze between providing for their kids—many of whom are entering college—and caring for aging parents, most of whom are among the 75 million Baby Boomers expected to retire by 2030. Credit card and other debt is the chief obstacle GenXers face in their efforts to stockpile money for retirement, according to the survey.
Smaller numerically than the generations on either side of them, GenXers face some unique pressures as they prepare for retirement while trying to help both their children and their parents. Including mortgages, credit cards, and other obligations, they’re carrying an average debt load of around $125,000, according to credit reporting agency Experian: greater than the national average of just under $90,000. Meanwhile, their median household savings stand at around $64,000. Given that raising one child to adulthood is expected to cost around $234,000 and that an elderly parent can require as much as $140,000 in assistance, it’s not hard to figure out why 42 percent of GenXers feel stressed about their finances.
The main questions GenXers want help with, according to the Schwab survey, cluster around making smarter preparation for retirement. They saved slightly more in their 401Ks and other retirement plans than the generations on either side, but 41% of those surveyed say they don’t know enough about how to choose the right investments to ensure a comfortable retirement. Roughly the same percentage say they need help figuring out how much they should save for retirement, and a strong majority (69%) say they would like personalized help with saving and investing for retirement.
But there are several things GenXers can start doing now to slant the odds of a successful retirement more in their favor. For one thing, they can look forward to a time when debt won’t soak up as much of their income. At this point in their life cycles, everything has piled up: car payments, mortgages, credit cards, and, for some, student debt (11% of GenXers are still paying off their own college debt, even as they help their kids finance higher education). But over the next few years, they can probably expect the overall debt load to begin to subside, as student loans, mortgage debt, and other indebtedness begin to decrease as a percentage of income.
Next, once the debt load begins to let up, GenXers can begin to funnel more of their earnings into retirement savings: 401Ks, IRAs, 403Bs, and others. Even though many are reaching their mid-50s, there’s still time for compounding and growth to work in their favor. This is also the time in life when the IRS catch-up provision kicks in, allowing retirement plan participants to sock away even more each year (an extra $6,500 for 401K and 403B plans in 2022, and an extra $1,000 for IRAs).
If you’re trying to figure out how to fit retirement savings into the picture with all your other obligations, or if you’ve got questions about the effectiveness of your retirement plan investments or overall financial strategy, JFS Wealth Advisors has answers. View our 2022 Guide to Retirement Webinar, where we explore the retirement and investing topics you need to know about with asset management and contribution strategy experts from JP Morgan.