Gen X Americans Face This Retirement Net Worth Reality Check

Few investors of any age are saving as much for retirement as they say they'd like to. One particular group, however, may be particularly behind on their savings goals. That's Generation X, born between 1965 and 1980. Here's the deal.

The numbers

The quantitative data comes from asset management outfit Schroders. Its most recent annual survey of investors of all ages indicates that only 16% of Gen X Americans (aged 46 to 61) feel like they're on track for retirement. Specifically, this generation feels they'll need an average of $1.12 million to retire comfortably, but they expect to have only a little less than $712,000 when that time comes. That's a shortfall of just under $405,000, the biggest shortfall among all generational groups surveyed.

These are all self-reported numbers, so take them with a grain of salt.

Still, the numbers certainly aren't difficult to believe, nor is Gen X's collective concern. This is the first generation to widely not participate in a defined retirement benefit plan like a pension. Instead, they've largely relied on contributions of their own money to self-managed retirement savings vehicles like 401(k) plans and IRAs created in the late 1970s. These initially seemed to work well enough. As time has marched on, however, middle-aged workers are increasingly realizing they're just not able to tuck as much away into these accounts as it feels like they should.

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Generation X as a whole may also feel more anxious than younger generations, simply because retirement is on the near horizon for them. They've got a clearer picture of the income they'll need when the time comes, and are more keenly aware that they may not be able to get in a position to generate it.

The kicker: If nothing changes in the meantime, Social Security benefit payment cuts of up to 24% are possible as soon as 2032. To the extent today's 46- to 61-year-olds were counting on this money to help fund their retirement, a big chunk of this future income is suddenly off the table, requiring their retirement nest egg to produce more than they were prepared for it to produce.

Not too late to take action

The good news is, it's not too late for most of Gen X to do something to close the gap between what they've got and what they need. Although it's unlikely all of the typical $404,976 shortfall will be made up, most investors of this age are well positioned by virtue of being in their highest-earning years and, in many cases, no longer responsible for raising children. Homes may be paid off, and even when they're not, credit scores are generally higher, and there's enough cash liquidity to avoid taking on expensive debt.

In other words, there's more money and fiscal flexibility to work with at this age, allowing you to tuck more away than you have been. And if you happen to have access to a workplace 401(k) plan, your employer's match of your own contributions to these accounts is one of the most effective ways of growing a nice cash pile in a fairly short period of time.

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