Generation X doesn’t get a lot of press, falling as it does between two much larger generations—boomers and Millennials. It’s a shame because at least in terms of retirement saving the youngest folks in this group are doing a lot of things well.
Gen X comprises those born between 1964 and the early 1980s. So they are around 30 to 48 years old. Compared to all other age groups, folks in their 30s are easily the most aware of what it takes to build a nest egg, Wells Fargo found in its latest middle class retirement study.
The study looked at retirement preparedness of Americans, lumped by age, in their 20s, 30s, 40s, 50s, and 60s. Those in their 30s who have access to a 401(k) or similar plan are saving a median 6% of income—a full percentage point more than boomers and Millennials. Thirtysomethings also estimate needing a median nest egg of $500,000 to retire, the highest estimate of all groups.
More than a third of thirtysomethings has a written retirement plan. Again, that’s the highest rate of any group. Having a written plan is highly correlated with retirement success. People who have a plan save three times more than those without one, Wells Fargo found. Finally, thirtysomethings registered the highest level of confidence in the stock market: 30% said stocks are the best place to invest for the long haul.
This is great news for a generation that still has ample time to earn and save, and to let their investments grow over the next 35 years. It comes on top of news that young people generally are doing a nice job diversifying their assets too. But the Wells Fargo study also points up some problems.
For one thing, a 6% savings rate isn’t high enough. Even those who enjoy a typical company match of 50 cents for every dollar they contribute—and most get less, if any match at all—end up saving just 9% of income. Planners generally target at least 10% and advise shooting for 15%. Meanwhile, just one in three having a plan and faith in the stock market promises to leave a lot of folks unprepared when their day comes to call it quits for good.
That these are high readings compared to other middle class cohorts is the most disturbing part of the study. Boomers especially should be planning and saving at a much higher rate; they are turning 65 at the pace of 10,000 a day and the youngest are just a decade and a half from retirement.
Less than a third of those in the prime saving years of 40-59 have a plan, Wells Fargo found. The study also found that across the age groups more than half said they stay clear of the stock market out of fear they will lose everything.
Middle-class Americans have many pressing financial concerns. So only 13% believe saving for retirement is a priority. They cite three reasons: 37% plan to work until they die, so why save; a similar percentage says it is impossible to pay the bills and still save for retirement; one in three are resigned to Social Security being their primary source of income.
These dire figures largely reflect the poor savings habits of boomers. Thankfully, Gen X seems to be thinking ahead while there is plenty time to change to the outcome.