Gen X Retirement Confidence Drops Sharply in Survey by Goldman Sachs Asset Management

Gen Xers are facing a daunting reality when it comes to retirement planning, with just 49% saying they're on track or ahead of schedule, according to a recent survey by Goldman Sachs Asset Management.

This is a significant drop from last year, when 58% of Gen X savers felt confident about their retirement prospects. The new numbers make Gen X the only generation in the survey where fewer than half feel secure about their financial future, with younger generations faring better.

The survey found that other age groups also experienced declines in confidence over the past year, but they started from higher levels. Millennials, for example, saw a 13-point drop to 61%, while Gen Z and baby boomers remained relatively stable at 66% and 60%, respectively.

One key factor contributing to Gen X's anxiety is their work situation. Only 57% of respondents described their primary job as financially stable, the lowest level among all four generations. Many Gen Xers are also taking on additional work outside their main job to make ends meet, with 72% citing a need for extra income.

The trend suggests that workers may be hiding financial insecurity behind a mask of stability, said Greg Wilson, head of retirement and co-head of Americas third-party wealth at Goldman Sachs Asset Management.

Gen Xers are struggling to achieve long-term financial security despite being in the prime of their careers and earning years.

According to Goldman's report, 49% of Gen Xers say they're on track for retirement, which is a far cry from what one would expect given their stage of life. This number is actually the lowest among all generations. The report highlights that this generation sits squarely in a critical period, just before retirement, when confidence in earning power should be at its peak.

The struggles of Gen Xers are not limited to financial security alone. When it comes to everyday expenses, they face significant challenges. In fact, 37% of Gen Xers cited everyday expenses as their top savings obstacle, the highest share among all generations. This is a stark contrast to younger generations, where housing was the primary concern.

The consequences of deferring major financial goals can be severe. As Chris Ceder, senior retirement strategist at Goldman Sachs Asset Management, noted, "Deferring these goals postpones stability and compounds the savings problem." Emergency savings are especially crucial for Gen Xers, as one unexpected expense can trigger debt and derail years of delayed savings.

Gen Xers were the pioneers of relying on 401(k) plans instead of traditional pensions for their retirement savings. As they approach their 60s, it's becoming clear that this shift in responsibility has left many struggling to make ends meet.

The latest data from Goldman Sachs shows a significant downturn in retirement savings among workers. The number of individuals increasing their retirement savings has plummeted by over 16 percentage points, the largest decline recorded in six years. This trend suggests that many employees are taking a more cautious approach to saving for retirement.

Experts attribute this shift to growing concerns about inflation and market volatility. Savers are becoming increasingly defensive, opting to reduce their risk rather than invest aggressively. The implications of this trend are far-reaching, with potential long-term consequences for the financial security of millions.

The numbers paint a grim picture: nearly 14% of workers have reduced their savings in recent years, up from just 8%. This decline is not limited to individual circumstances; it's a broader industry-wide trend. Many companies are struggling to provide stable employment and benefits, leaving employees to fend for themselves.

For generations, the formula for retirement security was simple: work consistently, save diligently, and financial stability would follow. However, this equation has proven to be flawed. Among retirees surveyed, nearly half (44%) stopped working earlier than they had planned. Many cited job loss or family obligations as reasons for their early exit from the workforce.

Financial stress is also bleeding into the workplace, with 53% of Gen Xers admitting that financial concerns distract them from work at least occasionally. The pressure is mounting: over a quarter (27%) have taken time off in the past year due to financial difficulties. In response, some are considering a change in careers, with nearly a third planning to look for new employment within the next 12 months primarily to improve their finances.

According to Jonathan Barber, head of compensation and benefits solutions at Goldman Sachs Ayco, employers now have a clear incentive to provide innovative support tools that go beyond traditional retirement plans, given the bleak outlook for many Gen Xers.

Savers who have created personalized retirement plans are more likely to feel on track, with 72% of them reporting progress compared to just 33% without such a plan. Furthermore, 46% of those with a personalized plan increased their savings over the past year, a significantly higher rate than the 26% seen among savers who do not have a tailored approach.