Gen X Has Retirement Problem and Doesn’t Even Know It

Gen X is about to come face to face with a retirement crisis, with many in the so-called “sandwich generation” not even aware they aren’t saving for retirement.

In a new Principal retirement research report, 59 percent of workers who hadn’t signed on for a 401(k) plan believed they had signed up through their employer but actually had no money in any such account. This was particularly pronounced among Gen X, as 64 percent of those workers assumed they had a 401(k) but didn’t.

After baby boomers, Gen X is the closest generation to retirement, making their lack of savings for their golden years even more alarming.

Kevin Thompson, a finance expert and founder and CEO of 9i Capital Group, said many Americans confuse 401(k)s with IRAs, which are a different type of retirement account with tax benefits.

“There is some education that needs to be provided in regard to the differences between a Simple IRA, a Sep IRA and a 401(k) because they are all under the veil of a qualified plan,” Thompson told Newsweek.

But for Gen X, the struggle of finding out they saved less than anticipated can be especially brutal. As the “sandwich generation,” they are often stretched thin, taking care of their aging parents as well as their children.

“This is a serious issue because Gen X is still in their prime earning years and having to make significant deviations in regard to work just to take care of their elderly parents in some cases,” Thompson said. “This not only impacts them monetarily….This has a larger impact for retirement.”

When Gen X initially entered the job market, pensions were going away and 401(k)s were often their replacement.

But Michael Ryan, a finance expert and founder of michaelryanmoney.com, said this was the financial equivalent of “being handed a Rubik’s Cube and told, ‘Good luck, kid.'”

Gen X has also been known to job hop more than their elders, Ryan said.

“Now they’re stuck in a financial tug-of-war. On one side, there’s mom and dad needing help,” Ryan told Newsweek. “On the other, adult kids who think moving out means relocating to the basement. Retirement savings? That’s not very high on the list.”

To fix the problem, employers will likely need to make some changes, experts said.

“Automatic 401(k) enrollment should be standard,” Ryan said. “And Gen X? Time to channel that slacker spirit into something useful like actually checking your retirement account more than once a decade.”

Alex Beene, a financial literacy instructor for the University of Tennessee at Martin, stressed that you should never make assumptions about your financial future.

“One problem Gen X can run into is over a long working lifetime having retirement products available from one employer and then assuming every job they have thereafter will have the same options,” Beene told Newsweek.

“That’s rarely the case, and the unfortunate result is soon-to-be retirees discovering the job they have been in for a few years didn’t provide a 401(k) as they assumed it would.”