Jessica McCabe, a 51-year-old U.S. Air Force veteran, has earned a rare achievement for Gen Xers: retirement. In many ways, she’s enjoying the retiree’s life, with frequent RV road trips and a lot of bonding time with her grandkids. But the path to get there wasn’t easy.

McCabe retired from the Air Force in her early 40s, but then quickly realized she didn’t have the savings she would need to stop working. She entered the civilian workforce and, six years later, retired again, but even those extra savings still weren’t enough for her to feel comfortable. Now, like many older Americans, she has a part-time job during retirement to supplement her savings.

The oldest Gen Xers (people ages 44-59) are approaching retirement age, but without enough savings, they may be running out of time to put aside the funds to spend their golden years relaxing. Only 40 percent of Gen X workers believe they’ll be able to save enough to retire comfortably, according to a September 2023 Bankrate survey.

Further complicating matters, economic factors like high interest rates and inflation have made it even harder for many Americans, regardless of age, to save. With limited or no savings and not enough time to catch up, Gen Xers are facing a future where they may work into their 60s and 70s, or beyond.

With the Fed having raised interest rates so quickly and the potential for a recession on the horizon, it’s not the best time to build wealth for older Americans who have long delayed saving for retirement. — James Royal | Bankrate Principal Investment Writer

Bankrate’s insights on Gen Xers and retirement

Retirement
  • Gen Xers are the next generation to retire, but they feel behind on savings. 69% of Gen X workers feel behind on where they should be for retirement savings, the most of any generation, as of a September 2023 survey. 60% of baby boomer workers, 49% of millennial workers and 42% of Gen Z workers feel the same. 
  • Overall, Gen Xers tend to not feel financially secure. Only 19% of Gen Xers feel completely financially secure, as of a July 2023 survey, compared to 25% of Gen Zers (ages 18-27), 28% of millennials (ages 28-43) and 32% of baby boomers (ages 61-79). 
  • Gen Xers overwhelmingly feel behind on savings. 72% of Gen Xers feel behind on their emergency savings, more than any other generation, as of an October 2023 survey. Of those people, 42% say it will take at least four years to get back on track, or that they’ll never be on track.
  • Gen Xers’ savings plunged in 2023. 39% of Gen Xers had less emergency savings in October 2023 than they did in the beginning of 2023. 36% of baby boomers, 27% of millennials and 21% of Gen Zers say the same.

69% of Gen X workers feel behind on where they should be for retirement savings

The average age of retirement is 61, according to 2022 Gallup research. The oldest Gen Xers are 59, so, in theory, retirement isn’t far away. But compared to the baby boomers before them, fewer Gen Xers are retiring now. Between 2016 and 2022, only 11 percent of people ages 55 to 59 were retired, compared to 19 percent of people that age between 2002 and 2007.

Retirement will continue to be out of reach for Gen Xers so long as their savings remain low. In several different Bankrate surveys, Gen Xers report more pessimism about their future savings than any other generation.

Gen Xers aren’t alone. The majority (56 percent) of American workers say they’re behind where they should be on their retirement savings, according to a September 2023 Bankrate survey. But while 42 percent of Gen Z workers and 49 percent of millennial workers feel behind on their retirement savings, a whopping 69 percent of Gen X workers feel the same:

Source: Bankrate

Note: Survey respondents are U.S. adults who are working full-time, part-time or temporarily unemployed; “Don’t know” responses are hidden from the chart.

Bankrate Principal Investment Writer James Royal says that without retirement savings, many older Americans, like Gen Xers, will have to work longer to meet their goals or delay taking Social Security until age 70, when people receive their maximum monthly payout.

Outside of thinking about the future, Gen Xers are still in a tight financial position — they’re unlikely to have emergency savings that could help them when they need to pay major expenses today.

In October 2023, 62 percent of Gen Xers who hadn’t increased their emergency savings since the start of 2023 (or who had no emergency savings) cited rising prices or inflation as reasons why, according to Bankrate. They also cited having too many expenses and too much debt:

Source: Bankrate

*Respondents are U.S. Gen Xers who have not increased their emergency savings since the start of the year, or who have no emergency savings

There is some good news for Gen Xers without savings, explains Royal, though it’s far more difficult to save for retirement when you’re older. “For those who have five to 10 years before they need to retire, they may be able to take advantage of 401(k) provisions allowing them to save more and enjoy those tax-advantaged benefits,” he says.

More than 1 in 3 Gen X workers plan to keep working part time after they retire

Retiring in 2024 doesn’t necessarily mean stopping work. Around half (55 percent) of workers plan to work at least part time after they retire, according to the July 2023 Transamerica Retirement Survey of Workers. (The survey is conducted by the Transamerica Center for Retirement Studies, a nonprofit funded by Transamerica Life Insurance.). Only 28 percent do not plan to work after retirement at all.

Gen X workers most commonly plan to work part time after they retire, at 38 percent. They’re also the generation most likely to be unsure if they’ll work after they retire:

Percentage of workers who plan to work after they retire, by generation

Generation Plan to work full time Plan to work part time Do not plan to work Unsure
Source: Transamerica Center
Gen Zers 17% 36% 30% 16%
Millennials 24% 32% 28% 16%
Gen Xers 16% 38% 27% 20%
Baby boomers 11% 44% 30% 15%

Working after retirement isn’t a bad thing for everyone. Around three-fourths (80 percent) of workers who plan to keep working past 65 (or who are already retired) want to keep working at least part time for healthy aging-related reasons, according to the Transamerica Center,  including:

  • Be active: 50 percent
  • Keep my brain alert: 42 percent
  • Enjoy what I do: 39 percent

Mike Rauth, a certified financial planner who works with people about five years or fewer from retirement, says his clients commonly don’t realize they can spend their retirement years doing something fulfilling.

“It’s more of a transition. I speak to people about retirement as ‘work optional,’” Rauth says. “You might still have a paycheck, but it might be less than what you were earning when you were grinding it out in the corporate world. But it’s providing additional meaning.”

However, working late in life isn’t always a choice. A similar percentage (78 percent) of workers who plan to keep working past 65 (or who have already retired) cite financial reasons:

  • Want the income: 52 percent
  • Concern that Social Security will be less than expected: 33 percent
  • Can’t afford to retire because I haven’t saved enough: 31 percent

Though McCabe travels with her husband and enjoys her downtime, she, too, finds it difficult to completely stop working. She began a side hustle designing and selling T-shirts on Etsy to both supplement her retirement income and help her adult children financially. McCabe has worked since she was 15 years old, and has found she needs to work, at least part-time, to keep busy.

“I truly enjoy it,” she says. “I just like being creative and I like to have a purpose, because I can’t just sit and do nothing.”

Half of Gen Xers think future generations will be worse off when they retire

Though many Gen Xers may be in a difficult position coming into retirement, there’s no guarantee that future generations will have it easier.

McCabe’s financial situation is vastly different from her three children’s, all of whom are in their 20s, but don’t have any savings. While two have college degrees and previously made healthy salaries, both were laid off this year. McCabe has pulled money from her own savings to help one of her children with her mortgage and has created trusts for her grandkids. But she fears for a future where she’s gone and can’t help her kids financially. She’s unsure if millennials like her children will be able to retire.

“We’re going to see more 65-year-olds either working or homeless. When these millennials age out, it’s going to be insane,” McCabe says. “I think almost all Gen Xers and millennials are literally living paycheck to paycheck. I’m worried for their future.”

Two in five (41 percent) workers think future generations of retirees will be worse off than current retirees, according to the Transamerica Center. Older workers are far more likely to feel pessimistic:

Percentage who think future generations of retirees will be better off or worse off than those currently in retirement

Generation Better off About the same Worse off Don’t know
Source: Transamerica Center
Gen Z 22% 38% 28% 12%
Millennials 26% 33% 33% 9%
Gen X 12% 29% 51% 9%
Baby boomers 10% 23% 55% 11%

“While young Americans are optimistic about their retirement savings, this optimism must turn into action or they’ll wind up like Gen X today — where the leading edge is just a few years away from claiming Social Security — mostly financially unprepared for retirement,” Royal says.

3 ways to prepare last minute for retirement

If you’re in your late 40s or 50s with little savings, you may feel like you can never retire. However, you can still save to make your life a little easier as you age. Keep these three tips in mind to save for retirement later in life:

1. Take advantage of retirement account benefits for people 50 and older

Royal reminds people five to 10 years from retirement they can take advantage of 401(k) and IRA benefits that are specifically for people their age. The typical 401(k) contribution limit for workers is $23,000 per year, as of 2024, but workers 50 and older can contribute up to $30,500 to give them a leg up on retirement. Similarly, if you have a traditional IRA or Roth IRA, up until Tax Day in 2023 (April 18), you can contribute $6,500 per year, or $7,500 if you’re 50 or older. The 2024 limits will be $7,000 per year, or $8,000 if you’re 50 and older.

2. Consider being flexible with how much you withdraw

The 4 percent rule recommends withdrawing 4 percent from your retirement accounts the first year you retire, then adjusting the amount for inflation each subsequent year. (For example, if you have $1 million in retirement, you can withdraw $40,000 your first year.)

However, instead of setting hard limits like the 4 percent rule, Rauth recommends setting guard rails to allow yourself to remain flexible with your changing circumstances and the changing economy. For example, that could mean withdrawing between 3 and 5 percent each year. “That may mean taking a little bit more money out of your portfolio early in retirement, which is scary for some people,” he says. “But once that security turns on, you can decrease those distributions.”

3.  Invest, even if it’s only a small amount

It may seem odd to begin saving for retirement when you’re young, but starting a retirement account early is important. Compound interest, when interest on savings earns interest, snowballs small contributions into major savings by the time someone hits retirement age. If you’re growing your savings over the course of 10 years, not 30, you’ll still earn more money in interest, compared to if you weren’t saving at all.

If someone with no retirement savings began saving $10 a week in a Roth IRA at 50 years old, by the time they’re 65, their savings would balloon to $13,067, assuming a regular rate of returns and marginal tax rate. While that’s not enough to retire on, it’s nearly twice the amount if someone had saved the funds in a normal savings account without interest.

This is McCabe’s biggest advice to millennials and Gen Zers: “I know it seems crazy and it’s hard right now, but even if you can put aside $5 a week in some sort of [account] that’s going to make your money grow, I absolutely recommend that,” she says.

FAQs

  • The average age of retirement in the United States is 61.
  • The average 401(k) plan balance is $112,572 as of 2022.
  • American workers can begin taking Social Security benefits at age 62, but you’ll receive the most money if you wait until 70. You won’t receive any more money by waiting until 71 or later.

Methodology

Bankrate commissioned YouGov Plc to conduct the survey on emergency savings. All figures, unless otherwise stated, are from YouGov Plc. Total sample size was 2496 adults. Fieldwork was undertaken between 20th – 22nd September 2023. The survey was carried out online. The figures have been weighted and are representative of all US adults (aged 18+). Emails were sent to panelists selected at random from the base sample. The email invited them to take part in a survey and provided a generic survey link. The survey meets rigorous quality standards employed by both YouGov and Bankrate.

Bankrate commissioned YouGov Plc to conduct the survey on retirement savings. All figures, unless otherwise stated, are from YouGov Plc. Total sample size was 2,527 US adults, of whom 1,301 are working full-time, part-time or temporarily unemployed. Fieldwork was undertaken between 23rd – 25th August 2023. The survey was carried out online. The figures have been weighted and are representative of all US adults (aged 18+). The survey was carried out online and meets rigorous quality standards. It employed a non-probability-based sample using both quotas upfront during collection and then a weighting scheme on the back end designed and proven to provide nationally representative results.

Bankrate commissioned YouGov Plc to conduct the survey on financial freedom. All figures, unless otherwise stated, are from YouGov Plc. Total sample size was 2,521 U.S. adults. Fieldwork was undertaken June 5-7, 2023. The survey was carried out online and meets rigorous quality standards. It employed a non-probability-based sample using both quotas upfront during collection and then a weighting scheme on the back end designed and proven to provide nationally representative results.