The Lost Retirement Generation? Gen X Missed Out on Auto Features in the Early Years of 401(k)s

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When asked how much money is needed to retire comfortably, Gen Xers say on average it will take $1,069,746 in savings, yet they expect to have just $602,944 saved by the time they leave the workforce. The resulting savings gap of $466,802 is larger than the shortfall millennials ($322,128) and baby boomers ($353,069) expect to face.

Millennials (ages 28-43) believe they will need $1,171,067 to retire comfortably and expect to have $848,939 saved, while non-retired baby boomers (ages 60-79), believe it takes $1,004,742 to retire comfortably, and expect to have $651,673 on hand.

“If planning and saving don’t become higher priorities, Gen X could become the lost-retirement generation,” said Deb Boyden, Head of US Defined Contribution, Schroders. “As the first generation to come of age with 401(k) plans rather than traditional pensions as their primary retirement savings, many Gen Xers missed out on the automation features that were not available in the early years of 401(k)s, such as auto enroll, auto escalate and QDIAs [Qualified Deferred Investment Alternatives] for a good part of their savings. However, even the oldest Gen Xers have several years left to better prepare financially before reaching their full retirement age.”

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Auto features “play a critical role in simplifying the retirement savings process,” said Boyden. “These features remove barriers and reduce decision-making fatigue, which often leads to procrastination. For instance, employees might not opt into a retirement plan if left to initiate the process themselves. Automatic enrollment ensures participation from the start of their careers, fostering earlier savings and greater potential for long-term growth through the power of compounding.

“Employers can help Gen X prepare for retirement by providing tailored education along with innovative tools and investment solutions that improve portfolio outcomes. As Gen X participants near retirement, this is an opportune time for employers to enhance their retirement plans with investment options specifically designed to safeguard retirees’ savings while also offering much-needed growth potential during retirement.”

More than half of all Gen Xers (54%) are concerned or very concerned about outliving their assets in retirement compared to 40% of baby boomers and 50% of millennials.

Notably, members of Gen X are the least likely to be working with a financial advisor. Just 27% of Gen Xers surveyed are currently working with a financial advisor compared to 37% of baby boomers and 31% of millennials. Further, 48% of Gen Xers say they have not done any retirement planning, which exceeds the 41% of millennials and baby boomers that have not done any planning.

The absence of a plan or guidance from a financial advisor could explain why 60% of non-retired Gen Xers are not confident in their ability to achieve their dream retirement compared to 48% of non-retired millennials and 52% of non-retired baby boomers.

“It’s never too late to seek the services of a financial advisor or explore investment solutions tailored to help retirees grow and safeguard their savings,” added Boyden. “With more than half of Generation X worried about outliving their assets, a plan for generating income in retirement that includes an informed decision about when to apply for Social Security benefits could provide much-needed peace of mind,” added Boyden.

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Despite their time horizon and savings shortfall, Gen Xers are holding, on average, 35% of their assets earmarked for retirement in cash. Why? 64% of Gen Xers say it’s out of fear of losing too much money if the stock market goes down.

Some good news for Gen X is that next year, older workers can put more money than ever in their 401(k)s. Workers between 60 and 63 can make a super catch-up contribution of up to $11,250, while workers 50 to 59, or 64 and older, can make an additional catch-up contribution of up to $7,500, the same as last year, according to the new IRS catch-up contribution limits, announced earlier this month.

“This rule provides a particular opportunity for Gen X members who did not or could not save for retirement in their early years,” said Eric Silver, Head of Retirement and Deferred Compensation at Guardian. “One potential risk, however, is that some members of Gen X might choose to delay saving while they are younger—relying on the catch-up rule to make up the difference. In light of the rule, employers should emphasize the benefits of saving early—even smaller amounts—and the advantages of long-term investment growth.”

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