Gen X Faces Unique Retirement Challenges Compared to Baby Boomers

A recent study conducted by Jackson in partnership with Advanis highlights significant differences in retirement planning and financial preparedness between Generation X (Gen X) and Baby Boomers. The research, which surveyed 1,000 pre-retirees and 1,000 retirees, reveals that Gen Xers are experiencing higher levels of stress and feel less prepared for retirement compared to their Boomer counterparts.

Gen Xers, who are currently in their peak income years, have higher incomes than Boomers but also face greater household expenses, particularly in housing and supporting adult children. Despite their higher incomes, Gen Xers have fewer investable assets than Boomers, although they do have more of their assets in tax-deferred accounts, tax-free accounts, and Health Savings Accounts, which offer clear retirement benefits.

The study also indicates that Gen Xers have lower financial knowledge and find financial information and retirement advice more confusing and overwhelming. Unlike Boomers, who are more likely to seek advice from financial professionals, Gen Xers tend to avoid thinking about money and finances, partly due to their role in the high-stress “sandwich generation,” caring for both children and parents.

In terms of retirement income sources, Gen Xers are less likely to depend on Social Security and more likely to plan to work longer to generate income. In contrast, Baby Boomers often include annuities as a significant part of their retirement plans. The study suggests that both generations could benefit from more regular advice from financial advisors and the creation of written retirement plans.

Additionally, Gen Xers are bigger financial risk takers, seeking higher investment returns to close their savings gap. However, this approach may expose them to greater market volatility with less time to recover from downturns as their investment time horizon narrows).