The Gen X Savings Crisis: How Plan Sponsors Can Help
According to a December 2023 survey from Schroder’s, nearly half of non-retired Gen Xers — those born between 1965 and 1980 — have not done any retirement planning whatsoever. Moreover, they report a savings gap of more than $450,000 between what they say they’ll need and what they project they’ll have. Amplifying these concerns, a separate study by the National Institute on Retirement Security earlier last year found the typical Gen X household has only $40,000 in total retirement savings. So how can employers help their MTV Generation workers save?
Flexible work arrangements. Recognize Gen Xers may look to pursue nontraditional retirement paths — such as phased retirement or working in encore careers — and provide support for these choices. Flexible work arrangements, such as part-time or remote work options, can allow employees to stay in the workforce longer and postpone their full retirement date. Tailor custom roles based on their new work schedule and availability.
Emergency savings opportunities. Effective this year, SECURE 2.0 paves the way for employers who provide a defined contribution plan to offer an emergency savings account for non-highly compensated employees. The provision could go a long way toward helping circumvent hardship withdrawals, allowing workers to be automatically opted in at up to 3% of their salary as Roth after-tax contributions — capped at $2,500.
Mid-career financial checkups. Offer personalized financial consultations focused on where Gen X employees are in their financial journey, emphasizing mid-career corrections and available savings acceleration strategies such as catch-up contribution to employee-sponsored retirement accounts.
Support for “Sandwich Generation” challenges. Provide resources and support for those in the “sandwich generation,” including elder care assistance, childcare benefits and flexible spending accounts being used for dependent care needs.
Plan sponsors have a critical role in bridging the retirement savings gap for Gen X employees. Initiatives such as SECURE 2.0 are steps in the right direction, yet they must occur within the framework of a holistic and individualized approach to employee financial well-being. By incorporating measures such as those listed above into your company culture and benefits structure, you can demonstrate a serious commitment to the long-term success and stability of your workforce. It’s important to engage with employees early and often. Plan sponsors who proactively address these needs can expect not only to aid their employees in securing a more stable financial future, but also to potentially benefit from a more productive and loyal workforce.
For personalized assistance tailored to your Gen X employees' financial needs and aspirations, don't hesitate to reach out to our Trusted Advisors. Let's work together to bridge the retirement savings gap and secure a brighter future for your workforce. Contact us today for expert guidance and support.
Sources:
Ringland, C. (2023, July 1). National Institute on Retirement Security. https://www.nirsonline.org/reports/genx/
Schroders (n.d.). Schroeders 2023 Retirement Survey. https://mybrand.schroders.com/m/641f99601ba5236e/original/Schroders_2023_US_Retirement_Survey_Gen_X_Rpt_FINAL.pdf
McDonald, T. (2024, January 18). The SECURE Act 2.0: What’s In It For You? https://www.natlawreview.com/article/secure-act-20-what-s-it-you