Will Generation X Ever Retire?

Nicolas Cesare

Retirement is finish line for many working class Americans. Those who belong to Generation X are reaching the halfway point with relief, and looking forward to a hard-won retirement. However, the shifting job market and new economic realities have led many to wonder if they will ever get to retire?

In order to understand the shifting landscape of retirement, let’s take a look at the history of retirement and what new factors are changing the way that we look at our twilight years. Let’s answer the question: will Generation X ever retire?

Table of Contents

How the Retirement Age Came to Be

65 has stood as the iconic age of retirement for some time now. In the United States this number was established by an act of Congress, the Social Security Act of 1935. In fact, your actual retirement age will vary depending on your date of birth, though not by much. Although the law does not force a person to retire at any particular age, it does incentivize retirement by promising optimal welfare distribution to those who retire at the right time.

Thus, 65 has long stood as the indicator for retirement. The hope has been that, after over 40 years in the workforce, employees would be ready to settle down and enjoy their pensions and Social Security funds for their remaining years.

Why Retirement is Falling Apart

At least, this was the hope. For several decades the Social Security Act held true to its original intentions, providing a safety net for those who couldn’t count on company support after they left the workforce. However, in 1935 the life expectancy of the average US adult was 61 years old. An adult born in 1961, the genesis of Generation X, can now expect to live well into their 80s.

This brings us to one of the big challenges facing retirement in today’s world: people are living much longer than they used to. Whereas the average retiree 50 or 60 years ago would have lived maybe 10 or 15 years on their Social Security and pension funding, it’s not uncommon for retirees today to rely on these funds for a 20 or even 30 years of retirement. Increased longevity places a strain on both welfare that lawmakers could never have anticipated during the 1930s.

Many of you may be tempted to point out that Social Security was only ever meant as a backup. By this line of thinking, Congress always intended for most American workers to retire on their own savings. However, these days, Gen Xers are facing economic challenges unique to their age group. While many Millennials are still renting and Baby Boomers have paid off their mortgages, Gen Xers are finding that rising home prices outstrip their earnings.

So Will Generation X Get to Retire?

This is a complicated question and there is no easy answer. As with most financial questions, the answer is largely dependent upon an individual’s circumstances as well as the unpredictable economic world that she inhabits. In spite of this natural shroud of obscurity, there is one thing that we can say definitely about the future of retirement: Gen Xers and those in younger generations will never experience retirement as it was lived in the 20th century.

Depends? On What?

The bad news is that a secure retirement is no longer a guarantee. The good news is that it is entirely in your hands whether or not you want to enjoy financial stability through your retirement. The quality of your future depends entirely on you, so let’s talk about what people in Generation X need to be doing while thinking about retirement.

Start Saving Now

The best time to plant a tree was ten years ago. The second best time is now. The same can be said of saving for retirement. Ideally, you already have an investing account that you’re using to save for retirement. Hopefully you’re already putting a percentage of each paycheck into this account and — if you’re lucky — your employer is also pitching a little in.

However, this is an ideal retirement savings scenario. No plan survives contact with the enemy, and harsh economic realities are the enemy of any retirement savings plan. This means that many Gen Xers have not started saving for retirement as early as they should have. That makes the best time to start right now. It’s possible to start saving for retirement after 40 with the right mindset and strategies.

Budget Responsibility

Saving for retirement is hard when you’ve got other financial responsibilities to keep up on. Things like the electricity bill, the mortgage, and groceries are all eating away at your budget and their demands are much more immediate than retirement, which may be 30 or 40 years away.

Responsible budgeting is the key here. If you play your cards right, you may even manage to retire earlier than expected. By developing good budgeting habits now, you’ll be able to carry those lessons on to retirement. A healthy fiscal mindset is especially important when you start to face the costs associated with retirement.

Talk to Your Spouse

Gen Xers do have one advantage over their predecessors. Unlike Baby Boomers or retirees from the Silent Generation, Gen X women are more likely to have entered the workforce. A retirement savings bolstered by two careers can help to assuage some of the fears the Gen Xers are facing with retirement. Remember to plan carefully in case you and your spouse are retiring years apart.

There is no doubt that Generation X will the pioneers in a new retirement landscape. Social Security and pensions are being stretched thin, making responsible budgeting and savvy retirement savings more important than ever. With smart money management and early investing in retirement, Gen Xers will hopefully be able to enjoy their time beyond the workforce.

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