1 in 3 of Gen X think they’ll never retire. Here’s why they could be wrong
A new study says 1 in 3 members of Gen X think they’ll never retire. Read why this generation is anxious about retiring, plus how they could do so comfortably.
If you were born between the mid-1960s and late-1970s, you’re likely a member of “Generation X”, also known as “Gen X”.
Interestingly, a recent study from Aviva revealed that 1 in 3 members of Gen X believe they’ll never fully retire. They are the most likely generation to believe this – 27% of millennials say the same, along with 13% of over-55s.
While there is some validity to Gen X’s financial worries, read on to take a closer look at the data and discover why this generation might be able to retire comfortably after all.
Baby boomers and millennials are said to be in a better retirement position than Gen X
There are two key reasons why Gen X might be feeling more insecure about their retirement prospects than the generations above and below them.
Property
Baby boomers (those born between the mid-1940s and early-1960s) are said to hold up to 78% of Britain’s property wealth, the Guardian reports. In 2019, the Financial Times even claimed that 1 in 5 of Britain’s boomers were millionaires.
Having perhaps had greater opportunities to gain wealth earlier in their lives, and benefiting from an entirely more affordable housing market than today’s young people, boomers are likely to be the most comfortable generation living today.
For instance, the average UK house price during the 1970s was £9,277, according to Financial Reporter, whereas the average salary was £2,265. So, buying a home may have cost around 4.1 times a person’s income.
In the 2000s, house prices jumped by nearly £80,000 in five years, SunLife reports. By 2009, the average home cost £162,116 and salaries were around £23,900. So, homes cost around six times the buyer’s earnings.
Looking at today’s market, as of June 2024, the Office for National Statistics (ONS) says that the average house price in the UK was £288,000. Statista reports that as of 2023, the average UK salary was £34,963, making house prices more than eight times the buyer’s earnings.
Pensions
The baby boomer generation are the most likely to have benefited from defined benefit (DB) pensions, also known as “final salary” pensions, that usually provide an income for life upon retirement.
While some Gen X and millennials have these schemes in place, they are slowly being dismantled, leaving the younger generations to rely largely on their defined contribution (DC) pensions and other savings when they retire.
What’s more, with the introduction of automatic enrolment in 2012, many millennial workers have benefited from making pension contributions from age 22. The effectiveness of compound returns mean that the younger generations may benefit from a sizeable retirement pot when they retire.
So, once again, Gen X seem to be “left out” of key wealth opportunities that could bring them greater stability in retirement.
Gen X might have higher outgoings than the generations either side of them
In addition to fewer wealth opportunities, Gen X might also be shouldered with the highest number of costs.
Just Group reports that half of Gen X parents have adult children living with them. Plus, another Just Group study from 2024 revealed that 1 in 10 members of Gen X are spending more than the full new State Pension – an average of £237.50 a week – on caring for elderly relatives.
And, while millennials (born between the early-1980s and mid-1990s) are subject to much higher property and living costs than their parents were at their age, they will likely benefit from the “Great Wealth Transfer”. Abrdn estimates that between 2022 and 2050, around £5 trillion will be passed from boomers to their children (who are likely to be millennials).
Despite some disadvantages, this doesn’t mean that retirement prospects are non-existent for those in Gen X.
Let’s take a look at three ways Gen X individuals can pave the way for a comfortable retirement.
3 inspiring ways Gen X can create better retirement opportunities
- Start saving and investing as early as possible
While starting to save for retirement in your early 20s is ideal, if you’re a member of Gen X and haven’t thought about retirement yet, you are not alone.
Now is the time to begin. Some tips to kickstart your retirement journey include:
- Identify your “when and how” – when you’d like to retire, and how much you’d like to receive as income each year
- Increase your monthly pension contributions
- Remember to claim higher- or additional-rate tax relief on these contributions through self-assessment, if you’re eligible
- Have a conversation with your employer about matching your higher contributions as part of your package of workplace benefits
- Provide little-but-often boosts to your non-pension investments and savings accounts
- Pay voluntary National Insurance contributions (NICs) for missed years if possible
- Make appropriate lifestyle changes to afford more consistent retirement savings.
Creating clear retirement goals and working consistently towards them could put you in a better position to retire with ease.
- Embrace the concept of a phased retirement leading to a hard stop
With more retirees embracing a “phased retirement” rather than a sudden “hard stop”, this could be the answer to Gen X’s retirement anxieties.
For instance, if you plan to stop full-time work at age 60, you could still:
- Offer consultation on your area of expertise part-time
- Reduce your hours in your existing role for a decade or so, rather than retiring completely straight away.
Continuing to earn a part-time income could mean you’re more comfortable when you do finally stop working, and may give you the opportunity to balance rest and relaxation with work.
- Work with a Kellands financial planner
Working with a financial planner could prove invaluable for Gen X individuals who are worried about affording a happy, comfortable retirement.
We’ll use cashflow modelling software to look at your income, investments, savings, and property assets, measuring these against inflation and discovering your current retirement position. Once we know the data as it stands, we can advise on your next steps, ensuring you’re optimising your wealth in the run-up to retirement.
Get in touch
If you’re worried you will “never retire”, it may help to seek independent financial advice.
Email us at hale@kelland.co.uk, or call 0161 929 8838.
Please note
This article is for general information only and does not constitute advice. The information is aimed at retail clients only.
A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.
The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.