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Why Gen X And Late Boomers Aren't On Track For Retirement


According to a recent study, Gen X and late baby boomers are on track to replace only about half of their current income when they reach retirement — which means they’ll need to seriously downgrade their lifestyles. Most financial planners recommend replacing, at the very least, 70% of one’s income.

In contrast, Depression babies, War babies and early boomers were on track to replace, respectively, 86%, 99% and 82% of their pre-retirement income.

Why are more recent generations finding it harder to save enough for retirement? [...]

The Shift Away From Pensions To 401(k)s

Teresa Ghilarducci, a labor economist at the New School and a nationally recognized expert in retirement security, says there’s only one explanation for why Gen X and late baby boomers will be less ready for retirement than their parents were.

“The reason for the lack of preparedness is because of the collapse of one layer of the retirement cake, which is the employer-provided layer,” she said by phone.

In the last three decades, the number of unions fell, older workers faced higher unemployment and competition began to heat up with countries like China, making it harder for older workers to negotiate for stronger retirement benefits.