Generation X: All Eyes on Retirement

Research shows Gen X is invested in—and worried about—their golden years.

Generation X is positioned to have a diversified financial future, especially when it comes to retirement, but two things are weighing on their wallets: time and fear. 

A multi-generational financial literacy study from Investopedia found Gen Xers—adults aged 42 to 57—are confident with their fundamental money skills and are focused on maximizing investments for their golden years. With this confidence comes a tinge of worry and some fear of financial industry changes, such as the introduction of cryptocurrency and the future of Social Security.

“Gen X tends to be equal parts cynical and suspicious,” said Gen Xer John Stoj, founder of financial investment advisory Verbatim Financial. He continued, “Gen X is in the home stretch. It's time to get real, take an honest look at retirement savings, current spending, and how long you can still work. We all like to think there's plenty of time to fix financial mistakes. For Gen X, that time is now."

Key Takeaways

  • About 80% of Generation X feels they have an intermediate or advanced understanding of personal finance fundamentals, namely money, insurance, and paying taxes.
  • Gen X is most worried about their financial future, ranking retirement, saving, and digital currency know-how as their top three concerns.
  • A little over half (55%) of Gen X expect to be able to retire, but one in four aren’t sure.
  • Gen X expects Social Security and 401(k)s will be their main source of retirement income, but cryptocurrency investments are also popular, amid reports of cautious optimism.


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With the Basics Covered, It’s Time To Prepare for Retirement

Members of Gen X have a good handle on the foundational components of personal finance. The Investopedia survey found that 75% to 80% of Gen Xers feel they have an intermediate to advanced understanding of personal finance fundamentals, such as saving, debt management, and insurance. 

This generation is most confident about paying taxes (48% say they have advanced knowledge), managing their own consumption and budgets (47%), and borrowing money and managing debt (45%). 

In this digital age, Gen X relies heavily on the web for personal finance advice. Their trusted sources of financial information are internet searches (46%), friends and family (40%), financial information websites (36%), YouTube and online videos (32%), and experts or influencers (26%). 

Tony Johnson, a 57-year-old member of Gen X, says his parents and friends never talked about money. “It was taboo,” he said. “I just started learning about money in the last five to 10 years. I watch YouTube videos practically every day about everything. I’m learning different financial strategies that work for me.”

While this generation is generally confident about handling their day-to-day finances, their primary concern is their financial future. Gen Xers are most worried about retirement (21%), followed by saving money (13%) and digital currency (13%).

Johnson has been actively working for 40 years, with multiple gigs in the middle. “I started with DC Metro at 18 and retired at 47 with a full pension and then decided to go into the federal government,” he said. “Now that both my kids have graduated from high school, I’m tired and burned out.” 

While the average retirement age can fluctuate depending on which state you live in, the average American man retires at 64.6 years old and the average American woman retires at 62.3 years old. Inflation is on the rise, the cost of living is increasing, and wages are stagnating. This makes it harder for most Americans to properly plan their departure from full-time employment.

Retirement Is the Goal, but How?

Gen Xer Jen Carrington says although she is eligible for retirement next year at age 50, she has to strategize covering healthcare expenses and financial responsibilities for children and aging parents.

“Sadly, I’m not ready for retirement; I’ve helped my mother and disabled brother quite a bit financially,” she said. “The only investments I have are my retirement accounts and I think they’re more conservative than they should be. At almost 50 years old, I should be much farther along. However, I feel like it’s next to impossible with young kids and other family obligations.”

Carrington’s feelings align with Investopedia’s survey findings. Gen Xers have mixed sentiments about retirement and many aren’t certain how and when they’ll stop working—or what that would even look like. When asked if they expect to retire in the near future, 55% of respondents said ‘yes.’ However, nearly one in four (24%) said they didn’t know when or if they would retire and another 14% said they weren’t planning on retiring any time soon. When asked when they expect to stop working, the median age reported was 64.

These days, retirement is not always synonymous with being unemployed. Johnson’s multiple careers are a good example of how some people can technically retire from a job but launch into one or more subsequent new salaried careers or side hustles. 

“Moving from earning a paycheck and saving to no paycheck and spending down that savings is difficult for most people,” Stoj said. To that, he encourages people to be more optimistic. “Humans are more flexible than we give ourselves credit for. In retirement, people adjust spending to their income and available savings. There are ways to make this adjustment less painful, mainly by lowering fixed costs.” 

The Great Resignation may offer more new employment options to Gen X, while creative solutions like geographic arbitrage could also lower overall cost of living and add a sense of adventure to the retired phase of life.

Retirements funded by Social Security—for now

When they do retire, Gen X plans to financially rely on a mix of traditional assets, namely Social Security (51%) and 401(k) plans (40%). Pensions, savings, and stock market investments are also high on the list, with cryptocurrency not far behind. The reality is that most people will need a combination of these income sources, most colloquially referred to as the three-legged stool.

In 2020, 69.8 million people received benefits from the programs administered by the Social Security Administration; 5.8 million of them were newly awarded Social Security benefits that year.

Certified Chartered Accountant and investment coach Anjali Pradhan says those who are further away from retirement might not be so lucky. “Based on different calculations, Social Security in the U.S. is expected to be depleted in the next 15 to 20 years. Consequently, it makes sense to prepare for retirement as if it were not going to be paid out. If it is, well, then it's a bonus,” she said. 

“I can’t even think about the possibility. How? It can’t just go away,” 42-year-old Rachel Alice told Investopedia when asked what she thought about the possibility of reaching retirement age and having no funds available from Social Security programs. 

Alice hopes the federal government would be able to fulfill its social contract with those who have already paid into Social Security. After working on contracts with public service entities for nearly a decade, she said they didn’t make enough to save properly. “My husband and I are definitely counting on Social Security,” Alice said. 

Social Security was designed to supplement pensions and savings, but not to completely replace the salaried income that Americans received from their jobs.

Gen X may be considering cryptocurrency a financial asset for the future alongside more traditional investment vehicles. Investopedia found more than half of Gen X is invested (59%), and stocks (38%), cryptocurrency (28%), and mutual funds (26%) are the most popular asset types. The reality is that most people will need a combination of these income sources for retirement, most colloquially referred to as the three-legged stool.

Johnson has taken a mixed portfolio approach. He has a small bitcoin portfolio that he expects to work in conjunction with an IRA, two pensions, 401(k) savings, Social Security, and passive income from his rental property to afford him around $150,000 per year in income during retirement.

Admittedly, the Future Is Crypto

Digital currencies have become increasingly popular over the last few years, especially among young generations, but as Investopedia found, cryptocurrencies are also gaining Gen X interest, with a bit of optimistic caution.

When asked where they expect the greatest return on their investments over the next decade, Gen X resoundingly said cryptocurrency, even though digital currency is the third most worrisome area of financial literacy for their generation behind retirement (21%) and saving (13%).

Alice said her husband dabbles in crypto, but she’s so risk-averse with money management that she doesn’t even ask him how their investments are faring. 

With few fees or regulations, digital currencies can be an appealing asset, but cryptocurrency values can be very volatile. Pradhan says to proceed carefully.

“As Gen X is nearing retirement, there is less and less time left to recover from any mishaps,” Pradhan said. “The younger you are, generally the more you can tolerate risk in your investment portfolio.” She recommends no more than 5% of investable assets in crypto, which she calls an “ultra-risky asset."

Investopedia found some Gen Xers share those sentiments. Despite their enthusiasm, only one in four Gen X investors say that they trust digital currency as an investment vehicle. Furthermore, 47% of Gen Xers overall say cryptocurrency is too risky and 48% say it is too confusing.

What Does Generation X Need? 

In an era when digital currencies are considered the future of wealth investing, Gen X is in the unique position to truly benefit from the gains. But if they’re banking on it for their retirement, they could jeopardize their entire financial future.

Rather than dissuade Gen X from crypto investing completely, planners and advisors can help this generation reach their financial goals by explaining how crypto can successfully fit into long-term and short-term planning. Young Gen Xers who don’t plan to leave their jobs for 15 to 20 years or more, and those who already have a diversified portfolio, still have time to explore, invest, and recover if necessary. 

Hypothetical scenarios that hedge bets on the rise of crypto and the fall of Social Security aren’t likely to move members of Gen X to immediate action. Instead, experts recommend they learn more about how digital currencies can work together with stocks, equity, dividends, and more to provide financial peace of mind during their golden years.

“Retiring can be very challenging mentally, regardless of whether or not someone has ‘enough’ money to retire,” Stoj said. He recommends creating a detailed budget and comparing that to available funds. Overestimating expenses can provide a comfortable cushion. “It might also be time to seek the professional assistance of a financial planner or advisor, if only for a second opinion,” he added.

Methodology

The 2022 Investopedia Financial Literacy Survey quantifies U.S. adults’ understanding of their own financial literacy on a generational level. The survey was fielded via an opt-in, online self-administered questionnaire between Jan. 27 through Feb. 7, 2022, to 4,000 U.S. adults, 1,000 from each of the following generations: Generation Z (18 to 25), millennials (26 to 41), Generation X (42 to 57), and baby boomers (58 to 76). Quotas and data weighting were used to ensure race/ethnicity, gender, regional, and income representation among the total and within each generation. To learn more, see the full methodology

Survey research and data analysis led by Amanda Morelli.

Research and analysis by
Amanda Morelli
Amanda Morelli, Sr. Director of Data Journalism at Dotdash
Amanda is the Senior Director of Data Journalism at Dotdash Meredith (Investopedia's parent company) and she oversees development of data journalism projects for brands across the company.
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Article Sources

Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy.
  1. Center for Retirement Research at Boston College. "What Explains the Widening Gap in Retirement Ages by Education?"

  2. U.S. Bureau of Labor Statistics. "CPI for All Urban Consumers (CPI-U)."

  3. U.S. Bureau of Labor Statistics. "Occupational Employment and Wage Statistics."

  4. Social Security Administration. "Fast Facts & Figures About Social Security, 2021," Page 2.

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