Saving and Investing Challenges for the Sandwich Generation (X)

A TD Ameritrade survey finds Gen X is more worried about retirement savings than boomers or millennials. This “sandwich generation” may have more than retirem

Print
https://tickertapecdn.tdameritrade.com/assets/images/pages/md/Financial challenges for the sandwich generation
4 min read

More Gen Xers are edging toward their 50s, and they’re worried about retirement. But they’re also worried about their parents’ retirement and their kids’ college choices and whether they have enough career momentum to finance existence as a sandwich generation.

Gen X, which includes those born between 1965 and 1980, is the first generation to experience the shift from traditional pension plans to 401(k)s and individual retirement accounts (IRAs). They’re also pretty likely to be shouldering college tuition or saving toward tuition for their kids—and they may still be feeling the weight of their own student loans. Those in their 30s and 40s have the highest average student loan debt among borrowers, according to the Federal Reserve. And Gen X is looking ahead to a day (if it’s not here already) when they may have to cushion the financial or housing needs of their baby boomer parents.

Foremost, the retirement planning shortfall is a big deal. The Center for Retirement Research at Boston College estimates that in order to maintain their lifestyle in retirement, households need about 70% of pre-retirement income, on average. Under current laws, Social Security can replace about 36% of retirees' final inflation-adjusted earnings. And to make up the difference, the center estimates savers need to set aside about 15% of their pay over the course of 30 years to retire comfortably (these are approximations; every retiree is different).

Much of the most publicized research on retirement readiness has focused on baby boomers, who are turning 65 at a rate of 10,000 a day; they’re a big demographic for sure. Then we have the millennials—aged 18 to 34—who are of great interest to retailers, moviemakers, and financial planners alike as this social media-obsessed culture launches its efforts to invest in a secure future while swimming in information on how to do it.

Gen X Feels Crunched

Not so for those Xers. A survey by TD Ameritrade this year found that Gen X is more worried about retirement savings than boomers or millennials. Notably, millennials maybe can’t yet worry about retirement planning, because the TD Ameritrade survey also found they are paying an average of $18,250 a year to financially support others in their family. That’s nearly double what boomers and Gen X are paying to support extended family.

But Gen Xers can see their own retirement deadline just a few decades away and, if the survey is any indication, they see themselves as challenged relative to other groups.

Half of Generation X (49%) think they have more financial responsibilities than their parents’ generation, and 39% feel their generation will never have as secure a financial life as their parents’ generation, according to the TD Ameritrade survey.

Financial support survey

FIGURE 1: DEBT LOAD. The TD Ameritrade survey found Gen Xers to be the more debt-laden of the three groups. Source: Head Solutions Group for TD Ameritrade. For illustrative purposes only.

Many Gen Xers likely consider it a privilege to support their boomer parents. But love alone can’t pay the bills. Supporting adult kids plus aging parents costs American family budgets $630 billion a year, and most aren’t letting their financial professional know about this burden, the survey found.

There’s Still Time

For Gen Xers, it could be particularly challenging to catch up. The Center for Retirement Research estimates that those who start saving at 45 and hope to retire at 65 will need to save a whopping 27% of their income each year.

Hopeless? No way. The Center for Retirement Research also estimates that savings targets drop to 10% if the worker aged 45 can put off retirement until they're 70. Plus, there are other ways to grow your savings. Start by sitting down with a financial professional who can help. Who knows, a fellow Gen Xer may just pull up across the desk. They get it.

Let’s Fix This Together

Let our Investment Consultants help you improve your fiscal fitness and get you on your way to retirement.

The information presented is for informational and educational purposes only. Content presented is not an investment recommendation or advice and should not be relied upon in making the decision to buy or sell a security or pursue a particular investment strategy.

Call Us
800-454-9272

Boston College and Head Solutions Group are separate from and not affiliated with TD Ameritrade, which is not responsible for their services or policies.

adChoicesAdChoices

Market volatility, volume, and system availability may delay account access and trade executions.

Past performance of a security or strategy does not guarantee future results or success.

Options are not suitable for all investors as the special risks inherent to options trading may expose investors to potentially rapid and substantial losses. Options trading subject to TD Ameritrade review and approval. Please read Characteristics and Risks of Standardized Options before investing in options.

Supporting documentation for any claims, comparisons, statistics, or other technical data will be supplied upon request.

The information is not intended to be investment advice or construed as a recommendation or endorsement of any particular investment or investment strategy, and is for illustrative purposes only. Be sure to understand all risks involved with each strategy, including commission costs, before attempting to place any trade. Clients must consider all relevant risk factors, including their own personal financial situations, before trading.

This is not an offer or solicitation in any jurisdiction where we are not authorized to do business or where such offer or solicitation would be contrary to the local laws and regulations of that jurisdiction, including, but not limited to persons residing in Australia, Canada, Hong Kong, Japan, Saudi Arabia, Singapore, UK, and the countries of the European Union.

TD Ameritrade, Inc., member FINRA/SIPC. TD Ameritrade is a trademark jointly owned by TD Ameritrade IP Company, Inc. and The Toronto-Dominion Bank. © 2018 TD Ameritrade.

Scroll to Top