Many Gen Xers Are Too Bogged Down With Debt to Save Enough for Retirement

On average, Gen Xers think they will need $1.81 million for a comfortable retirement, more than either of the other groups, and they may not be saving enough to achieve their goal, Schwab said. In comparison, millennials said they'd need $1.78 million and boomers said $1.51 million.

While Gen Xers saved slightly more in their 401(k) s last year than the other two surveyed generations – $9,499 on average vs. $9,433 for boomers and $7,257 for millennials — that only equaled about 50% of the 2018 IRS contribution limit of $18,500 for those under age 50, Schwab noted.

Many Gen Xers may also not be thinking about their 401(k) s as a long-term savings vehicle. That's because 31% said they had taken a loan from their 401(k) and 61% said they had done so more than once, Schwab said, noting that was higher than either of the other generations in both cases.

One main takeaway of the survey was that Americans are not making the most of their investment opportunities. "While everyone's path to retirement is different, investing a sufficient percentage of your salary early on is key to growing a nest egg," Schwab pointed out on its website. More than half of those surveyed (51%) were contributing only 10% or less of their salaries to their 401(k) plans, with the average annual contribution totaling $8,788, the firm noted.

"This is a good start but may not be enough, especially if you start investing for retirement later in life," it said, explaining: "To put this in perspective, Schwab has determined that if you start in your 20s, you will likely be able to retire comfortably by investing 10 to 15% of your salary each year. But if you don't start until age 45 or older, you might need to invest as much as 35% of your salary annually," which "would be a significant challenge for most workers," the firm said.

The survey clearly showed that Gen Xers could benefit from help and education to make more of their 401(k) plans, the firm said, pointing to two specific data points: Forty-one percent of Gen Xers said they didn't know which investments to choose for their 401(k) to have enough for retirement, while only 28% said they were "very confident" in making 401(k) investment decisions on their own. Gen Xers said they wanted help with fundamentals, including calculating how much money they need to save for retirement (41%), determining at what age they could afford to retire (38%) and deciding where to invest their 401(k) (37%), according to Schwab.

Sixty-nine percent of Gen Xers expressed a desire for personalized help with their 401(k) plans, according to Golladay. "Fortunately, most plans today offer some kind of managed account or advice service," she said, adding: "We encourage people at any stage of their career to take full advantage of the resources available to them. Professional advice can boost your investing confidence as you formulate a tailored plan you can stick to, all with the goal of ultimately helping you achieve better outcomes."

The nationwide survey of 1,000 online 401(k) plan participants included 368 Gen Xers, 315 millennials and 317 baby boomers, Schwab said. The survey had a 3% margin of error at the 95% confidence level, it said, adding survey respondents worked for companies with at least 25 employees, were current contributors to their 401(k) plans and were 25 to 70 years old. Survey respondents weren't asked to indicate whether they had 401(k) accounts with Schwab Retirement Plan Services, it said.

The overall retirement savings picture for Gen X Americans — and those in other age groups — could be much bleaker when taking into account those who aren't contributors to 401(k) plans. After all, many — including the growing number of gig economy workers, as well as those working at traditional freelance and part-time jobs — don't have 401(k) plans to contribute to. Schwab declined to speculate and didn't have additional data to share, ThinkAdvisor was told.