Almost Half of Gen X Retirements ‘At Risk’

The report found 10% of Gen X families will have a shortfall of between $50,000 and $100,000, with 9.8% having a shortfall of less than $50,000. Single Gen Xers were not so lucky. More than 11% of single men and 20.6% of single women will have a shortfall of between $101,000 and $200,000. Fully 13% of single women could have a shortfall of more than $200,000.

These shortfalls can be dramatically reduced by participating in a defined contribution plan, the report noted. For individuals with no future years in a 401(k) plan, their retirement deficit was estimated to be $78,000. For those with between one and nine years left in a plan, the deficit fell to $55,000. Those with at least 20 years left in a plan could reduce their deficit to $23,000.

EBRI also considered the impact health care and nursing home costs could have on retirement. For example, 90% of single Gen X men were simulated to have no shortfall in retirement if health care and nursing home costs were ignored. By including those costs in the model, the percentage of single men with no shortfalls fell to 68%. EBRI found similar results among single women and married Gen Xers. “Ignoring the impact of nursing home and home health care costs in retirement significantly exaggerates the likelihood of achieving retirement income adequacy,” the report noted.

The percentage of households with adequate retirement income has increased by between five and eight percentage points since 2003, EBRI found. Still, despite the small improvement, there are a “significant percentage of households that are simulated to be at risk of not being able to cover retirement expenses and uninsured medical costs” throughout their retirements.