Many 401(k) participants in the U.S. who belong to Generation X are focused on saving for a comfortable retirement, but can’t save nearly as much as they’d like to because of credit card and other debt, along with other competing financial obligations, according to Schwab Retirement Plan Services.
Although a small majority (58%) of this age group that includes Americans 39 to 54 years old say they’re more focused on saving for retirement now than paying off debt, the other 42% say they’re prioritizing their debt, the firm said, citing the findings of a new online survey conducted for it by Logica Research from March 19 to 29.
Seventy percent of Gen Xers feel on top of their 401(k) investments but still face obstacles and experience financial stress while trying to meet their long-term goals, according to the findings.
When asked what was preventing them from saving more for retirement, 31% cited credit card debt as their top barrier, while 38% named unexpected expenses including home repairs, 29% pointed to needing money for monthly bills, 22% cited paying for their kids’ education and 11% blamed their own student loans still being paid off.
Saving for retirement was the top source of money-related stress for 40% of Gen Xers surveyed, followed by credit card debt at 27% and keeping up with monthly expenses at 23%.
“Gen Xers are at a time in their lives when they have financial pressures on all sides,” according to Catherine Golladay, president of Schwab Retirement Plan Services. “While many are caring for children and financing those children’s education, many are also providing care and financial assistance to older relatives,” she said in an announcement on the survey’s findings, adding: “Given all of these competing priorities, it’s not too surprising that they’re relying on credit to cover expenses.”
But most Gen Xers are in their “critical earning years and at an age when it makes sense to really focus on retirement preparations,” she said, noting that, “with additional guidance and a solid financial plan, Gen Xers could feel more confident and better manage the many responsibilities they face.”
Most Gen Xers are relying on their 401(k) plans to “fund their golden years,” Schwab said, noting 58% of those respondents said their 401(k) was their largest or only source of retirement savings. That compared to 68% of millennials surveyed and 48% of Baby Boomers surveyed.
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.