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What you need to know
- Over half of Gen Xers who invest in real estate say they support their children and parents financially.
- Gen X investors withdrawing early from their savings can have a detrimental impact on their nest eggs in the future.
- Gen Xers have a median retirement savings of less than $100,000.
If you feel that financially taking care of your family is making it harder to save for your own retirement, you're not alone.
According to a survey conducted recently, over half (56%) Gen X investors support their parents or children financially, which takes a hit on their retirement savings.
About 23% of respondents to Nationwide Mutual’s survey said that they had been forced to reduce or even stop their retirement savings because of this. Some (24%) take on additional credit card debt to meet their family’s obligations. A third cut back on expenses that are not essential.
“A big challenge for the Sandwich Generation is that they often put the needs of their loved ones above their own, leaving them in a potentially precarious financial situation that can have long-term implications,” Craig Hawley said, President of Nationwide Annuity.
Gen X members are even more concerned, as 16% said they have tapped early into their retirement account to handle their financial responsibilities. This could cause them further problems with their retirement savings.
Experts advise against early withdrawals from retirement funds, because they can result in a penalty and the loss of benefits such as compounding interest.
Inflation, Economy Could Further Derail Gen X's Retirement Plans
Along with family responsibilities, the economy has also weighed on Gen X's outlook for retirement. More than one-quarter (26%) said that they'll retire later than expected due to inflation with nearly half (44%) saying they anticipate retiring at age 66 or later.
This may not always be the case.
A recent Transamerica survey of current retirees found the majority had exited the workforce earlier than expected, retiring at a median age of 62—largely due to health or employment-related issues.
Gen Xers, in particular, are behind the curve when it comes saving for retirement. Only 16% of respondents had more than $1 million, and 3 out 10 had less.
A number of external factors may have also contributed to their slighter decline compared with previous generations.
“Gen X investors have shouldered the impact of major economic events, from the dot-com crash in 2000 to the Great Recession in 2008, while also entering the workforce just as pensions were being phased out,” Hawley stated.
Despite struggling to deal with multiple financial priorities, Gen X is still trying to stay on top of their finances—60% say they've adjusted their investment portfolio due to high inflation and 67% said they have enough savings to weather a possible recession if it happened in the next 12 months.
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