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Feeling the Squeeze: Schwab Survey Finds Gen Xers Burdened by Debt as They Face Financial Pressure on All Sides
[September 10, 2019]

Feeling the Squeeze: Schwab Survey Finds Gen Xers Burdened by Debt as They Face Financial Pressure on All Sides


According to research from Schwab Retirement Plan Services, many 401(k) participants in Generation X are struggling with credit card and other kinds of debt as they try to save for a comfortable retirement. While a small majority of this group, aged 39 to 54, say they are more focused on saving for retirement (58%), a full 42% say they are more focused on paying off debt right now.

The nationwide survey of 1,000 401(k) plan participants, including 368 Gen Xers, 315 Millennials and 317 Baby Boomers, shows that 70% of Gen Xers feel on top of their 401(k) investments but they still face obstacles and experience financial stress while trying to meet their long-term goals.

When asked about what is preventing them from saving more for retirement, Gen Xers named:

  • Unexpected expenses like home repairs (38%),
  • Credit card debt (31%), and
  • Needing money for monthly bills (29%) as their top barriers.
  • Moreover, 22% are paying for children's education/tuition, and 11% are still paying off their own student loans.

Saving for retirement is Gen Xers' top source of money-related stress (40%), followed by credit card debt (27%) and keeping up with monthly expenses (23%).

"Gen Xers are at a time in their lives when they have financial pressures on all sides. While many are caring for children and financing those children's education, many are also providing care and financial assistance to older relatives. Given all of these competing priorities, it's not too surprising that they're relying on credit to cover expenses," said Catherine Golladay, president, Schwab Retirement Plan Services. "Most in this group are in critical earning years and at an age when it makes sense to really focus on retirement preparations. With additional guidance and a solid financial plan, Gen Xers could feel more confident and better manage the many responsibilities they face."

Gen X and their 401(k)s: Help Wanted

The majority of Gen Xers are relying on their 401(k) plans to fund their golden years. Most (58%) say their 401(k) is their largest or only source of retirement savings, compared to 68% of Millennials and 48% of Boomers.

On average, Gen Xers think they will need $1.81 million for a comfortable retirement, more than either of the other groups (Millennials say $1.78 million and Boomers, $1.51 million). Yet they may not be saving enough to meet that goal.

While Gen Xers saved slightly more in their 401(k)s last year than the other two surveyed generations - $9,499 on average, with Boomers right behind at $9,433 and Millennials at $7,257 - this only equates to about half of the 2018 IRS contribution limit of $18,500 for those under age 50.

In addition, many Gen Xers may not be thinking about their 401(k)s as a long-term savings vehicle. Almost a third (31%) have taken a loan from their 401(k), and more than half of those borrowers (61%) have done so more than once - higher than either of the other generations in both cases.

The survey shows that this group could benefit from help and education to make more of their 401(k) plans:

  • 41% of Gen Xers say they don't know which investments to choose for their 401(k) to have enough for retirement.
  • Just one in three (28%) say they are "very confident" in making 401(k) investment decisions on their own.



Gen Xers say they want help with fundamentals like:

  • Calculating how much money they need to save for retirement (41%),
  • Determining at what age they can afford to retire (38%), and
  • Deciding where to invest their 401(k) (37%).

"A sizeable majority of Gen Xers, 69%, expressed a desire for personalized help with their 401(k). Fortunately, most plans today offer some kind of managed account or advice service," added Golladay. "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."


Beyond 401(k) advice, many workplace plans offer broader financial wellness resources to help employees address a range of financial challenges, including debt management, college planning and more. Schwab has also developed the Savings Fundamentals to help people manage and prioritize their competing financial obligations using a step-by-step approach.

About the Survey

This online survey of U.S. 401(k) participants was conducted by Logica (News - Alert) Research for Schwab Retirement Plan Services, Inc. Logica Research is neither affiliated with, nor employed by, Schwab Retirement Plan Services, Inc. The survey is based on 1,000 interviews and has a 3% margin of error at the 95% confidence level. Survey respondents worked for companies with at least 25 employees, were current contributors to their 401(k) plans and were 25-70 years old. Survey respondents were not asked to indicate whether they had 401(k) accounts with Schwab Retirement Plan Services, Inc. All data is self-reported by study participants and is not verified or validated. Respondents participated in the study between March 19 and March 29, 2019. Additional survey information can be found here.

About Charles Schwab

At Charles Schwab we believe in the power of investing to help individuals create a better tomorrow. We have a history of challenging the status quo in our industry, innovating in ways that benefit investors and the advisors and employers who serve them, and championing our clients' goals with passion and integrity.

More information is available at www.aboutschwab.com. Follow us on Twitter, Facebook, YouTube and LinkedIn.

Financial tools and resources are available at www.schwabmoneywise.com.

Disclosures

Through its operating subsidiaries, The Charles Schwab Corporation (NYSE: SCHW) provides a full range of securities brokerage, banking, money management and financial advisory services to individual investors and independent investment advisors. Its broker-dealer subsidiary, Charles Schwab & Co., Inc. (member SIPC, www.sipc.org), and affiliates offer a complete range of investment services and products including an extensive selection of mutual funds; financial planning and investment advice; retirement plan and equity compensation plan services; compliance and trade monitoring solutions; referrals to independent fee-based investment advisors; and custodial, operational and trading support for independent, fee-based investment advisors through Schwab Advisor Services. Its banking subsidiary, Charles Schwab Bank (member FDIC and an Equal Housing Lender), provides banking and lending services and products. More information is available at www.schwab.com and www.aboutschwab.com.

The Charles Schwab Corporation provides services to retirement and other benefit plans and participants through its separate but affiliated companies and subsidiaries: Charles Schwab Bank; Charles Schwab Trust Bank; Charles Schwab & Co., Inc.; and Schwab Retirement Plan Services, Inc. Trust, custody, and deposit products and services are available through Charles Schwab Bank and Charles Schwab Trust Bank, Members of FDIC. Schwab Retirement Plan Services, Inc. is not a fiduciary to retirement plans or participants and only provides recordkeeping and related services.

Schwab MoneyWise® is provided by Charles Schwab & Co., Inc.

©2019 Schwab Retirement Plan Services, Inc. All rights reserved. (0919-9331)


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