Generation X Massively Underfunded for Upcoming Retirement

Research by PensionsBee has found that Generation Xs, those born after the ‘babyboomers’ (post war year babies) i.e., born between the mid 1960s and early1980s, are massively underfunded and unprepared for retirement with many now in their 50s and approaching age 60.

Research found that the average Generation X male has just £54,512 saved in pension funds and the average Generation X female has an average of just £30,644 in pension funds.  These funds might just buy a pension annuity today of say £2,000 to £3,000 pa.  Known as ‘latchkey kids’, due to the trend of both ‘babyboomer’ parents working, meaning you arrived home from school, let yourself in and put the dinner on for when parents got home.

‘Babyboomers’ had the advantage of a culture of apprenticeships or easier tracks into nursing, local government or other careers with excellent defined benefit pension schemes as well as buying houses at extremely low prices (when compared to Generation X buyers in the late 1980s). 

Comment

Generation Xs faced:

• Mass unemployment in the early 1980s.
• Basic rate income taxes of 30% and then down to 25% (compared to today’s 20% basic rate).
• Spiralling house prices in the mid and late 1980s.
• Then to be hit with 15%+ mortgage interest rates in 1989.
• Negative equity as house prices crashed in the early 1990s.
• Defined benefit pension schemes closing and replaced with defined contribution/investment linked pensions that have suffered 9 global stock market crashes since 1987.
• Property deposit requirements also spiralled (after 2007 Credit Crunch) and are now also faced by Millennials (1990s to 2000s and Generation Zs (2000 onwards) but they have lower income tax rates.
• Finally, with the collapse of the social care industry, Generation Xs are now also spending ever more time (giving up career/earnings) to care for their own parents (now in their 70s/80s)

Is it any wonder that so many Generation Xs have such low provision for retirement.  It is bever too late to save and invest in pensions though given tax relief and tax-free growth incentives.