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For the first time in years, members of Gen X reported slightly worse financial wellness than Gen Z, potentially due to concerns around inflation and economic uncertainty, in a new Guardian's Mind, Body, and Wallet 2024 report. This may be because Gen X, some of whom will reach age 60 next year, is the generation approaching retirement, and during a time of high inflation and economic uncertainty, they’re concerned about saving enough as they approach that milestone, according to Guardian.
A mere 27% of Gen X reported good financial health, lower than the already low average of 32%. So it makes sense then that Gen Xers are more worried about retirement-related concerns, including having a guaranteed source of income in retirement (51%, vs. 46% of Gen Z) and having retirement savings last as long as they need (52% vs. 41% of Gen Z). The latter concern is particularly pronounced in today’s high inflation environment, as someone’s savings to-date might not last as long as originally anticipated.
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Many Gen X workers are also likely be in the Sandwich Generation, which means they may be simultaneously caring for both younger and older members in their family. Given caregivers are another group of workers who have some of the lowest self-reported financial health (21% vs. 32%), this may be another reason why Gen X report lower financial well-being, according to the Guardian report. The costs of caregiving can range from reduced work hours to taking time off work to refurbishing homes with accessible furniture or equipment, all of which impact financial well-being.
However, under a new law meant to boost retirement savings for people in their early 60s, which Gen X will be soon approaching, older workers can put more money than ever in their 401(k)s starting next year. Workers between 60 and 63 can make a super catch-up contribution of up to $11,250, while workers 50 to 59, or 64 and older, can make an additional catch-up contribution of up to $7,500, the same as last year, according to the new IRS catch-up contribution limits, announced earlier this month.
The contribution limit for individual retirement accounts and Roth IRAs will remain the same in 2025 at $7,000, with a $1,000 catch-up for those 50 and older.
Related: It’s official! IRS announces 401(k) contribution limits for 2025
“This rule provides a particular opportunity for Gen X members who did not or could not save for retirement in their early years,” said Eric Silver, Head of Retirement and Deferred Compensation at Guardian. “One potential risk, however, is that some members of Gen X might choose to delay saving while they are younger—relying on the catch-up rule to make up the difference. In light of the rule, employers should emphasize the benefits of saving early—even smaller amounts—and the advantages of long-term investment growth.”
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Lynn Cavanaugh
Lynn Varacalli Cavanaugh is Senior Editor, Retirement at BenefitsPRO. Prior, she was editor-in-chief of the What's New in Benefits & Compensation newsletter. She has worked for major firms in the employee benefits space, Vanguard and Willis Towers Watson, as well as top media companies, including Condé Nast and American Media.
