Millions of ‘Generation X’ workers born in the early 1960s to the late 1970s face years of financial hardship in later life, a new study has warned.
At least one in three are set to retire with meagre pension pots, and during the pandemic 1.6million people in this age category have been furloughed.
Around 1.3million have been lumped with reduced hours as a result of Covid-19 and just over half a million have been made redundant and seen their incomes wiped out, according to research by the International Longevity Centre UK for the Phoenix Group
Dire: Millions of ‘Generation X’ workers born in the early 1960s to the late 1970s face years of financial hardship in later life, new findings have warned
At least one in three are at risk of spending their later years with minimal retirement income, with just over 2.3million people yet to retire expecting to rely predominantly on the state pension, which is currently about £9,100 a year.
‘From a retirement income perspective, many Gen Xers are, frankly, screwed,’ says ILC director David Sinclair.
‘Too many are sleepwalking into a retirement where they won’t have an adequate income to meet their aspirations. And their situation has been made worse by Covid-19.’
‘They haven’t been able to save enough. Many Gen Xers aren’t going to benefit from final salary pensions. And there is a sense of hopelessness about how they might turn things around.
‘There is some good news however. Some people really do want to save more. They just don’t see how they can do it.
‘Government and industry must find a way to lever this willingness and ensure public policy better addresses the barriers too many are facing to saving.’
Around 2.6million Generation X workers have seen their retirement savings disrupted by Covid-19, while nearly 4.3million are set to reach retirement with minimal retirement incomes, the research showed.
Lost jobs: Over 500,000 people in Generation X have lost their jobs as a result of Covid-19
Nearly 60 per cent of people in the Generation X age category who are yet to retire want to save more for retirement but are struggling to do so, with 7.9million unable to afford to save more or prioritising paying off debts, while almost 3.8million feel overwhelmed with other pressures and priorities.
Half of people born in the Generation X era who are yet to retire are worried they will not be able to live the lifestyle they want when they get older, while 6.2million, or 48 per cent, think they will be worse off than their parents in retirement.
Perhaps worse still, 1.4million people in this age group are at risk of sleepwalking into financial difficultly in later life as they fail to get a grip of their pension pots now.
The research finds that most Gen Xers, also referred to as the ‘forgotten generation’, want to save more, but face significant barriers to growing their pots.
The pandemic has seen sectors like hospitality, travel and retail hit hard by mass job cuts or reduced hours and furloughing, leaving many uncertain of what their financial futures will look like in the years to come.
The ILC surveyed around 6,000 people aged 40-55 in mid-November.
Lord Hutton, a former Secretary of State for Work and Pensions, says: ‘This report from the ILC has highlighted the fact that many people still find it very hard to save sufficient money to cover their retirement needs.
Concern: Many in Generation X are worried they will not be able to afford the retirement lifestyle they want
‘We will need a very significant focus on Generation X as we consolidate the enormous progress we gave made since 2005 in establishing an effective and inclusive pension savings policy. ‘
Meanwhile, Jenny Holt, managing director of savings and investments at Phoenix Group, says: ‘This is a clear call to action to help improve the future of Gen Xers.
‘One in five of the UK population are Gen Xers and millions will face problems because of inadequate retirement savings if actions aren’t taken to help them understand their current position and the options available to them.
‘This is the generation that entered the job market too late to benefit from final salary pensions, yet too early to benefit from schemes such as auto-enrolment.
‘The combination means that without appropriate intervention many Gen Xers are expected to face very significant challenges in retirement, and even pensioner poverty.
‘Policymakers, industry and business need to work together to help this generation, including ensuring they have access to the right support – whether that’s guidance or advice – when they need it. With the Covid-19 impact putting additional strain on finances this need is even more urgent.’
Many workers in addition to those in Generation X will be affected by changes to the measure of RPI inflation announced by Chancellor Rishi Sunak this week.
The changes affecting people with ‘final salary’, or defined benefit schemes coming in from 2030 could see millions of people end up worse off than before.
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