Gen X’s Retirement Woes: The Rise of Silver Squatters

It’s getting closer to retirement time for Gen X—those roughly born between the mid-1960s and early 1980s. Specifically, the first wave of Gen X was born in January 1965. Since they are currently around 59½, they can withdraw money now without paying a penalty on their 401(k)s and other retirement accounts. However, members of this generation face an imminent retirement crisis that poses a significant challenge.
The reason? A few obstacles stand in the way of Gen X and retirement.
As a result of near-term financial needs and economic pressures, Gen Xers are having difficulty saving for the future. Research from Corebridge Financial found that two-thirds (67 percent) of respondents cited inflation as one of their biggest challenges, and half (51 percent) cited rising healthcare costs. Moreover, a majority (58 percent) of respondents reported higher daily living expenses and a quarter (26 percent) reported higher non-mortgage debt over the past three years.
In addition, after largely shifting from pensions to 401(k)s in the 1980s, this is the first generation to come of age with 401(k)s as their primary retirement vehicle. A 401(k) puts the burden on its participants to figure out how much money to save, how to invest it, and how to withdraw it in retirement. In other words, this is a do-it-yourself method that retirement expert Teresa Ghilarducci has called flimsy.
Complicating matters further? A lot of Gen Xers are caught between responsibilities for their children and aging parents, which makes them known as the “sandwich generation.”
In this trend, silver squatters live with their families and rely on them financially and for housing. For example, when an adult has to move into their parents’ basement. For many, this could have major repercussions.
As an example, having elderly parents live with their adult children can strain their relationships and limit their independence. In addition, adult children may need to contribute to the parents’ living expenses or modify their housing arrangements to accommodate them.
It has also become increasingly difficult for retirees to afford their homes due to rising housing costs. Often, people are forced to sell their properties and move to cheaper alternatives, leading to multi-generational living arrangements. Furthermore, the shortage of affordable senior housing further exacerbates the problem, leaving older adults with limited choices.
But that’s not all. According to the World Economic Forum, financial literacy is a major issue across all generations in the United States. In particular, around half of Gen Xers don’t have retirement plans, according to Prudential.