New Schwab Survey: Gen-X'ers Facing Significant Roadblocks on the Road to Saving for Retirement

A new survey from Charles Schwab & Co., Inc. shows younger investors are aware they should be saving for retirement, but face significant challenges like competing spending priorities and a lack of information to make simple investment choices. Schwab surveyed over 500 Americans between the ages of 25 and 40 — a range that generally overlaps with the so-called Generation X — regarding finances and retirement.

The survey found paying daily living expenses is a higher priority than saving for retirement for this age group, with paying off debt also a significant factor. While more than eight in 10 of those born into Generation X are taking some sort of action to save for retirement, only 40 percent of those who are saving have an IRA. Those who do not have an IRA say they don’t need one, don’t have enough money to fund one, or believe the accounts are too complicated.

“Gen-X’ers are facing a range of financial challenges — from paying off college debt to making mortgage payments to saving for their families,” said Rande Spiegelman, vice president of financial planning for the Schwab Center for Investment Research. “What we are seeing in these results is that competing spending priorities are impacting their ability to save for retirement. But with a few minor adjustments, younger investors can make the necessary changes to ensure they are doing everything they can to save for the future.”

More than four in ten (44 percent) of those who do not currently fund an IRA said they would be more likely to invest in an IRA if there were a simple, one-time investment choice to automatically help them reach their retirement goal. This perspective was shared almost equally between current IRA/401(k) investors (50 percent) and non-investors (39 percent). One in five Americans (20 percent) in this age group report that they either do not have enough information to understand how an IRA works or they simply do not know what an IRA is.

Tax Refunds Offer Great IRA Opportunity

The survey found only 16 percent of people in this age group plan to use their tax refund to invest in an IRA or other retirement account, with the majority opting to either save it for other uses (59 percent) or use it to pay off debt (58 percent). Many are likely unaware that the Pension Protection Act — signed into law last summer — gives taxpayers the ability to directly invest all or a portion of their refund into an IRA. The option appears on forms for the 2006 tax year.

[ The above information is a segment of a February 20th press release issued by The Charles Schwab Corporation ]

Author: Jeremy Vohwinkle

My name is Jeremy Vohwinkle, and I’ve spent a number of years working in the finance industry providing financial advice to regular investors and those participating in employer-sponsored retirement plans.


Sad news, I guess many of these people need to read your site. I agree with LAMoneyGuy, the articles about people saving too much were pretty much off base.


I didn't check into the recent articles reporting that people are saving adaquately, but I think they are off base. I meet with people in almost every demographic on a daily basis and I would say that less than 25% of these people have enough money saved up to help support their retirement needs.

The typical 40-50 year old I meet with has under 50k saved in their retirement accounts, still carry a mortgage and have this expectation that they will be able to retire "early" at 60.

I don't know how they expect to retire on that. Sure they may receive a little social security (but not for a while after they retire at 60) and a bit of a pension (again, full benefits at 65) and under $100,000 in retirement accounts when they are currently making $50-60k a year. I'm sure they could pull it off, but it would not be an ideal retirement by any means.

One trend I have noticed though is that the younger workers (Generation X) who do actually participate in their employer's retirement plan are in a far better situation than their elders as far as savings go. They may not have a terribly large account but the early start and 5-8% savings over their longer time frame will put them in what could be considered an adequate retirement savings.

The real problem with this generation is simply the percentage of people who are actually saving. Those who are saving are doing so well, but unfortunately many more are not saving at all and would rather put it off or concentrate on other things.


So much for the recent stores that suggested that we are saving too much! That was the biggest nonsense that I have seen in a while. Given the age ranges, this is quite shocking. I would not be surprised to see 18-30, but somewhere between 25-40 is when people need to get it together.