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Pensions & Retirement

54% of Gen X face inadequate retirement income, warns Social Market Foundation

The research found 39% are set to fall short of keeping up their current standard of living, while 35% could drop below minimum retirement living standards.

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54% of Gen X face inadequate retirement income, warns Social Market Foundation
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Over half (54%) of Gen X are heading for a retirement income that will not be enough to cover their needs, according to research from the Social Market Foundation.

The Social Market Foundation warned many in this age group could face a “pension shock” in the next decade as they realise their retirement income is set to be much lower than they expect.

The research found 39% are set to fall short of keeping up their current standard of living, while 35% could drop below minimum retirement living standards.

Half of those asked expected a higher retirement income than projections suggest. 

When told about their likely retirement finances, 16% said they would cut spending on essentials like food, energy or transport to save more.

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Nearly half (49%) of Generation X in the North East are expected to fall below minimum retirement living standards compared to 26% in the South East. 

Women, renters, people who have divorced, those with long-term health conditions and ethnic minority groups are more likely to be affected.

The report stated that pension insecurity in this group could become a bigger political issue as Generation X approaches retirement age. 

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Gideon Salutin, chief economist at the Social Market Foundation, said: “Gen X is approaching retirement caught between two pension systems. 

“Many were too late for generous defined benefit schemes and too early to benefit fully from auto-enrolment. 

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“This generation now approaching retirement forms a slow-moving avalanche. Millions are heading for a retirement without the income they expect.”

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Salutin added: “Without action, their retirements will be meagre. Despite many of them working longer than their parents and making more money than their parents, Gen X is in for a substantially worse retirement.

“Action is urgently needed. The Pensions Commission provides a perfect opportunity for change, but time is running out for Gen X. 

“Unless policymakers make difficult decisions, the next wave of retirees looks likely to fall into inadequate retirements.”

Catherine Foot, director at the Standard Life Centre for the Future of Retirement, said: “Gen X are at the sharp end of a building retirement crisis. 

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“While today’s retirees are better off than previous generations, this trend is set to go into reversal within the next decade and into the 2040s. 

“There is a relatively short window now in which to act and two key enablers for Gen X will be pension dashboards that help people get a clear picture of the outcome they’re on track for and policies designed to support longer working lives which leads to greater financial security.”

Foot added: “Younger generations have more time on their side but ultimately the Pensions Commission must consider savings levels across society if we’re to avoid a repeat of the challenge now facing Gen X.”

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