Gen X 401(k) retirement savings lag, but there's optimism
How does Gen X's average 401(k) savings compare to Baby Boomers?
Gen X's average 401(k) savings have surpassed those of Baby Boomers for the first time. Gen X workers who have been saving for 15 years have an average balance of $543,400, compared to Baby Boomers' average of $543,200. This is a positive trend, as Gen X is approaching retirement and needs to save aggressively.
Why are Gen X's 401(k) balances now surpassing those of Boomers?
Gen X's 401(k) balances are surpassing those of Boomers due to a combination of factors. As Boomers retire, they stop contributing to their nest eggs and start drawing down their 401(k) savings. Meanwhile, Gen X is approaching retirement and is more aggressively saving, often exceeding the recommended 15% of their paycheck. Additionally, Gen Xers are taking advantage of catch-up contributions, which allow older workers to put more money into their retirement plans.
What percentage of Gen X is making catch-up contributions?
According to Fidelity's data, 14.5% of Gen Xers are making catch-up contributions to their retirement plans. This allows them to contribute an additional $7,500 on top of the $23,000 limit for everyone else, for a total of $30,500 per year.