Gen X faces 46% retirement shortfall as half delay pension planning

Roughly half of Generation X did not seriously consider pensions until their 40s, and 46 percent are expected to fall short of the income needed to maintain retirement living standards, a PensionBee survey shows.

"'Gen X have been squeezed from every angle,' said Maike Currie, vice president for personal finance at PensionBee. 'They came of age as final salary pensions were disappearing, while auto-enrolment arrived later in their careers.'"

The survey of 1,000 UK adults found one in ten people aged 45 to 60 cannot picture life after work. Among those who felt they had left planning too late, 40 percent said they could not afford to pay attention to their pension sooner and 18 percent did not know where to start. Some 32 percent with a defined contribution pension have less than £50,000 saved.

The shortfall reflects a structural squeeze. Gen X entered work as final-salary pensions were being phased out of the private sector, while auto-enrolment — introduced in 2012 and requiring employers to contribute at least 3 percent of earnings between £6,240 and £50,270 — arrived later in their careers. The government's Pensions Commission has warned that 15 million people are under-saving, with Gen X facing the most acute challenge of any generation.

Affluent savers are not spared

Separate research by Rathbones found even Gen Xers with £250,000 of investable assets are the least confident generation about retirement. In a survey of 2,000 wealthy people, 29 percent said they do not have a clear understanding of how to turn pensions and investments into regular retirement income, and 28 percent do not believe their retirement income will allow them to live well.

The confidence gap matters because Gen X sits closer to retirement than any other working generation, leaving less time to correct course. Many are also caught between supporting children and caring for ageing parents, a squeeze Currie said has pushed their own retirement down the priority list.

Currie called the findings "a wake-up call for the government and policymakers," arguing Gen X is an overlooked generation that needs the tools, support and flexibility to catch up while there is still time. With the state pension age already rising and the Pensions Commission reviewing adequacy, the survey sharpens the question of how far private saving must stretch for a cohort that entered the workforce between two pension eras.

Closing the gap before retirement

Currie said Gen X risks becoming the first generation to retire worse off than the one before. "You can't plan for a future you can't picture," she said. "When you can't see what you're aiming for, it's much harder to work out what you need to save to get there."

For savers worried about falling short, the first step is to check existing pots. Ask schemes for the current fund value, the transfer value, whether the pension is defined benefit or defined contribution, and whether any guarantees — such as a guaranteed annuity rate — would be lost by moving. Pension calculators, widely available online, can project whether current savings meet retirement living standards; add the forecast to the state pension, currently £241.30 a week, or nearly £12,550 a year, for those who qualify for the full new rate. These figures reflect current rates and thresholds, which readers should verify against the latest official announcements.

Consider paying more in, especially if an employer matches higher contributions. Many employers offer 4 percent, 5 percent or 6 percent matching if workers opt to save a higher share of income. For lost pots, the government's free pension tracing service can help — though savers should be wary of lookalike firms that charge for the same service or push other products.

This article is for informational purposes only and does not constitute investment or professional advice.