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Home » Early Retirement, Retire, Retirement Planning

The Current “State of Retirement” for Gen X & Y

Last updated by on November 25, 2013

I hate to break it to you. But somebody has to.

You’re not going to hear it from your parents, your employer, or your spouse. And the news media would rather focus on more trivial matters.

It’s something you’ve probably known all along. But you’ve been pushing it out of mind. One of these days you were going to get around to dealing with it.


A comfortable retirement for the masses is dead.

retirement realityToo much debt. Too little savings. And no fallback safety net.

This wasn’t always the case. If you look back over the last few generations, you’d think a cushy retirement were a given birth right. Frequent inheritances from a generation of savers that braved the Great Depression. Cushy pensions for everyone. Well-funded Social Security. And can’t-lose investment returns. What could go wrong?

Today’s reality is:

1. Pensions are all but dead. And what is left is under an all out attack by both the private and public sector.

2. Inheritance? A large majority of us will never see one. Boomers have been financially negligent. Luckily, Social Security and pensions (which can’t be passed on to children) will save the day for them.

3. Social Security: may not disappear entirely – but it is under-funded and the threat of cuts are real. You’d be wise to look at Social Security as a scaled-back supplement vs. a primary means of sustenance.

4. And just in case you had any hope that the almighty market would allow you to start saving and investing heavily in your 50’s to make a late push, witness the last 15 years of pathetic roller-coaster investment returns in the infallible S&P 500 index:

stock market returns

There has been less than a 2% annual return from the 1999 peak to the most recent peak. That doesn’t even keep up with inflation and is after the market has more than doubled in the last four years. If you invest on emotion, like most do, the odds are you are in negative return territory because you couldn’t brave the dips long enough to enjoy the rises. Time it wrong, with a late start, and you’re out of luck.

5. Oh, and due to the marvels of modern medicine, our bodies (and occasionally are minds) are staying alive longer than ever before.

If those five things aren’t enough evidence that the “state of retirement” has changed for gen X and Y, factor in the crushing student, housing, consumer, and health care related debts that previous generations never realized.

What does all of this mean?

Retirement is all on you – and outside of blind, uncontrollable luck, there really is no other way to go about it. There will be no hero to swoop in and save the day, in this story. You’re going to have to save a shitload of your own money if you ever hope to retire. The longer you wait to get started, the less likely it will happen. And no – a 5% (national average), 10%, or even 20% personal savings rate is not going to get you there.

Now, before you go jump off a 10-story building (cliff would probably be cheaper, you could save on parking) – this does not mean that you have to concede to a fate that includes working until death – unless you want to.

This story can have a happy ending. And if you’re smart about it, early financial independence and even total retirement are still possible.


We make more money than ever before. At the same time we waste more money than every before.

That leaves a lot of room for hacking for those making a decent income who are willing to cut back on frivolous stuff and services.

Not all stories have happy endings. But that doesn’t mean that yours can’t be one of them.

The question you have to ask yourself is: what fate will I make for my financial future and retirement?

You can still have a comfortable financial future and retirement. But you’re going to have to work for it, save more than you thought possible, and nobody is going to help. Will you choose it?

Consider it a real life “Choose Your Own Adventure”.

About the Author
I am G.E. Miller, & this is my story. My goal is financial independence ASAP. If you share that goal, join me & 10,000+ others by getting FREE email updates. You can also explore every post I have written, in order.

  • I think it’s very important to start contributing to your retirement accounts early on. It’s money you invest and won’t miss, if you start early in your career. I’m 23 and currently maxing out my 401K. I, also, plan to max out my ROTH IRA for 2013, and on.

  • SD Lurker says:

    Taking responsibility for your own retirement savings and avoiding unnecessary expenditures is only ONE side of the equation.

    The OTHER side is getting serious about understanding economics and using your VOTE wisely to stop the federal spending madness which will continue to DISSIPATE your wealth.

    If the American working class doesn’t take the government back from the political class who seem to have an insatiable appetite for your money, then NO level of saving will ever get you to an comfortable retirement.

    As long as progressive ideologue politicians are in control of your destiny, those who depend on the government rather than their own resources will be encouraged to multiply, and your savings will just be seen as the “nation’s resources” – wealth to “spread around” as Obama has euphamistically declared.

    If the Obamacare (now being referred to as the Affordable Care Act) disaster doesn’t get you to focus on the reality of “progressivism” and unaffordable spending then I see little hope.

    We are now headed for a $20 Trillion debt and at this rate the next stop will be $30 Trillion in about 5 years. For the math-challenged $30 Trillion is about $100,000 for every man, woman & child in the USA or about $280,000 per household!

    The ONLY way governments ever bail out of this kind of debt is to encourage high economic growth OR inflating the currency to pay back debts with cheap dollars. Since Obama and the progressives refuse to do the things necessary to encourage economic growth, we can pretty confident that inflation is on the horizon. That inflation combined with ever higher taxes will substantially erode the purchasing value of whatever nest egg Americans manage to save.

    Savings will be all for naught if electoral wisdom is ignored.

    • Andrew says:

      Alright, this is laughable and can’t be given a pass. Virtually everything you said is head in the sand conservative talking points.

      President Obama is not some super progressive. He specifically went with a conservative derived market based solution for healthcare. I’m not sure if you’re trying to be cute but saying the ACA was originally Obamacare is just ignorant. Also, the FED is the one devaluing the currency not the President and I’ve been hearing the hyperinflation doomsday prediction for several years now.

      Last thing, I find it funny when people talk like the President can just do whatever by himself. Shows an amazing lack of understanding.

  • Ron Ablang says:

    I’m only in my early forties and I’ve forseen the future, and it is bleak. It is important to pay yourself first by routing money away from your checking acct before you see it. I have some going to 457b, and some to my HSA before it goes to checking.

  • Steve says:

    It is near impossible to get any of my friends (early 20s) to give their retirement a simple thought. And even though saving does happen for them, it is saving for the next big ticket item – a car, wedding, vacation, etc.

    I have been maxing out my Roth IRA since senior year of college (3 years ago). I have not been contributing as much as I would like to my 401k because 1.) my previous company did not match at all and 2.) my tax bracket was still pretty low and 3.) I would rather use the funds to build a taxable dividend growth stock portfolio which I think would get me better returns than the 401k mutual funds over the long run.

    I am now at a new company which matches! So now, I will contribute up to the company match, continue to max out my Roth IRA, and continue building my taxable portfolio.

  • George P burdell says:

    Your chart in #4 is actually a good thing for investors who have many years till retirement. If you rebalanced at the lows or putting in more money; you’d be way above a 2% return.

  • Matt says:

    The future really does not look good. Being only 29 I have a long way to go, but the though of retiring to another country has crossed my mind. I started a Roth IRA on my own at 18 and even with a good job and currently zero debt I am not sure how this is going to pan out in the end. A few of my friends are participating in a retirement plan of some sort but many are not, I have tried help them see the possible future. I hate to say it but preparing early still may mean working part time in retirement but it is still better than working full time… Delaying retirement is also going to hold down the next generation worker due to lack of openings. My co-worker is 70 and still full time. He has worked up to 6 weeks of vacation plus sick time and out of the way desk job. He claims he never wanted to stop working and this was the retirement plan all along.

  • Steve says:

    While I’d never discourage others to save enough so they’ll be self-sufficient during retirement, I’m not sure I agree with this doomsday scenario. Yes, everything you wrote is factually accurate. But, like you said, the majority of Gen X and Y don’t save enough. That means when they’re in their late fifties or so and realize they made bad financial decisions decades ago, they’ll lobby Congress to make sure that there’s some type of financial safety net.

    Is this what’s best for the country? No. Is this fair to those who make smart financial decisions starting in their twenties? No. But in our democracy, those who are willing to make poor decisions that make life easier today but much more difficult tomorrow generally win elections.

    • G.E. Miller says:

      Well… lobbying Congress doesn’t seem to work too well for anyone who is not a lobbyist with lots of money. I wouldn’t hold my breath for that lobbying for more of a safety net for poor senior citizens will ever get a groundswell of Congressional support in today’s political climate.

      • Cletus says:

        I worry about this too. Will early savers and those who practiced frugality earlier in life get punished by being subject to more taxes later in life to prop up those who made “other” decisions with regard to their money early in life?

        It would be a real kick in the teeth to make the “right” choices by delaying gratification today, only to have the government take away that delayed gratification tomorrow.

        • Andrew says:

          Well quit worrying and do what is right for yourself.

          Being afraid someone else might get something you didn’t is a waste of time.

        • Alyssa says:

          This is my exact fear as well, Cletus. While all my friends are going out every night, I politely decline for a night in with the hopes I’ll be able to provide for myself in the future. However, when the 99% of Gen X and Y’s make it to retirement age without a penny to their names, God knows the government is going to give in and provide for them anyways. Then I’ve spent my days like a miser only to not have it any better in the future than my spendy counterparts. And, as you point out, possibly worse than them in the future based on taxes on high value accounts.

          The bottom line is today’s society and government reward financial irresponsibility.

  • Ryan says:

    Yes! Great post…now if only EVERYONE would read it. Especially people who are 20 somethings. At 25, I’ve worked my way up to a 60+% savings rate. Max out 401k – check. Max out Roth – Check. The rest goes into taxable investments boglehead style and a little bit of Lending Club on the side. Seriously wish I knew what I do now when I was still in college. Keep up the good work G.E.!

  • Eden Prairie Insurance says:

    This is great straightforward post with a good humor. I totally agree with you that financial literacy and financial independence should be learned and developed early on. It true that we’re making more money, but we’re also spending too much money on so many trivial things, including high-end gadgets, etc, and not giving too much thought on saving up for their retirement years. I’m not saying to totally forego luxuries in life, but there should always a balance. One way to do this is to have a solid concrete plan on how to save up one’s money.

  • Newton says:

    Whatever the economic times or your current personal circumstances or at whatever age you’re in now, its very important to realize the value of saving up early; to spend your money wisely and find a way to make your grow however small at first.


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