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

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”.


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