Many in their forties and fifties are approaching pivotal financial decisions without the clarity or confidence they need. They have lived through major changes, including the decline of DB pensions, increased investment responsibility, higher property values and growing expectations to support both older and younger family members.
Not surprisingly, a significant proportion do not feel prepared for retirement, due to their financial position and poor understanding about pensions and savings. As more Gen X workers (born 1965-1980) reach retirement age, this lack of readiness creates not only personal challenges, but also wider issues for employers and the economy.
Part of this stems from the gap between what people expect and what their finances are likely to provide in retirement. Many believe their pension savings will stretch further than they will, while others have never taken the time to consider the the income they will require to live comfortably.
These behaviours are often rooted in limited access to clear, straightforward information. Many cannot say how much they have saved or how their pension is invested. They also may have several old pension pots scattered across past employers, which makes it even harder to see the full picture.
When people do finally take stock, the results can be a surprise – sometimes a pleasant one, but oftentimes not. The common theme is that most people only look at this shortly before retirement, giving them little time to make meaningful adjustments or take actions to improve the situation.
When employees delay retirement due to financial constraints, this can have broader implications for workforce dynamics. Organisations may need to consider how to maintain engagement and productivity among employees who remain in their roles longer than originally planned, as
well as the potential impact on workforce costs and performance.
A lack of retirement movement can also have implications on progression for younger employees. If positions are held for longer, it becomes harder for ambitious staff to see opportunities for advancement, and therefore a future in the organisation. This can lead to higher turnover and difficulties attracting fresh talent.
In some cases, people continue working despite being financially able to retire, simply because they lack a clear understanding of their circumstances. This means businesses may be carrying workforce challenges that could be avoided with better information and support.
Why the current system falls short
The shift from final salary pensions to defined contribution pensions has changed the retirement landscape for Generation X. Individuals now need to make active, complex choices, such as how and where to invest, how much risk to take, how to use tax free cash, how to draw income and how to ensure their money lasts.
Without access to appropriate support, many delay action or make choices that do not align with their long-term needs, potentially jeopardising their long-term financial goals.
Improving outcomes for Gen X starts with improving knowledge. People need to know how much they have, how much income they are likely to need in retirement, what their wider financial picture looks like and what options are available to them as they approach this transition. These basics are critical to ensure people have the confidence to plan and make informed decisions.
Employers can play a vital role. The emerging framework for targeted support, alongside more accessible forms of advice and more comprehensive financial planning, gives employers a practical way to provide the right support when their people need it most.
Most importantly, retirement planning should not be a one-off activity. It requires ongoing engagement, with support that people can return to over time, through different channels, and at the stage that makes sense for them.
A systemic risk that requires systemic action
Gen X retirement readiness extends beyond individual finances, affecting families, workplaces and the wider economy. If we do not address it now, we risk a generation reaching retirement without the preparation they need, and employers facing workforce pressures that could have been prevented.
With clearer information, ongoing support and a more accessible approach to advice, the industry can help individuals save for the future and help businesses manage a smoother and healthier transition to retirement across their workforce.
