On the go: Thirteen million people born between 1966 and 1980, the so-called Generation X, will face acute problems as they come up to retirement in the next 12 to 28 years unless decisive action is taken, according to the Pensions Policy Institute.
Worryingly, one third of people in Generation X will fail to achieve more than the minimum income levels in retirement.
While millennials (aged 19 to 38) face similar challenges, the critical difference is that people in Generation X will retire in the next 12 to 28 years and therefore have less time to remedy their financial shortfall.
This generation will reach retirement with lower levels of defined benefit entitlement than baby boomers, but without a full working life of auto-enrolment accrual. Generation X members are more likely to work casually, or to be self-employed than baby boomers at the same age, affecting their access to workplace pension saving.
They will receive less income proportionally from state pensions on average, and are more likely to reach retirement in rented accommodation or with an outstanding mortgage. They are more likely to have debt in retirement.
Daniela Silcock, head of policy research at the PPI, urged stakeholders to act now. “The government could consider whether benefits could be restructured to ensure that those renting in retirement don’t lose out on means-tested benefits, such as housing benefit, reducing both the incentive to save and disposable income in retirement,” she said.
“Products that combine sustainability and flexibility – which appeals to consumers – such as a drawdown and annuity hybrid products, could reduce the sustainable retirement income gap.”
She added: “Employers could support those who need to provide care, or develop health problems, to continue working and contributing to their pensions by allowing flexible working, encouraging shared parental leave, and providing retraining opportunities for workers who need a more sedentary position as they age.”
