Gen X retirement concerns center on 401(k)s and identity

Generation X is nearing retirement with fewer pensions than baby boomers and heavier reliance on 401(k) savings, a shift that changes both the math and the psychology of leaving work. In a Fortune commentary, former 401(k) executive Jeanne Thompson argues that many Gen X workers are confronting retirement as an identity question as well as a financial decision.

Thompson wrote that Gen X includes about 65 million Americans born from 1965 through 1980. Citing CNBC, she said 14% of Gen X workers have traditional pensions, compared with 56% of baby boomers.

The gap matters because pensions often create a clearer retirement path, while 401(k) accounts require workers to decide how to turn savings into income, Thompson wrote. Those decisions can include whether to use annuities, keep assets in an employer plan, roll money into an IRA, convert to Roth accounts or claim Social Security at a particular age.

Thompson also pointed to adviser use as a problem for the cohort. Citing Schroders, she wrote that 26% of Gen Xers work with a financial adviser, compared with 43% of boomers.

From saving to spending

In Thompson’s view, Gen X workers spent decades following familiar 401(k) guidance: contribute enough to get an employer match, avoid loans, keep accounts invested when changing jobs and let market growth build over time. She wrote that this accumulation phase was often automatic because money came out of each paycheck before workers had to think about it.

The next stage is harder, Thompson argued, because retirees must begin drawing from accounts without a paycheck replenishing them. She wrote that the average 401(k) balance for Gen Xers is $215,600, and that the figure rises to $648,800 among Gen X workers who contributed continuously for 15 years.

Thompson described her own retirement timing as an example of the stress involved. She wrote that she retired in December 2021, before the S&P 500 fell 19.4% in 2022, and said her portfolio had been built to withstand market declines even though the drop was difficult to watch without new earnings going into the account.

Work and self-worth

The Fortune commentary argues that money is only part of the hesitation. Thompson wrote that many Gen X workers, often described as latchkey children, learned independence early and later connected their value to competence, output and being needed at work.

That history, she wrote, can make retirement feel less like a reward than a loss of role. Thompson said she heard former colleagues who were senior executives hesitate to accept a voluntary buyout because they did not know how they would use their time after leaving work.

Thompson wrote that some near-retirees respond by saying they will work “one more year,” a phrase she framed as a way to delay both the financial drawdown and the personal adjustment. She said financial projections alone may not resolve the issue if workers have not answered what will replace the status and structure of a career.

The commentary calls for more help from advisers, especially because most Gen Xers do not use one, according to the Schroders figure Thompson cited. Her argument is that advisers need to pair retirement-income planning with reassurance that leaving work can be a planned transition rather than a failure of usefulness.

This story draws on original reporting from Fortune.