Finance
Gen X helps drives retirement savings balances to new record
Generation X has been boosting its efforts to build nest eggs for retirement, according to the newly-released data from Fidelity Investments.
The financial services company reported Thursday in its third-quarter retirement analysis that Gen Xers socking away money in individual retirement accounts (IRAs) upped their total contributions by a whopping 35% from the same period in 2023.
It considered Gen X to be people born in the years 1965 through 1980.
Compared to a year ago, more Gen Xers also put money into their IRA accounts in the third quarter, according to Fidelity. That jump was 23%.
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The financial services company said in a press release that Gen X made “impressive gains across all retirement accounts” including IRAs, 401(k)s and 403(b)s.
When it came to Gen Xers that have been playing the long-game and setting aside money in 401(k) plans on a regular basis for the past 15 years, there was a 6% quarter-over-quarter increase in their average account balance to $586,100, per Fidelity’s data.
“We are pleased to see Gen-X retirement savers continue to make solid gains with their retirement savings,” President of Fidelity Wealth Roger Stiles said in a statement. “The oldest members of this generation will be approaching retirement in the next five to ten years, making this the perfect time to focus on securing a nest egg that can help them live more comfortably throughout their retirement years.”
This comes as Fidelity found that people saving up for their golden years overall “experienced another quarter of growth thanks to continuing strong contribution levels, and positive market conditions.” Its analysis included over 49 million retirement accounts.
Two types of retirement plans – 401(k)s and 403(b)s – notched their “highest average on record” for balances in the third quarter, the financial services company said.
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For 401(k) accounts, balances averaged $132,300 in the third quarter, a quarter-over-quarter increase of 4% and a year-over-year increase of 23%, according to Fidelity.
Average balances in 403(b) plans notched similar increases, hitting $119,300.
Meanwhile, the average balance for IRAs came in at $129,200 for the quarter.
Fidelity’s retirement analysis reported the total average savings rate in the third quarter “held steady.” It pegged it at 14.1%, just shy of the 15% the company recommends.
“Consistent retirement contributions during various market cycles is important, but despite what happens in the market, maintaining this commitment in the long run is what will help set Americans up for a future of financial wellness and security,” Fidelity Investments President of Workplace Investing said in a statement.
AMERICANS REVEAL THEIR BIGGEST FINANCIAL REGRET ABOUT POTENTIAL RETIREMENT
Earlier this year, Northwestern Mutual said Americans think $1.46 million is the amount of money they must have in order to “comfortably” retire.
About 57% of working Americans reported thinking they were on the backfoot when it came to socking away money for retirement, a separate Bankrate survey published in late September found. On the other hand, 15% expressed they were “significantly” or “slightly ahead of where you should be” for it.
Another 22% believed they were “right on track,” per Bankrate.
‘The Big Money Show’ co-hosts discuss buy now, pay later spending options and the impact it will now have on your credit score.
Small, everyday purchases like a meal from DoorDash are now able to be financed through eat now, pay later options — a practice that some experts deem “predatory.”
“You’ve got to have enough sense to not follow the urge to finance a taco, okay? You have got to be an adult,” career coach Ken Coleman told “The Big Money Show,” Wednesday.
“This is predatory, and it’s going to get a lot of people in deep trouble.”
RISKS OF BUY NOW, PAY LATER: ‘TICKET TO OVERSPENDING,’ EXPERT SAYS
DoorDash and Klarna are now partnering up to extend buy now, pay later options to consumers. (Reuters, Getty / Getty Images)
Financial wellness experts are continuously sounding the alarm to cash-strapped consumers, warning them of the devastating impact this financial strategy could have on their credit score as some lenders will begin reporting those loans to credit agencies.
Consumers may risk getting hit with late fees and interest rates, similar to credit cards.
“So your sandwich might show up on your FICO score, especially if you pay for it late,” FOX Business’ Jackie DeAngelis explained.
EXPERTS WARN HIDDEN RISKS OF BUY NOW, PAY LATER
Major players like Affirm, Afterpay, and Klarna have risen to prominence at a time when Americans continue to grapple with persisting inflation, high interest rates and student loan payments, which resumed in October 2023 after a pause due to the COVID-19 pandemic.
Ramsey Solutions personal finance expert and ‘The Ramsey Show’ co-host George Kamel discusses the ‘buy now, pay later’ craze and the trend that celebrates the financial benefits of being childless.
“The Big Money Show” co-host Taylor Riggs offered a different perspective, suggesting that company CEOs have a “duty” to attract as many customers as they want.
“Unfortunately for me, this always comes down to financial literacy — which I know is so much in your heart about training people to save now by later,” she told Coleman, who regularly offers financial advice to callers on “The Ramsey Show.”
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Coleman continued to come to the defense of financially “desperate” consumers, arguing that companies are targeting “immature” customers.
“I’m for American businesses being able to do whatever they want to do under the law. That’s fine. But let’s still call it what it is: it’s predatory, and they know who their customers are,” Coleman concluded, “And I’m telling you, they’re talking about weak-minded, immature, desperate people.”
FOX Business’ Daniella Genovese contributed to this report.
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