Spanked on Retirement, Gen X Still Doesn't Get It

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Responding to a long, thoughtful article in last Sunday's New York Times about the predicament of America's next generation of retirees, a reader from Minneapolis named Patrick cut to the chase: "I'm a Gen Xer. None of my siblings or friends save a dime."

In so many words, he summed up a new report from the consulting firm PwC (formerly known as PricewaterhouseCoopers). The report, the 2013 edition of an annual temperature-taking of working people's financial wellness, portrays Generation X—the roughly 85 million Americans 32 to 52 years of age—as the most direly affected by the savings crisis.

And they know it. Less than 40 percent of this group told PwC that they are confident about their retirement. Of those over 50, it's less than a quarter.

PwC's findings are hardly new. While the current retired generation is famous for their thrift and the nation's youngest adults are already showing signs of financial savvy, the unpreparedness of both Baby Boomers and Gen Xers has been extensively documented.

But while many Boomers seemed to have been better positioned to profit from the dotcom boom and the housing bubble (not to mention their Greatest Generation parents' estates), Gen X was hit with a severe recession in their prime wealth-building years. From 2007 to 2010, a recent Pew study found, Gen-Xers lost 45 percent of their net worth – about $33,000 on average.

There are other reasons to pity Gen Xers, especially the older ones: As PwC's report points out, those who came to parenthood in the past two decades are not only putting their kids through college but supporting them afterward, as the recession has left many of them unemployed. Meanwhile, their own parents are living longer but needing more care.

They are, in a word, strapped. Half of Gen Xers have difficulty meeting their expenses each month, compared to less than a third of Boomers and Millennials. Some 58 percent carry balances on their credit cards, 16 percentage points higher than Boomers.

"Not having enough emergency savings is still the top concern," said Kent Allison, a partner at PwC who oversaw the study. "This is an indication of just how extended people are."

But PwC's study starkly shows how those in middle-middle age have failed to adapt to the economic storms as well as other groups. "Generation X overextended themselves" in the good times, said Allison. "They bought what they could afford, not what they should afford, and the economic downturn hit them hard." The damage done, "they are often making choices they shouldn't be making," said Allison, citing paying for their children's educations and continuing to spend on credit.

(Read More: Millennials Make Most of Massive Inheritance)

Their lack of discipline is coming at the cost of their main sources of retirement savings. Of the three groups broken out in the PwC study, Gen X is the most likely to have already withdrawn from retirement plans like 401(k)s and IRAs, and the mostly likely to do so in the future. "With their depleted home equity, employees are continuing to view their 401(k) funds as not just a retirement savings vehicle," said Allison. "Even when you force them into saving, with auto-enrollment in 401(k)s, there is leakage of 30 to 40 percent."

The study shows that all Americans need to be smarter about how they spend, Allison said. The share of workers who said they don't save for retirement because their expenses are too high leapt last year to 73 percent from 60 percent in 2011. Nor do we save as wisely as we could, failing to take full advantage of programs like health savings accounts, that are designed to help with expenses in retirement.

But is it Generation X that appears to be most stalled by the downturn, rather than energized. "We were hoping the pain would help fix the problem," said Allison. "The question is, with things getting good again, will they remember being on the edge?

Patrick, the Sunday Times reader from Minneapolis, doesn't think so. "Now we're in our 30s and they still haven't figured out how to live within their means," he wrote. He can take cold comfort that his family and friends are not alone.