Abstract
According to the U.S. Census records, 40% of the population is aged between 35 and 64. This statistic means that a substantial percentage of the nation’s population is in the wealth-formation phase of their life cycle and should be saving towards their retirement goals. Hence, the demand for retirement planning is anticipated to increase over the next decade. However, many economists and policymakers are concerned that a substantial number of American households are not well prepared for retirement. The Retirement Confidence Survey of the Employee Benefit Research Institute found that 36% of workers do not have any retirement savings. In particular, Generation X is the cohort that is least prepared for retirement. This research focuses on Generation X (40–54 years old) and explores this cohort’s retirement preparedness relative to their Baby Boomer and Millennial peers. The study also models cohort effects and identifies the key factors affecting retirement preparedness. The result indicates that Generation X is better prepared for retirement than Millennials in safer portfolio allocations, but there is no significant difference in retirement adequacy between Gen Xers and Baby Boomers. Income, risk tolerance, and attainment of a college education are positively associated with retirement preparedness.
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