Generation X, the next to reach retirement age, is behind on saving for retirement. A study from the National Institute on Retirement Security reports the typical Gen X household has only $40,000 saved for retirement.

That’s despite earning more than baby boomers or millennials.

Now in their 40s and 50s, Generation X is financially stressed by the largest share of national household debt. Inflation has added to this generation’s woes.

“The social and economic forces impacting Generation X have left them in a different place financially from their boomer predecessors,” report authors Tyler Bond, Celia Ringland, and Joelle Saad-Lessler wrote.

These forces have created a sizable retirement shortfall without much time to make up the difference as retirement looms.

Gen X retirement savings swallowed by debt and home equity

It’s not for lack of income that Gen X retirement accounts remain scant. Its average income in 2021 was higher than for any other generation: $117,577 before taxes.

In the decade following the Great Recession, Generation X’s median net worth rose by 115%. By holding onto their homes and paying down debt, they were able to recover the most home equity lost to the housing crisis of any generational cohort.

But the tradeoff of putting equity into their homes has come at the neglect of their retirement accounts. In addition, 22% of Gen X have no emergency savings, and 35% have less than three months’ worth of their income tucked away for an emergency.

Even though they earn the most, Xers also have the most debt out of any generation. That includes more non-mortgage debt, more credit card debt, and more student loan debt.

On average, Gen Xers carry the most non-mortgage consumer debt by far: $45,781. That’s after paying down non-mortgage debt by about 3% in the past two years.

More than one-third of that debt is auto loans. Including mortgages, the average total debt per Gen Xer is $167,493.

"Sandwich generation" faced unique challenges

This cohort had unique challenges during their entire working career.

They had to navigate the dot-com crash at job-seeking age, the housing crisis at home-buying age, and then the pandemic recession in their prime income-earning years.

These were three major economic setbacks in 25 years, Gen X’s prime working years. Meanwhile, many Gen Xers report they are a “sandwich generation” providing or helping out financially for both their children and their parents.

More than half (51%) of Gen X say rising education and healthcare costs due to inflation have hampered their ability to make retirement contributions, according to a recent Bankrate survey.