Will Gen X ever be able to retire?

If you're a Gen X-er, there's a chance that the prospect of retirement is starting to become a very real one for you. But are you ready?

Gen X is now aged roughly 44 to 59 - a stage of life where Massey University associate professor Claire Matthews said plans for retirement started to crystallise in people's minds.

"It starts to become a bit more real... 50 is really where it starts to hit.

"When you're younger, you kind of know that you're going to retire, you know you're going to hit 65 and all this stuff is going to happen but it seems so far in the future. At 45 and particularly at 50, people start thinking really seriously about it."

Are you on track?

The first question for a lot of people is whether they are on the right path to be able to ever sign off from work. Research from the Retirement Commission found only 38 percent of those aged 45 to 54 said they expected to have a financially comfortable retirement.

Matthews said Gen X was more of a "sandwich generation" than some previous cohorts - caught between their parents who were living longer and their own children, whom they may have had later in life.

Data from actuaries Melville Jessup Weaver shows the average balance for a 46-50-year-old KiwiSaver member is $43,600. For those aged 51 to 55, it is $50,446, and for people aged 56 to 60 it is $55,632.

Assuming a 51-year-old earns $100,000 a year, if they have $50,000 in KiwiSaver now, they could be on track to save $160,369 by 65, saving 3 percent plus an employer's 3 percent in a balanced fund, according to Sorted.

But is that enough?

Matthews' work would suggest probably not, if you want a luxurious lifestyle.

Each year, she produces research outlining the sort of income required to live either a "no frills" simple life, or a "choices" lifestyle with a few extras, both in cities and provincial areas. This is based on data from the Household Economic Survey, which is then inflation-adjusted on intervening years.

Her most recent update showed a two-person household in a metropolitan centre living a "choices" lifestyle would need a combined $969,000 lump sum on top of the pension to meet their costs.

A "no frills" lifestyle would require a lump sum of $235,000 across the couple.

A single person in a metropolitan area living a choices lifestyle would need $717,000 and someone with a no-frills life would need $355,000.

Shirley McCombe, manager at Bay Financial Mentors, said there were other ways that Gen X were incurring costs beyond those estimates of current retirees' spending, too.

"The current cost of living crisis now means children are staying at home for longer with their Gen X parents. Gen X often have parents who are moving in with them and requiring financial support."

How can you get there?

Retirement savings are one area where the power of compounding can really pay off. The earlier you start, the less you have to save of your own money to get to your goal.

If you're a Gen Xer just starting now, or realising that you've fallen behind where you should be, you may need increase your savings efforts significantly.

The same Massey report calculated that a one-person household in a city wanting a no-frills life would only have had to save $106 a week from the age of 25, but that would have to increase to $394 if they were starting from 50.

For a choices life, they would need to have saved $221 a week from 25 or $806 from the age of 50.

If they were part of a couple in a choices lifestyle, they would need $301 a week from 25 or $1093 from 50.

That same 50-year-old earning $100,000 could increase their likely savings outcome to $313,000 - roughly what is required for a single, no-frills life in a city according to Matthews, by increasing their contributions to 10 percent of their income and switching to a growth fund.

Matthews said the advent of KiwiSaver meant that Gen X were probably in a better position than Baby Boomers in terms of retirement savings.

"Baby Boomers have had other advantages but in terms of retirement savings, Gen X is going to have had KiwiSaver going on for 17-odd years."

She said people who were worried about their retirement savings could talk to a financial adviser, or use tools such as Sorted's calculators to work out what changes could be required.

What about home ownership?

Homeownership is another key pillar of retirement planning, because having a freehold house can provide significant security and reduce costs in retirement.

Data shows that at age 45 to 49, 77.9 percent of Baby Boomers were homeowners, compared to 70.3 percent of Gen X.

But Infometrics chief forecaster Gareth Kiernan said there seemed to be some homeownership catch-up later in life as people inherited money from their parent, or had more disposable income once their children left home.

"At 45-49, the homeownership rate for Baby Boomers was 6.4 percentage points (ppts) below the Silent Generation at a comparable age. Fifteen years later… the gap has closed to just two.

"There's a similar trend at play, but probably with different drivers, when we compare homeownership rates across generations at a younger age. At 30-34, the gap between homeownership for Baby Boomers and Gen X was 17.6ppts, but it has closed to 7.4ppts by the time these generations are 45-49."

He said that could be caused by people settling down later, but that would mean carrying mortgages for longer, as well as the financial responsibilities of children lasting later in life.

Gen X might not get the inheritance windfall their parents had, either, he said.

"With people living longer, the potential for an inheritance to significantly improve one's financial position also gets pushed later and later in life, so the closure of the homeownership gap that we saw between the Silent Generation and the Baby Boomers by age 64 might not occur to the same degree for Gen X."

McCombe said people who were homeowners as Gen X were often being called upon to help their children into home ownership, too.

And the debt...

Getting rid of debt is likely to be another key concern for Gen X.

McCombe said Gen X were some of the first people to have student loans, which made it harder for them to save for a home and retirement. Many were also often supporting their children so they did not have to get student loans of their own. The Retirement Commission found 35 percent of Gen X still owed more than $100,000 of which most will probably relate to mortgages. Just under 2 percent of active student loan borrowers are aged over 50.

She said financial mentors encountered people who were trying to support their children and grandchildren when they had barely enough to get by themselves.

"Often the children are not contributing and the client is falling deeper and deeper into debt."

Generation X: 50 Artworks from the Chartwell Collection, opens at Te Papa on Saturday 27 July and runs until 20 October.

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