More than half (54%) of people born between 1965 and 1980 are heading for 'inadequate' retirement income, according to a new report from think tank The Social Market Foundation.
It has warned that Gen X members face a financial cliff-edge in their retirement.
Some 7.5m suffer from inadequate savings and 2m have no housing equity or investments to fall back on.
Its study suggests that 16% of Gen X plan to spend less on essentials like food, energy and transport, in order to make up the shortfall to their retirement savings.
The think tank points out that Gen X-ers fall in the gap between two pension systems. Many were too young to benefit fully from generous defined benefit schemes but arte too old to build up significant savings through automatic enrolment, which was introduced in 2012.
When many in the cohort begin to retire within the next decade, millions will discover their pension savings fall well short of maintaining their current standard of living.
The findings include:
• 54% are projected to have inadequate pension incomes in retirement
• 39% will fall short of maintaining their current standard of living
• 35% could fall below minimum retirement living standards
The research also suggests that many workers are unaware of the scale of the problem. Around half of Gen X respondents expected a higher retirement income than current projections suggest. When informed about their likely retirement finances, 16% said they would cut spending on essentials such as food, energy or transport to increase savings.
Gideon Salutin, chief economist at the Social Market Foundation, said: “Millions are heading for a retirement without the income they expect. Without action, their retirements will be meagre. Despite many of them working longer than their parents and making more money than their parents, Gen X is in for a substantially worse retirement.”
He called for urgent action. “The Pensions Commission provides a perfect opportunity for change, but time is running out for Gen X. Unless policymakers make difficult decisions, the next wave of retirees looks likely to fall into inadequate retirements.”
Catherine Foot, director of the Standard Life Centre for the Future of Retirement, sponsors of the report, said: “There is a relatively short window now in which to act and two key enablers for Gen X will be Pension Dashboards that help people get a clear picture of the outcome they’re on track for and policies designed to support longer working lives which leads to greater financial security.
"Younger generations have more time on their side but ultimately the Pensions Commission must consider savings levels across society if we’re to avoid a repeat of the challenge now facing Gen X.”
The report calls for a number of policy changes to improve retirement outcomes, including increasing default auto-enrolment contributions to 12%, expanding access to the Lifelong Learning Entitlement, and expand the MoneyHelper Pension Wise programme so that all of Gen X can access financial guidance.
It warned that the ‘pension shock’, whereby many in Gen X are unaware they have not saved adequately for retirement, is likely to become a major political issue in the next few years given that it is likely to affect over 40% of the Gen X voting bloc for every major party. Voting intention breakdown shows that Reform has the highest proportion of Gen X voters vulnerable to pension shock (55%), followed closely by the Greens (53%).
• Research findings were based on a Survation survey of 2,000 Gen Xers across the UK.