How Family Financial Obligations Threaten Retirement Readiness: Gen-Xers Shift to Annuities for Risk Mitigation

Generation X, defined as those aged 41–56 in 2025, faces a unique confluence of financial pressures that are eroding their retirement readiness. As the "sandwich generation," many Gen-Xers are simultaneously supporting aging parents, raising children, and managing their own student loan debt-all while navigating a volatile economic landscape marked by inflation and market uncertainty. These obligations are forcing a reevaluation of traditional investment strategies, with annuities emerging as a critical tool for risk mitigation.

The Weight of Family Financial Obligations

The 2025 Protected Retirement Income and Planning (PRIP) Study reveals that 17% of Gen-Xers provide financial support to adult children, while 7% assist aging parents or in-laws. These caregiving responsibilities often come at the expense of retirement savings. A staggering 23% of Gen-X investors have reduced or halted retirement contributions due to these obligations, and 21% have tapped into retirement accounts to manage caregiving costs. Compounding these challenges, only 41% of Gen-Xers express confidence in their savings lasting through retirement, compared to 62% of Baby Boomers.

Student loan debt further exacerbates the crisis. The average Gen-X borrower held $44,240 in student loan debt in 2024-the highest among all generations. This debt reduces net worth and increases the likelihood of falling short of retirement savings targets. For many, the "sandwich generation" dynamic-supporting both children and aging parents-leaves little room for retirement planning. Over 80% of Gen-Xers now express concerns about not having enough money for a comfortable retirement, with an average expected savings of $711,771, far below the $1.2 million they believe is necessary according to data.

Annuities as a Risk Mitigation Strategy

Amid these pressures, Gen-Xers are increasingly turning to annuities to secure guaranteed income in retirement. A 2025 survey by the Nationwide Retirement Institute found that 32% of financial advisors are increasing or introducing annuities for Gen-X clients, citing their ability to provide lifelong income and protect against outliving savings. This trend is reinforced by the Allianz Life Q3 2025 Market Perceptions Study, which reported that 50% of Gen-Xers are more likely to allocate funds to annuities or similar guaranteed income solutions in response to macroeconomic volatility.

The appeal of annuities is further underscored by a LIMRA study showing that 69% of Gen-Xers would choose an annuity over the stock market with a $100,000 inheritance, highlighting a clear preference for stability over risk. For the sandwich generation, annuities offer a way to balance caregiving costs with retirement security. Athene's 2025 survey found that 73% of sandwich-generation individuals have adjusted retirement goals to accommodate caregiving, with 34% delaying retirement and 22% using retirement assets to support family. Guaranteed income strategies, such as fixed indexed annuities, could provide a stable stream to manage these costs while preserving retirement savings according to industry analysis.

Strategic Shifts and the Role of Financial Advisors

The shift toward annuities reflects a broader strategic pivot among Gen-Xers toward risk mitigation. Financial advisors are playing a pivotal role in this transition. Athene's survey found that 90% of respondents who worked with a financial professional reported positive impacts on their financial future, and 66% of those less confident in their ability to support their families said increased income would improve their situation. Advisors are increasingly emphasizing annuities as a way to hedge against longevity risk and market downturns, particularly for clients with caregiving responsibilities.

However, adoption remains low. Only 14% of sandwich-generation respondents in Athene's survey have an annuity, suggesting untapped potential for these products to address retirement insecurity. For Gen-Xers, annuities represent not just a financial tool but a lifeline-a way to navigate the dual threats of caregiving costs and economic uncertainty while ensuring a baseline of income in retirement.

Conclusion

The retirement readiness of Generation X is under siege from multiple fronts: caregiving responsibilities, student loan debt, and macroeconomic instability. These pressures are forcing a reevaluation of traditional investment strategies, with annuities emerging as a vital component of risk mitigation. By prioritizing guaranteed income and working closely with financial advisors, Gen-Xers can begin to bridge the gap between their current financial realities and long-term retirement goals. As the 2025 data shows, the path forward lies in strategic, proactive planning-and annuities may hold the key to securing a stable future.