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Company: Autodesk (ADSK)

Business: Autodesk engages in three-dimensional (3D) design, engineering and entertainment technology solutions. Its product offerings are focused on the following categories: Architecture, Engineering and Construction, AutoCAD and AutoCAD LT, Manufacturing, and Media and Entertainment. Its products include AutoCAD Civil 3D, Building Connected, Autodesk Build, Revit, Computer-Aided Manufacturing Solutions, Fusion 360, ShotGrid and 3ds Max. Autodesk’s product development and manufacturing software provides manufacturers in automotive, transportation, industrial machinery, consumer products and building product industries with comprehensive digital design, engineering, manufacturing and production solutions. It also offers Wonder Studio, which is a cloud-based 3D animation and VFX solution.
Stock Market Value: $52.2B ($242.31 per share)

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Autodesk shares’ 2024 performance

Activist: Starboard Value

Percentage Ownership:  approximately 1% (more than $500 million position)
Average Cost: n/a
Activist Commentary: Starboard is a very successful activist investor and has extensive experience helping companies focus on operational efficiency and margin improvement. The firm has taken a total of 150 activist campaigns in their history and has an average return of 24.83% versus 12.99% for the Russell 2000 over the same period. Starboard has had an even better track record in the information technology sector. In 53 prior engagements, it has a return of 36.43% versus 18.82% for the Russell 2000 over the same period.

What’s happening

On June 17, Starboard sent a letter to Autodesk’s shareholders announcing that it is filing a lawsuit to compel the company to delay its 2024 annual meeting, scheduled for July 16, and to reopen the director nomination window. This follows Autodesk’s delayed disclosure of an internal investigation into reporting irregularities that Starboard says may have misled and possibly disenfranchised shareholders. The Delaware Chancery Court ruled against Starboard on June 20, but the activist still thinks that Autodesk requires board enhancement, as well as improved growth and profitability through operational performance, capital allocation policies and investor communications.

Behind the scenes

Autodesk is a global leader in design, engineering and entertainment software solutions. About 75% of revenue is generated from Architecture, Engineering, and Construction (AEC) solutions. These are application areas in which Autodesk is the No. 1 or No. 2 player — where it generates significant recurring revenue and maintains pricing power. Its remaining revenue comes from its growing manufacturing applications (20%) and legacy applications in entertainment like movies and TV (5%).

With 90%+ gross margins and 35% operating margins, Autodesk is a leader in AEC software. The company’s gross margins are best in class, a reflection of its value add and pricing power. Further, its operating margins are not much worse than those of its peers at first blush. However, Starboard correctly does not judge the company’s operating margins on the mean of its peer set, but by the potential embodied in its gross margins and market position. Autodesk currently spends approximately 28% of its revenue on sales and marketing versus 23% for peers, and 9% on general and administrative expenses compared to 5% to 7% for peers. In other words, operating expenses as a percent of revenue is roughly 1,000 basis points higher than peers. Moreover, the company’s FY2023 operating margins of 36% missed its own target of 38%, which was adjusted downward from an original target of 40% despite front-loading revenue through multiyear contracts. This engagement had great potential to be an excellent amicable and constructive activist campaign for Starboard. The firm has had great experience working with companies just like Autodesk from a board level to improve margins and create tremendous shareholder value. That would have been a great plan here and would have likely meant adding only two or three directors to the board.
But the cooperative, constructive scenario was seemingly dashed on April 1, when Autodesk publicly notified shareholders that its annual report would be submitted late following information being delivered to the audit committee, which resulted in the launch of an investigation regarding the company’s free cash flow and non-GAAP operating margin practices. Ultimately, the committee found that despite signaling to investors that it would be shifting its enterprise customers toward annual billing, Autodesk had recently pursued multi-year upfront contracts at levels that even exceeded their historical use, helping the company meet its FY23 free cash flow goal.
To make matters worse, the company informed the U.S. Securities and Exchange Commission of these issues by early March, but it withheld the information from investors until after the closure of its nomination window, preventing a potential activist director nomination this year. Despite this, Starboard said it reached out privately to offer to work with Autodesk to improve the board, but the company declined. So, Starboard requested that Autodesk reopen the nomination window so that shareholders could make a fully informed decision following the recent disclosures, given the fact pattern. The company rejected that offer. Starboard filed a lawsuit in the Delaware Court of Chancery to compel Autodesk to delay its 2024 annual meeting set for July 16 and to reopen its nomination window, which closed on March 23. The court rejected Starboard’s claim on June 20.
While the findings of the investigation alone are worrisome, there are two things in our mind that could elevate it from an acute accounting issue to a much more serious governance issue. First, while Autodesk reports free cash flow as a key operational metric, it was also a factor in executive compensation. Second, how the board and management responded to this investigation might be an even bigger problem. Here, the board seemed to determine that Deborah Clifford could no longer remain as CFO. What happened next did not exactly inspire a strong feeling of board oversight and accountability: Instead of firing her, Autodesk appointed Clifford to the role of chief strategy officer. While the first issue reflects on management and its lack of alignment with shareholders, the second issue goes directly to the board’s ability to oversee management and hold them accountable.
It is incontrovertible that these developments at Autodesk will require governance changes. The level of change that is necessary will not depend on the company’s acts, but rather the level of involvement. Starboard does not know yet whether this situation can be rectified with a few board seats or a total board and management overhaul, but that will become clearer as more facts as to accountability come out. From our perspective, the company’s response with respect to penalizing management and notifying and working with shareholders does not bode well for the “minor change” scenario. The governance issue is paramount here and must be addressed before Starboard can make any real economic changes directly enhancing shareholder value.
Once that is resolved, a reconstituted board and management team to the extent necessary can focus on improving operating margins and trading multiples. Improving margins by 1,000 basis points by itself could greatly increase shareholder value, but applying a bigger multiple to that will have an exponential effect. Presently, Autodesk trades at an EV/CY2025E earnings before interest, taxes, depreciation and amortization multiple of 19.4x versus some peers above 30x and a peer average of 23.5x. A good argument can be made that a market leader like Autodesk should trade at a higher-than-average multiple, but just getting to the peer average would be very meaningful for shareholders. This happens when shareholders have more confidence in the governance of the company – when the board offers more transparency, oversight and accountability – and when management hits its targets as opposed to missing and lowering them.
Whether that happens will depend on several things. Starboard’s loss in the Delaware Court takes the quick scenario off of the table. While there is a proposal on the proxy this year that would allow 25% of shareholders to call a special meeting, even if that is approved, the company can drag its feet on implementation so it would not really be useful prior to the next annual meeting. This might come down to how hard the board wants to dig in and how convincing Starboard and other shareholders can be. Otherwise, it will have to wait until 2025. The good news is that Starboard is an activist with the patience and conviction to wait until 2025. If it comes to that, the company’s chances of winning would go down dramatically.
One final note: This is not the first time Autodesk has been engaged by an activist. Sachem Head had an activist campaign here between November 2015 and June 2017, and ultimately settled for three board seats and the appointment of a new CEO, Andrew Anagnost, who is currently at Autodesk’s helm. It should be noted that one of the director designees pursuant to Sachem Head’s agreement was Rick Hill, who has a very interesting relationship with Starboard. He was the chairman of Tessera when Starboard waged a proxy fight there. At the time, he fought the firm tooth and nail and was its most vocal opponent. Starboard ultimately replaced a majority of the board with Hill staying on and eventually becoming the firm’s biggest supporter. Since then, he has served as its director designee at both Marvell Technology and Symantec. He no longer serves on the board of Autodesk, but he could certainly be an informal advisor to Starboard – or a cautionary tale for Autodesk.
Ken Squire is the founder and president of 13D Monitor, an institutional research service on shareholder activism, and the founder and portfolio manager of the 13D Activist Fund, a mutual fund that invests in a portfolio of activist 13D investments. More

The U.S. Department of Education may extend the eligibility of a popular student loan forgiveness program to early childhood educators.
The agency announced that it was issuing a request for information on potentially broadening the Public Service Loan Forgiveness program to include workers in early childhood education settings, many of whom receive low wages.

Lourdes Balduque | Moment | Getty Images

The U.S. Department of Education may extend the eligibility of a popular student loan forgiveness program to early childhood educators.
The agency on Thursday announced that it was issuing a request for information on potentially broadening the Public Service Loan Forgiveness program to include workers in early childhood education settings, many of whom report low wages.

“Early childhood educators help young children learn, grow, and thrive,” said U.S. Under Secretary of Education James Kvaal in a statement.
“But they are often poorly compensated, and student debt is a problem,” Kvaal added. “If these educators can access Public Service Loan Forgiveness, we can help our youngest children, their families, and their communities.”
The PSLF program, signed into law by President George W. Bush in 2007, allows certain not-for-profit and government employees to have their federal student loans canceled after 10 years of on-time payments. Including early childhood educators would likely expand the reach of the program to at least some for-profit employers.
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The change could make more than 450,000 additional workers eligible for the debt relief if they have student loans, the Education Department said.

The benefit would likely be retroactive in effect, said higher education expert Mark Kantrowitz.
That means some workers may be able to get their debt cleared before 10 years, depending on how long they’ve been in the line of work.
The Education Department is inviting researchers, academics, policy experts, administrators and other individuals familiar with early childhood educators to provide comments on how it may determine people’s eligibility and implement the change. The comment period will close on July 22.

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The unemployment rate rose to 4% last month for the first time since January 2022.
While economists say they aren’t worried, they are keeping an eye on unemployment insurance claims and any news of layoffs that could indicate a recession.
New college graduates and people seeking entry-level jobs might have more trouble finding a job as the number of people aged 20 to 24 entering the workforce jumped in May.

People walk past a restaurant, with a hiring sign outside, in Washington, D.C., on Oct. 5, 2023.
Andrew Caballero-Reynolds | AFP | Getty Images

The unemployment rate, which has remained low for two years, has been inching higher in the first half of the year, according to data from the Bureau of Labor Statistics.
For the first time since January 2022, the unemployment rate ticked to 4.0% last month, up from 3.9% in April. It was as low as 3.4% in April 2023.

Even though the employment rate has reached the highest it has been in a couple of years, 4% is still historically low, experts point out.
Economists say people shouldn’t be too concerned because both the number of jobs and the size of the labor force are growing. And while the year kicked off with layoffs from big names such as Google and Amazon, the trend hasn’t caught on in the broader labor market, experts said.
May’s unemployment rate was impacted heavily by people, particularly those who are between 20 and 24 years old, entering and reentering the workforce, according to Moody’s Analytics head labor economist Marisa DiNatale.
With school out for the summer, it’s typical to see a boost in teenagers, college students and recent graduates beginning their job search. 
“It’s a very volatile age group,” DiNatale said. “People are finding it more difficult to find a job when they graduate from college, but there is no evidence that there are some sort of massive layoffs going on in the economy.”

Payrolls soar, ‘no real indicator for a recession’

Meanwhile, another factor boosting confidence for economists is job growth. Nonfarm payrolls grew by 272,000 in May, BLS data shows, outperforming the Dow Jones consensus estimate of 190,000.
In addition to workforce and payroll growth, a high labor force participation among prime-age workers is reassuring, according to Stephen Juneau, U.S. economist at Bank of America. The percentage of people between 25 and 54 participating in the workforce is 83.6%. That’s the highest it has been in at least 20 years according to BLS data.
“When you look at the aggregate labor market data, there’s no real indicator for a recession,” Juneau said.
While economists say they aren’t concerned about a 4% unemployment rate on its own, they are paying attention to how fast the rate is rising. 
One way to measure this is through the “Sahm Rule,” named after economist Claudia Sahm.
The rule compares the average unemployment rate for the past three months with the lowest reported rate in the past year. If the three-month average is half a percentage point higher than the yearly low, then the unemployment rate is rising fast enough to signal the start of a recession.
Following the May jobs report, the Sahm Rule stood at 0.37. This means the unemployment rate would have to stay at 4% or higher for the next couple of reports to bring the three-month average 0.5% above the yearly low, which in this case is 3.5%.
“The Sahm Rule is a contemporary indicator that we’re in a recession,” Juneau said, “We’re not worried it’s going to cross that 0.5% next month.”

When to worry

Moody’s DiNatale said she is keeping an eye on unemployment insurance claims, which are historically low. For the week ending June 15, the BLS reported that 238,000 Americans applied for unemployment benefits. 
“If they go near or above 260,000, then it’s usually time to worry. We’re nowhere near that,” DiNatale said. “What would be more worrying is if employers were actually laying people off. We’re looking for big, sharp movements.”
As for the number of jobs added in future reports, Juneau said he wouldn’t be concerned unless it dropped below 100,000.
“Outright job losses, they can kind of come out of nowhere and the labor market tends to snowball,” Juneau said. “We don’t expect that in the next labor report, but there’s always that risk.”

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The IRS will deny billions of dollars’ worth of claims for a pandemic-era tax break while working to process lower-risk filings.
Enacted to support small businesses during the Covid-19 pandemic, the employee retention credit, or ERC, is worth thousands of dollars per eligible employee.
However, the IRS paused processing new filings in September amid a surge of “questionable claims” and will extend that moratorium.  

Danny Werfel, IRS commissioner, speaks after being ceremonially sworn in at the IRS headquarters in Washington on April 4, 2023.
Ting Shen | Bloomberg | Getty Images

The IRS will deny billions of dollars’ worth of claims for a pandemic-era tax break while working to process lower-risk filings, the agency said on Thursday afternoon.
Enacted to support small businesses during the Covid-19 pandemic, the employee retention credit, or ERC, is worth thousands of dollars per eligible employee. However, the agency stopped processing new filings in September amid a surge of “questionable claims,” the IRS said in a news release.

The agency added that it will extend that moratorium.  
After investigating more than 1 million claims worth roughly $86 billion, the IRS said in the release that it identified 10% to 20% of the highest-risk filings, and “tens of thousands” will be rejected in the coming weeks, according to the agency. Another 60% to 70% of claims with an “unacceptable level of risk” will be further examined, the IRS said.
“We will now use this information to deny billions of dollars in clearly improper claims and begin additional work to issue payments to help taxpayers without any red flags on their claims,” IRS Commissioner Danny Werfel said in a statement.
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During the ERC review period, the agency processed 28,000 claims received before September 2023 worth $2.2 billion and disallowed more than 14,000 claims worth $1 billion, according to the release.

Overall, compliance efforts for erroneous ERC claims have topped more than $2 billion since last fall, the IRS said.
“This is one of the most complex credits the IRS has administered, and we continue to ask taxpayers for patience as we unravel this complex process,” Werfel said. “Ultimately, this period will help us protect taxpayers against improper payouts that flooded the system and get checks to those truly eligible.”

ERC withdrawal program still open

With more than 1.4 million unprocessed ERC claims and many “questionable” filings, the IRS urges taxpayers with pending ERC claims to consider the agency’s withdrawal program. 
There’s still time to withdraw a claim if you haven’t received a payment for any tax period. If you received a check but haven’t cashed or deposited it, you can use this program to return it.
If eligible, the IRS will undo the original ERC claim and no penalties or interest will apply.
“It’s a mulligan moment” because you can still fix ERC mistakes before the IRS catches them, Dean Zerbe, national managing director at Alliantgroup, previously told CNBC.

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Construction began on about 18,000 single-family built-for-rent homes in the first quarter of 2024, a 20% jump compared with the first quarter of 2023, according to the National Association of Home Builders.
The increase in single-family rentals is in part a response to the housing affordability crisis, real estate experts say. 
Here’s what to consider if you need more space but can’t afford to buy.

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More built-for-rent single-family homes are being constructed in the U.S., according to the National Association of Home Builders, and experts say this is in part due to the housing affordability crisis.
“When mortgage rates move higher, and it’s harder to buy a home, renting becomes more of an option,” said Robert Dietz, chief economist at the NAHB.

Construction began on about 18,000 single-family, built-for-rent homes in the first quarter of 2024, a 20% jump compared with the first quarter of 2023, according to NAHB, which analyzed data from the U.S. Census Bureau’s Quarterly Starts and Completions by Purpose and Design.
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“People need somewhere to live, and they have a choice to make,” said Molly Boesel, principal economist at CoreLogic, a real estate data firm.
“And if they can’t find what they need in the for-sale market, they’re going to go to the rental market,” she said.

‘We are seeing this growing move’

As a share of all housing starts, single-family built-for-rent starts grew to 10% in 2023 from 5% in 2021, almost doubling in two years, according to the National Association of Realtors, which analyzed data from the Survey of Construction Data by the U.S. Census Bureau.

Single-family built-for-rent starts grew to 90,000 units in 2023, up from 81,000 units in 2022, the National Association of Realtors reported.
“We are seeing this growing move towards having built-for-rent properties in the U.S.,” said Jessica Lautz, deputy chief economist at the NAR.
The growing share of built-for-rent single-family homes is a response to demand from “people who can’t afford today’s very expensive, out-of-reach housing market,” Lautz said.
Homebuyer affordability declined in April, according to the Mortgage Bankers Association’s Purchase Applications Payment Index.
NAHB’s Dietz said builders are noticing “an expansion” among renters in their 30s and 40s.
Young adults are interested in built for rent “as a growing share who can’t afford to purchase a home today,” Lautz said.
“[They] have to turn to rental properties because there is no alternative,” Lautz added.
With the shortage of homes for sale, “potential buyers either can’t find what they’re looking for or it’s too expensive,” Boesel said.
And with mortgage rates still close to 7%, monthly mortgage payments are pretty high, she said, “keeping a lot of potential buyers in rentals.” 
“And if they’re at the stage of life where they would rather be in a single-family home, a detached single-family home is going to be the next best thing,” she said. 

Rent or buy?

The typical asking rent price for a single-family home in May was $2,262, a 4.7% increase from a year prior, according to Zillow. To compare, the rent price in a multifamily building in May was $1,896, up 2.6% in the same time frame, the real estate website found.
The national median mortgage payment applied for by purchase applicants was $2,256 in April, up $55 from March, according to the Mortgage Bankers Association. It is up $144 from one year ago, a 6.8% increase.
But keep in mind that a mortgage payment will depend on several factors, such as the size of the down payment and the interest rate.
Homeowners are also responsible for shouldering “hidden costs” that aren’t figured into a mortgage payment, such as maintenance, repairs, taxes and insurance.
As people consider their options, they need to understand what a realistic budget looks like. Also think about how long you plan to live in the home or if that house will fit your needs in the near future, Lautz said.

Find out what your true expenses and responsibilities will be as a single-family home renter. Ask the same set of questions that you would if you’d rent an apartment, Dietz said.
Also, it’s important to find out who is responsible for the upkeep of the property outside the home, such as the yard work, said Dietz. Typically, those tasks are covered by the property owner, but it can vary, he said. More

The Supreme Court on Thursday denied a challenge to a federal tax on foreign investments, but left questions about whether a wealth tax is constitutional.
In Moore v. U.S., the Supreme Court upheld a one-time tax on unrealized income from a foreign investment for a Washington state couple.
“They didn’t really issue a red light on anything,” said tax attorney Don Susswein, principal in the Washington national tax office at RSM US. “But there’s a gigantic yellow light about a lot of things.”

An exterior view of the Supreme Court on June 20, 2024 in Washington, DC. 
Andrew Harnik | Getty Images

In a closely watched case, the Supreme Court on Thursday denied a challenge to a federal tax on certain foreign investments — but left questions about whether a wealth tax is constitutional.
The case, Moore v. United States, focused on whether a Washington state couple received income from an investment in an India-based company that didn’t distribute dividends.

The Moores incurred roughly $15,000 in taxes due to the “mandatory repatriation tax,” a one-time levy on earnings and profits in foreign entities. The provision was enacted via the Republicans’ 2017 tax overhaul to help pay for the legislation’s other tax breaks.
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Some experts believed the Moore case could have implications for future wealth tax proposals, which have called for taxes on “unrealized gains” or profitable assets that haven’t been sold.
While the Supreme Court upheld the tax on the Moores, the justices steered clear of the broader debate on whether a wealth tax is constitutional.
“Nothing in this opinion should be read to authorize any hypothetical congressional effort to tax both an entity and its shareholders or partners on the same undistributed income realized by the entity,” Justice Brett Kavanaugh wrote in his majority opinion.

He emphasized the limited scope of the opinion and how it only addressed the “precise and narrow question” of the Moore’s case.

“The opinion itself is very narrow,” said University of Chicago Law School professor Aziz Huq. However, “powerful constitutional arguments against a wealth tax” existed before the Supreme Court opinion and still exist now, he said.
“The wealth tax thing was a stalking horse,” Huq said. “What was really at stake was this highly, highly regressive litigation strategy.”

The opinion left a ‘gigantic yellow light’

Some experts worried the case could have implications for domestic stockholders who could have imputed income from corporations that didn’t issue dividends. However, the opinion said the Moore’s realization of income was similar to other pass-through taxes on foreign companies.
But the majority didn’t decide whether realization is required for income tax.
“They didn’t really issue a red light on anything,” said tax attorney Don Susswein, principal in the Washington national tax office at RSM US. “But there’s a gigantic yellow light about a lot of things.” More

Social Security faces looming depletion dates for its trust funds in the next decade, prompting some experts to say the program is on the ballot this November.
Yet, while older voters rank the program as a top priority, they are not overwhelmingly supporting one party over another on the issue, according to a new AARP poll.
“Social Security is really an up-for-grabs issue,” one pollster said.

Joe Biden and Donald Trump
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Voters, ages 50 and older, will have a strong influence on the November election.
And politicians who want to win their vote would be wise to emphasize personal economic issues that affect them, particularly Social Security, according to a new AARP poll of likely voters from the 44 most competitive congressional districts.

When asked one question — “How worried are you about your personal financial situation?” — 63% of all voters and 62% of voters ages 50 and older checked the worried box, according to the bipartisan survey conducted earlier this month by Fabrizio Ward and Impact Research.
“It’s a substantial majority of voters who are concerned about their personal financial situation, and why economic issues are going to play such a big role in in this election,” Bob Ward, partner at Fabrizio Ward, said during a Thursday presentation of the results.
Meanwhile, for older voters, ages 50 and older, Social Security is a top economic concern, the results found.
The program’s trust funds are at risk of being depleted in the 2030s, at which point there would be across-the-board benefit cuts unless Congress acts.

Social Security an ‘up-for-grabs issue’

When asked how important the health of Social Security is in determining their vote, 80% of voters — ages 50 and older — said it is either extremely important or very important.

The issue also ranks high as a priority for voters who identify as Democrats, Republicans or independents.
“Democrats only have a three-point advantage on Social Security right now, so the parties are basically tied,” said Jeff Liszt, partner at Impact Research.
“Social Security is really an up-for-grabs issue,” he added.
Many voters said they would be more likely to vote for a candidate who will protect Social Security, he noted.
Another issue — family caregiving — also ranked as a high priority with voters in the older cohort. To that point, 80% of the group said they would be more likely to vote for a candidate who would provide support to family caregivers to help seniors live independently as they age, and 74% said they would support a candidate who would provide tax credits to help cover the costs of family caregiving.
While President Joe Biden has vowed not to cut Social Security benefits, former President Donald Trump said in a March CNBC interview that he would reevaluate spending on entitlements, which could include benefit cuts. Democrats in Congress have proposed plans to make Social Security benefits more generous, which would be paid for by taxing the wealthy.

Social Security advocacy organizations including Social Security Works and the National Committee to Preserve Social Security and Medicare recently endorsed Biden.
It was only the second time in the National Committee’s history that it endorsed a presidential candidate.
“We broke precedent in 2020 because we believed Joe Biden would fight for America’s seniors — and protect Social Security and Medicare,” Max Richtman, the group’s president and CEO, said in a statement.
“We did not trust Donald Trump to safeguard either program or to uphold other cherished American institutions,” he said. “Four years later, those beliefs have been validated beyond dispute.”
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When polling for the full ballot in the 44 competitive districts, Trump led with 42% among voters ages 18 and up, while Biden had 37% and Robert Kennedy, Jr. came in with 11% support.
Yet older voters, ages 50 to 64, are more likely to support Trump, while voters ages 65 and up are more likely to lean toward Biden.
Congressional Democrats and Republicans are tied with 45% support in the 44 districts. Voters ages 50 to 64 are the lone group favoring the GOP, with a 13-point margin. Voters ages 65 and up plan to vote for Democrats by five percentage points, the AARP poll found.
“Everyone’s focused on the presidential race, but this is very much up in the air who will control the House of Representatives this year,” Ward said.

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Generation X feels less prepared for retirement than other generations despite approaching it sooner.
Nearly half of Gen Xers, or 48%, say they won’t have enough money to enjoy retirement.
Much of Gen X is in the “sandwich generation,” taking on the financial burden of caring for both adult children and aging parents.

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As older members of Generation X inch toward their golden years, the pressure of retirement saving is on — especially for those sandwiched between the financial burdens of caring for both elderly parents and adult children.
About half, or 48%, of Gen Xers say they won’t have enough money to enjoy their retirement, a 2024 report from global asset management company Natixis Investment Managers found. Meanwhile, of those surveyed, 31% say they fear they’ll never save enough to retire. 

Gen X is typically defined as those born between 1965 and 1980. Its oldest members are several years away from retirement, but they are already starting to think about where they will live in their 70s, 80s and even 90s.
“I think where it’s very stressful for [Gen X] is being sandwiched in that tug of war, saving for their retirement as well as helping aging parents,” said Marguerita Cheng, a certified financial planner and Gen X mother. “Even if they don’t have aging parents, their parents are fine, there is still that tug of war between retirement savings and helping their kids with education.” 
Gen X is the first generation of U.S. workers to come of age with 401(k) plans as their primary retirement vehicle after employers largely shifted away from traditional pensions in the 1980s.
As retirement approaches, Gen X is feeling the financial squeeze — but financial planners say there are still ways to maximize your savings.
“Generation X is the guinea pig for the 401(k),” said CFP Preston D. Cherry, founder and president of Concurrent Financial Planning.

Cheng, CEO of Blue Ocean Global Wealth, and Cherry are both members of the CNBC Financial Advisor Council.

The survey, conducted by CoreData Research in March and April 2023, included 8,550 individual investors across 23 countries.

The ‘forgotten’ generation

Gen Xers experienced political turmoil and societal change as children in the 1970s and later entered the workforce without the security that a pension offered their parents, Cheng said. 
“We’re very irreverent, latchkey kids, independent, a little bit skeptical,” she said. “I feel like Gen X is the middle child, it’s like Rodney Dangerfield said, ‘they get no respect.’ People talk a lot about millennials, talk about boomers, but then Gen X is like the middle child, forgotten.”
As Gen Xers began to think about planning for retirement, they faced 401(k) decisions about how much and what to invest in that their boomer parents never had to consider, Cherry said.
“They’re having to make constant decisions to choose how much they’re going to contribute to their 401(k),” Cherry said. “That’s why we have automatic enrollment now, because it was so much of an under-allocation for so many years.”
The median age at which Gen X workers began saving for retirement is 30, according to the research nonprofit Transamerica Institute, which is significantly older than the generations that came after.

More than half Gen Xers, or 55%, wish they saved more for retirement, according to a recent report from the Allianz Life Insurance Company of North America. That report was based on a survey of 1,000 respondents conducted between March and April 2024. The 55% who wished they saved more said in the report that day-to-day necessities, credit card debt and housing debt prohibited them from saving more.
Much of Gen X, coined the “sandwich generation,” also found themselves caring for elderly parents and supporting their kids’ college funds as they got older. 
That toll is expected to impact the financial freedom of nearly half of the generation, with 46% anticipating living frugally in retirement, according to the Natixis report.

‘Retirement savings rates determine retirement dates’

Gen X can take advantage of their peak earning years, roughly the 40s and 50s, by maxing out contributions to tax-advantaged accounts like 401(k) plans and individual retirement accounts, according to Cherry.
Additionally, individuals who are age 50 or over at the end of the calendar year may be permitted to make annual catch-up contributions of up to $7,500 in 2023 and 2024 to their 401(k) plans.
The more someone saves toward retirement from their income, Cherry said, the earlier they can retire.
“Retirement savings rates determine retirement dates,” he said. 
For Gen Xers without a lot of extra cash flow to devote to savings, not much can be done to make up for lost time, advisors say. But it’s not too late to start saving and maximize existing savings accounts, they said.
Gen Xers can also look to delay claiming Social Security until age 70 to maximize their monthly benefits, Cherry said. They can also consider working past the typical retirement age of 65 if they are able, he added.

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