Generation X is currently most at risk for financial hardship in retirement. PricewaterhouseCoopers released results of an employee financial wellness study this week and found of employees in the generation born in the early ’60s through early ’80s say they’re likely to tap into their retirement savings. This number was higher than both surrounding generations, the Baby Boomers and Millennials. In fact, 30% of them admit to already having withdrawn from a retirement account.

“With our retirement deficiency, companies have reacted with auto-enrollment and auto-escalation of retirement plans,” says Kent Allison, partner and national practice leader of PwC’s Employee Financial Education practice. “What we’re seeing is money squeezed out the back end. These could have been people who weren’t interested in 401(k) plans otherwise because of financial hardships.” Allison says that Gen X is most stressed with aging parents, school-aged children and perhaps a home that may be without equity. So they’re turning to the only place they can, their retirement savings.

“The long-term implications are something has to give,” he says. “We’re already seeing the extension of retirement ages and that has implications for companies because the workforce is older, less healthy and more expensive.”

Allison says advisers and financial planners have to reinforce the importance of a long-term view for all generations. For example, if a client wants to pay for a child’s education through retirement savings. He says there are other ways to find funding for education through loans, scholarships and financial aid but there is no alternative to retirement. “Bad decisions are being made as people are reacting to the here and now and not focused on the long term,” he continues.

The survey also asked about employees’ biggest financial concerns. The top three apprehensions were running out of money (45%), health care costs (38%) and not being able to maintain their current standard of living (26%). PwC surveyed approximately 1,600 employees for the results reported this week.

So how does the retirement problem get fixed? “That’s the million-dollar question,” Allison says. “People have too much flexibility. A 401(k) doesn’t replicate a pension in that it can be accessed before retirement.” He says now that savings is the only answer, “people have to look at the plans themselves and see if there needs to be some action to limit the leakage out of the plan and there needs to be some required savings on their part.”

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