With 10 years to go, near-retirees have a shot to avert the midlife retirement crisis

As a record number of Americans turn 65 in 2024, a new survey from Prudential Financial turns the focus on the financial straits faced by those set to cross that retirement threshold in 10 years.

The 2024 Pulse of the American Retiree Survey suggests today’s 55-year-olds are not as financially equipped for retirement as previous generations, partly due to the risk of Social Security trust funds running dry in 10 years. Beyond that, that cohort of near-retired workers are less able to rely on the increasingly endangered defined benefit pension to support their needs in old age.

Caroline Feeney, CEO of Prudential’s US Businesses, said the focus on the roughly 11,000 65-year-olds entering retirement daily shouldn’t take the industry’s attention away from the “slightly younger generation of workers entering the critical 10-year countdown to retirement.”

“Further, the financial futures of certain cohorts — such as women — are especially precarious,” Feeney said in a statement.

According to the survey, 55-year-olds are grappling with complex financial and personal challenges, registering life satisfaction levels of 6.2 on average, compared to 7.0 and 7.4 for 65- and 75-year olds, respectively. That financial insecurity adds to the pressures on their mental health, with just over half of financially insecure 55-year-olds (53 percent) saying they’re living with mental health issues.

The median retirement savings for 55-year-olds is less than $50,000, which is significantly below the recommended amount of eight times their annual income. That’s caused two-thirds (67 percent) to fear outliving their savings, compared to just 59 percent of their 65-year-old counterparts.

Financial independence in retirement is looking unlikely for a quarter of near-retirees who expect they’ll need financial support from family during retirement, which Prudential says is double the rate seen among 65- and 75-year-olds.

The poll also highlighted an emerging trend of “silver squatters” as 21 percent of near-retirees expect they’ll need housing support in their sunset years – an elephant-in-the-room topic for 48 percent who haven’t broached the subject with their family.

Inflation has had a notable impact on the next-to-be-retired, with one-third of 55-year-olds delaying retirement due to higher living costs. Compounding the financial strain, more than a third said they’d struggle to deal with a $400 emergency expense, compared to just 19 percent of 65-year-olds and 15 percent of 75-year-olds.

In yet another show of the gender wealth gap, Prudential Life said women reported having less than a third of the median savings of men. Beyond that, they were nearly three times more likely than their male peers to put off retirement due to caregiving duties.

The shift away from defined benefit pension plans means 55-year-olds are more reliant on employer-sponsored plans like 401(k)s. While annuities offer a potential fix to the widening retirement income gap, only 6 percent of 55-year-olds plan to use them, though 71 percent of the respondents said expressed interest in the products.

“America’s 55-year-olds have the opportunity to reimagine and protect retirement outcomes with a new set of tools,” said Dylan Tyson, president of Retirement Strategies at Prudential.

“With the retirement model evolving beyond traditional pensions, lump sums and Social Security, it is critical that we work together to prepare for better and longer lives throughout retirement,” he said.