America’s next generation to retire en masse is worryingly unprepared for the next chapter in their lives. If only they had heeded advice to take retirement planning seriously.
A new survey from Schroders reveals the retirement crisis facing Gen Xers (aged 44-59) as they close in on their retirement years, with the oldest of this cohort approaching their sixties.
Gen X respondents said they would need $1,069,746 in savings for a comfortable retirement, but they expect that they will only have $602,944, leaving them with a $466,802 retirement savings shortfall.
The generations above and below Gen X have different ideas about what they will need and what they will have. Boomers have lower expectations of what is required ($1,004,072) but believe they will be closer to this target than Gen Xers with $651,673 in savings. Millennials have a higher target ($1,171,067) but also believe they will be closer to this target ($848,939).
This means Gen X expectations are for a larger shortfall than Boomers ($353,069) and Millennials ($322,128) and that 54% of Gen X are concerned or very concerned about outliving their retirement savings, well above the 40% of Boomers who said this and even above the 50% of Millennials who said this.
“If planning and saving don’t become higher priorities, Gen X could become the lost-retirement generation,” said Deb Boyden, Head of US Defined Contribution, Schroders. “As the first generation to come of age with 401k plans rather than traditional pensions as their primary retirement savings, many Gen Xers missed out on the automation features that were not available in the early years of 401ks, such as auto enroll, auto escalate and QDIAs [Qualified Deferred Investment Alternatives] for a good part of their savings.”
Gen X are also revealed by the survey as less likely (27%) than Boomers (37%) or Millennials (31%) to be working with a financial advisor and are more likely to say they have not done any retirement planning (48%) than the other two generations (41%), leading to 60% of Gen Xers lacking confidence in achieving their retirement dream and 50% thinking they may have to return to work to pay their bills.
Gen Xers are holding (on average) 35% of their assets earmarked for retirement in cash with almost two thirds saying it’s out of fear of losing too much money if the stock market goes down.
“It’s never too late to seek the services of a financial advisor or explore investment solutions tailored to help retirees grow and safeguard their savings,” added Boyden. “With more than half of Generation X worried about outliving their assets, a plan for generating income in retirement that includes an informed decision about when to apply for Social Security benefits could provide much-needed peace of mind.”
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