People born between 1965 and 1980 — currently aged from 44 to 59 — are not doing too well on the financial front, according to research, which says they believe they need at least $1 million to retire comfortably but don’t seem to have a way to amass that amount of funds.
Retirement ‘Out of Reach’
And the majority of people in this generation bracket, called X, think they won’t be able to retire at all, simply because they won’t be able to afford to quit working, the research, by financial firm Schroder Investment Management, found.
‘Just $661,000 Saved By Retirement’
Although members of Generation X would like to have $1 million in the bank so they can enjoy their golden years, most say they will probably have saved around $661,000 by time they stop working, Schroder’s 2023 US Retirement Survey says.
Big Generational Savings Gap
The gap between Gen Xers’ desired savings and the reality of what will likely be in their bank accounts is much bigger than for other generations, especially Millennials (1981–1996) and Baby Boomers (1955–1964), the research found.
Majority ‘Not Confident’
The majority of Gen Xers, (61 percent) say they are not confident they will have a “dream retirement” compared to just under half of Millennials (49 percent) and the majority (53 percent) of Baby Boomers who do feel confident about having sufficient savings for a comfortable retirement, the research says.
Gen X Retirement Planning
And almost half, or 45 percent, of Gen Xers who are currently working have not done any planning for their retirement, such as setting up a fund, it says. In contrast, 43 percent of Millennials are actively planning for their retirement and 30 percent of Baby Boomers are also doing so.
‘Troubling Findings’
Deb Boyden, a strategy executive at Schroders, said the research findings about Gen Xers and their retirement planning was worrying.
‘Concerning Savings Gap’
She said in a statement: “The size of the retirement savings gap facing Gen X is concerning, as they are the first generation to rely on 401k plans instead of pensions and the next in line to retire.”
‘Still Time Left’
She added: “Fortunately, even the oldest Gen Xers have some time before reaching their full retirement age. Using this time to develop a retirement plan and increase their savings rate is crucial to improving their retirement readiness before it’s too late.”
Other Gen X Findings
The research also discovered that Gen Xers were not so savvy about investing their savings, or not inclined to, instead opting to keep it in cash. The majority, or 63 percent, said they “fear losing their money” if they invested it in the stock market or elsewhere while almost one-quarter (24 percent) said they were “not sure how best to invest their savings.”
‘Terrified’ Over No Pay in Retirement
And an overwhelming amount of Gen Xers said they were “concerned or terrified about the idea of no more regular employment paychecks in retirement.” The figure was slightly lower for Millennials, at 79 percent, and working Baby Boomers, at 74 percent.
Money Worries
Millennials worry the most about money, or a lack of it, spending 1.7 hours each day thinking about cash, the survey found. Next were Gen Xers, who had money on their mind 1.5 hours daily and Baby Boomers, who only thought about cash 0.8 hours every day.
Concerns About Retirement Plans
For those Gen Xers who do have a retirement plan, most, or 66 percent, say they’re worried it won’t have grown to the level they want by time they stop working, leaving them with insufficient funds. A total of 61 percent of working Baby Boomers and 64 percent of Millennials had the same concern.
Average Household Income
Schroders’ survey, conducted by New York-based research firm 8 Acre Perspective, questioned 2,000 people aged between 27-79 from February to March last year and found that the average household income among respondents was $75,000.
‘Not too Late’ for Gen Xers
Economist and author Keisha Blair said it all is not lost because Gen Xers can act now “for lasting financial prosperity.” She says: “Gen Xers should also take a holistic approach to building wealth, as many are also in the sandwich generation with care responsibilities for both teens and aging parents.” But she cautions that “[b]uilding generational wealth requires strategic planning and disciplined financial habits.”
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