Here’s a shocker (or maybe not); baby boomers refuse to grow up. A new survey The PNC Financial Services Group finds their children are better prepared for retirement.
The survey, which measured the attitudes on retirement preparedness of Generation X, defined as those between the ages of 35 and 49, and baby boomers, between the ages of 50 and 68, also revealed that more than half believe they will need $1 million or more to be comfortable in retirement.
Generation X expects to need an average of $1.5 million for retirement while baby boomers’ average expectation is slightly lower at $1.3 million. However three-quarters (74 percent) of boomers have yet to reach the $1 million milestone.
In PNC’s survey of 1,017 adults with investable assets of at least $50,000, 65 percent of Generation Xers responded “I believe I am solely responsible for my retirement (no Social Security, employer pension, inheritance, etc.)” vs. 45 percent of boomers.
The survey showed that while only one in seven (15 percent) of all survey respondents are still coping with the effects of the Great Recession, seven out of 10 changed their financial behavior as a result. A majority of Gen X (51 percent) say they are saving more for retirement, compared to 37 percent of boomers.
“One outcome of the Great Recession is that we are seeing meaningful changes in financial behavior in 71 percent of all survey respondents, especially among Generation X. One of the most challenging tasks is changing habits, particularly in managing spending and debt and increasing savings and seeking advice,” Celandra Deane-Bess, senior wealth planner for PNC Wealth Management and chair of PNC’s national practice group for retirement , said in a statement.
Many of those surveyed know that their 401(k) or comparable plans will not be enough to get them over their retirement goal. On average, respondents invest 11 percent in their employers’ retirement plan and another nine percent (on average) specifically for retirement outside of these plans.
Younger investors worry more that they will have enough to live on for the rest of their lives. Three quarters (73 percent) of Generation Xers agreed with the statement “I worry that my savings may not hold out for as long as I live” as opposed to 55 percent of boomers.
“It is important to note that the actual amount needed to retire comfortably is dependent on the individual level of spending in retirement and the cost of living in the area of the country one may reside. It is also affected by how effectively individuals have managed debt throughout their working years,” Deane-Bess said.
Other insights from the survey included:
No matter the age, an overwhelming number expect Social Security to be there for them. Ninety-four percent of all survey respondents agreed “I have earned my Social Security through paying Social Security taxes and therefore it is owed to me.”
Healthcare concerns high: 84 percent of all survey respondents fear that healthcare costs will be too expensive in retirement, topping the list of all concerns among respondents. Generation X is slightly more worried than boomers (89 percent vs. 83 percent).
Control is important: Nearly all (95 percent) said “it (is/was) very important to me to be able to retire when I (choose/chose) to do so.”
Generation Xers expect to retire younger at an average age of 63.6 years while Boomers expect to retire, on average, at 65.5.
Of those who participate in a 401 (k) program at work, seven in 10 (70 percent) are offered an employer match. Nine in 10 (90 percent) say that match is important to overall retirement savings.
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
