Gen X Didn’t Prioritize Retirement Saving Until 50—Can They Catch up?
We’ve long heard that many members of Generation X are not as prepared for retirement as they should be, and a new survey adds more fuel to this fire. Six in 10 (61%) non-retired Gen Xers say they didn’t feel their retirement was an urgent priority until age 50 or older, according to a new study released today from The Harris Poll and Nationwide.
“These investors have been focused on juggling college costs for their children, caring for aging parents and managing through economic volatility over the last several years, but retirement planning can no longer wait.”
Suzanne Ricklin, Nationwide
And about a quarter (26%) say they won’t reach the point of feeling their retirement is an “urgent priority” until age 60 or older.
The study found this delayed awareness has created a domino effect. Many Gen Xers now feel like they’re behind in their planning and are fighting to catch up with their retirement savings. After realizing retirement was nearing, 40% of Gen X investors cut discretionary spending, 34% increased their contributions to retirement accounts, 23% sought out professional financial advice and 19% shifted their investment strategy to reduce risk.
“For Gen Xers, the clock is ticking. Retirement is no longer a distant milestone, but an event that’s right around the corner. These investors have been focused on juggling college costs for their children, caring for aging parents and managing through economic volatility over the last several years, but retirement planning can no longer wait,” said Suzanne Ricklin, vice president of Nationwide Retention and Sales. “Every year of delay means fewer options and greater risk they will miss out on a secure retirement. Making retirement a priority now by connecting with a financial advisor who can help pinpoint the right solutions for Gen Xers’ needs is essential for this generation.”
Even though they’re taking action, the study found Gen Xers lack confidence in their ability to stretch savings through the full duration of their retirement—and financial advisors agree with that concern. A quarter (25%) of Gen X investors say they are concerned their savings won’t last more than 14 years, and more than one in 10 (12%) say their savings are already dwindling. Many advisors share that unease, with 39% believing insufficient retirement income is one of the biggest obstacles for their Gen X clients’ retirement readiness.
Macro pressures top of mind
The survey also found the cost of living and broader macroeconomic pressures are profoundly impacting Gen Xers’ retirement plans. Despite being on the threshold of retirement, many are reconsidering their timelines entirely. In fact, 16% of non-retired Gen Xers say they are planning to retire later than initially hoped. More than one in 10 (12%) say they plan to work part-time in retirement, and 15% say they don’t know if they’ll ever be able to retire.
That uncertainty is carrying over into Gen Xers’ perspective on their post-retirement lives, too. A quarter (26%) of non-retired Gen Xers believe they would be forced to return to the workforce at some point due to inadequate savings if they retired in the next 12 months. More than four in 10 (43%) say they’d continue working in some capacity to supplement income out of necessity.
Swirling macroeconomic pressures over the last year have played a key role in this sentiment. While 29% say they won’t change their allocations, 50% of Gen Xers say the events of the last 12 months have made them more likely to put part of their portfolio into an annuity or other solution that provides guaranteed income.
Learning from observed experiences
Gen Xers are learning from their family members’ retirement experiences—and it’s changing how they approach their own planning, the research found. In fact, more than a third (37%) of non-retired Gen Xers say observing peers or family members struggle with retirement planning was a primary trigger for making retirement planning a priority for themselves.
In addition to familial struggles with retirement, the current economic landscape is driving retirement planning to the top of the list of priorities for Gen Xers, as 38% say economic changes or market volatility forced them to prioritize retirement planning. Recommendations from advisors also carry significant weight in Gen Xers’ eyes, with 28% saying a financial planning session or advice from an advisor prompted them to make retirement planning a priority.
Advisors see headwinds, offer perspective
Beyond insufficient retirement income, financial professionals have identified other key headwinds facing Gen X clients’ retirement prospects. A quarter (25%) point to insufficient emergency savings as a key retirement obstacle for Gen Xers, and a third (33%) also point to concerns around escalating healthcare and insurance expenses as one of the biggest obstacles for Gen X clients.
In response, advisors are using different, targeted approaches to help their Gen X clients compared to those used with their older clients. More than four in 10 (43%) are having more frequent and flexible communication with this cohort, keeping in touch regularly to guide them through the home stretch. Nearly a third (32%) are increasing or introducing the use of annuities with their Gen X clients.
“As Gen X investors approach retirement, working with a trusted financial advisor becomes more critical than ever,” Ricklin said. “This generation faces unique challenges, and a calm, professional perspective can help cut through the noise, keep plans on track and protect the dreams they’ve worked so hard to build. Advisors should help Gen X clients create a holistic financial plan that sets them up to meet all their needs, including a plan to ensure their money lasts as long as they do, providing confidence and clarity when it matters most.”
To address the aforementioned issues, Nationwide offers a whitepaper to help advisors facilitate conversations with Gen X clients, exploring how annuities can help address this cohort’s inflation and market volatility concerns while also offering the clarity and control they value.
Nationwide’s 11th annual Advisor Authority study, powered by the Nationwide Retirement Institute, was conducted by The Harris Poll. It includes responses from 510 advisors and financial professionals and 2,007 investors ages 18+ with investable assets of $10K+. Among the investors, there were 580 Gen X (age 45-60) respondents.
SEE ALSO:
• More Than a Third of Gen X Plans to Delay Retirement
• Nationwide Unveils RetireAssist for Small Businesses
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.