Multiple findings in the past week have all pointed to one critical theme: Gen Xers are severely unprepared for retirement.
Now, Prudential is adding to that sentiment by releasing its Pulse of the American Retiree Survey, which found that 55-year-old Americans are “far less” financially secure than their older colleagues, with a median retirement savings of less than $50,000. Furthermore, 67% of 55-year-olds are concerned about outliving their savings, compared to 59% of 65-year-olds and 52% of 75-year-olds.
Others are focusing on the short-term before moving on to their long-term savings needs. More than one-third (35%) of 55-year-olds say they would have trouble putting together $400 within one month to cover an emergency expense, compared to 19% of 65-year-olds and 15% of 75-year-olds.
A lack of financial backing plays a role in this insecurity, Prudential reports. A growing number of Gen Xers will head into retirement without pension support, and the depletion of Social Security’s trust fund in 2035 could further add to their financial stress down the road. This gap has led to more Gen Xers adopting a “do-it-yourself” attitude and relying on employer-sponsored plans like 401(k)s to fund their retirement, the research finds.
“Attention today is rightly centered on the approximately 11,000 65-year-olds entering retirement every day, but we must also focus as an industry on the opportunity to help a slightly younger generation of workers entering the critical 10-year countdown to retirement,” said Caroline Feeney, CEO of Prudential’s U.S. Businesses.
Retirement attitudes are even more daunting for women—Prudential’s research shows that female workers currently hold less than a third of the median savings of men and are nearly three times as likely to delay retirement due to caregiving responsibilities.
“Further, the financial futures of certain cohorts — such as women — are especially precarious,” added Feeney. “The upside is that, with the right planning and strategy to protect their life’s work, we can ensure this generation is well-prepared to live not only longer, but better.”
As a result, younger age cohorts may soon become the new “Sandwich Generation,” as Gen Xers lean on them for financial and housing support. According to the research, 24% of 55-year-olds expect to need financial support from family in retirement — double the number of 65- and 75-year-olds (12%). One in five (21%) also expects to need housing support, compared to 12% of 65-year-olds and 9% of 75-year-olds. Despite their expectations, 48% of 55-year-olds say they have not discussed these matters with their family yet.
While retirement is near for this group, Prudential notes that adopting retirement income products could offer the support Gen Xers are looking for. Seventy-one percent of 55-year-olds say they are interested in annuities, yet only 6% plan to use annuities in retirement, compared to 11% of 65-year-olds and 20% of 75-year-olds. This presents an opportunity for advisors to educate their Gen X clients on guaranteed income products that can sustain them in the future.
“America’s 55-year-olds have the opportunity to reimagine and protect retirement outcomes with a new set of tools that can help them safely grow their retirement nest egg while also ensuring a reliable stream of lifetime income,” 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.”
SEE ALSO:
- Gen Xers Doubt Their Ability to Retire Securely
- Gen X More Concerned About Retirement Than Other Generations
- Millennials, Gen Z More Hopeful About Retirement Than Gen X, Boomers
- How America Saves? At a Record Pace in 401(k), Vanguard Finds
Amanda Umpierrez is the Managing Editor of 401(k) Specialist magazine. She is a financial services reporter with over six years of experience and a passion for telling stories and reporting news. Amanda received her degree in journalism and government and politics at St. John’s University. She is originally from Queens, New York, but now resides in Denver, Colorado with her partner. In her free time, Amanda enjoys running, cooking, and watching the latest drama show.