The Insured Retirement Institute (IRI) recently released the findings from its fourth biennial report on Generation X and its thoughts about – and preparations for – retirement.
With only 10 years until the eldest of the cohort turn 65, the majority of GenXers believe their savings will cover their basic expenses and allow for leisure and travel in retirement. However, this confidence is misguided as 40% of GenXers have no retirement savings – an increase of 5% from the previous study – and two-thirds have not attempted to calculate how much they would need to save in order to retire.
“Time is running short for GenXers to save for a financial secure retirement,” said IRI President and CEO Cathy Weatherford. “Unfortunately, fewer GenXers are saving for retirement or utilizing professional financial advice than in previous years.
The study notes the top three retirement risks GenXers are most concerned about are changes to Social Security (66%), high health care costs (64%), and running out of money (59%), “and financial advisors are uniquely positioned to help them effectively plan for these concerns,” Weatherford said. “In fact, the research clearly shows that GenXers working with advisors are better prepared for retirement, and far less concerned about the risk of falling short. As the responsibilities of funding retirement falls more on the individual, it is encouraging to see that the majority of GenXers anticipate their own savings will form the bulk of their income. However, they must build sound plans for the use of those savings, including the use of annuities to provide guaranteed lifetime income, and align their expectations with their financial resources.”
Key findings from the report include:
- Economic satisfaction is up slightly among GenXers, with 67% feeling satisfied with their lives from a financial standpoint versus 64% in 2016.
- 6 in 10 GenXers have money saved for retirement. This is down from 65% two years ago.
- Of those with retirement savings, 7 in 10 have less than $250,000 saved, down from 8 in 10 in 2016. However, this shift is the result of those with savings of $250,000 or more nearly doubling, from 12% in 2016 to 23% in 2018.
- 6 in 10 GenXers believe private employers should be legally required to offer a 401(k) plan to employees, and a staggering 81% would like to be offered an option to take a portion of their retirement plan balance as monthly, guaranteed lifetime income.
- Despite their concerns regarding adequate savings and expenses, and most having either no savings or comparatively low retirement account balances, 60% of GenXers believe they will have enough money in retirement to cover their basic expenses and allow them to enjoy some (36%) or extensive (24%) travel and leisure activities.
The study data is based on an online survey conducted by Woelfel Research, Inc. A total of 802 respondents completed the survey between Feb. 1, 2018 and Feb. 4, 2018. Survey respondents were Americans ages 36 to 55, and the results were weighted by age and gender to the 2012-2016 American Community Survey. The margin of error for the survey was +/-3.5% at the 95% confidence level.
About the Insured Retirement Institute: The Insured Retirement Institute (IRI) is the leading association for the retirement income industry. IRI proudly leads a national consumer coalition of more than 30 organizations, and is the only association that represents the entire supply chain of insured retirement strategies. IRI members are the major insurers, asset managers, broker-dealers/distributors, and 150,000 financial professionals. As a not-for-profit organization, IRI provides an objective forum for communication and education, and advocates for the sustainable retirement solutions Americans need to help achieve a secure and dignified retirement. Learn more at www.irionline.org