Gen X Employees' Retirement Savings Look Skimpy, Survey Finds

By Bruce Crumley, Inc. (TNS)

Life expectancy in the United States has doubled over the past century. And as lifespans have lengthened, growing numbers of political and business leaders have warned that people might have to work beyond the traditional retirement age of 65 to be able to fund their extended golden years. Now it appears many Gen Xers will have no other choice—unless they start growing their insufficient nest eggs very fast, and right away. Employers wanting to help them reach that goal in time will have a role to play.

Though much has been said about the relatively comfortable financial situations for many baby boomers now heading into retirement, a new study paints a starkly contrasting scenario for many Gen Xers. The survey of 55-year-olds by Prudential Financial discovered the cohort currently has less than $50,000 in median savings for retiring—under half of what NerdWallet calculates someone making $60,000 per year should have put away by that age.

Perhaps not surprisingly, Prudential’s “2024 Pulse of the American Retiree Survey” also found 67 percent of those 55-year-olds fearing “they will outlive their savings.” As a result, it said, nearly a quarter of respondents “expect to need financial support from family in retirement—twice as many as 65- and 75-year-olds.”

Yet despite their anticipation of becoming what Prudential dubbed “Silver Squatters,” relying on family for housing and money in older age, 48 percent have yet to broach the topic with loved ones. Given demographic trends, however, younger people have probably already fully digested what Gen Xers say they’re now becoming resigned to.

Unlike the preceding generations, the 55-year-olds surveyed are at considerable risk of receiving virtually nothing from Social Security when they stop working. The over 10,000, benefits-extracting baby boomers set to retire each day from now until 2023 are forecast to exhaust the trust funds generating those payments by 2035. If so, Prudential noted, that would make Gen X “the first modern generation to confront retirement without full Social Security support, and in most cases without a defined benefit pension plan.”

But there is a Plan B, with a big place for business owners in it.

Last March, BlackRock CEO Larry Fink published a manifesto on solving the looming U.S. retirement crisis created by too many people retiring, not enough workers paying into Social Security funds, and many current and future retirees lacking sufficient private savings. An obvious start in addressing that dilemma is for employees now enjoying better health and longer lives to work beyond age 65—a suggestion that generated more than a few boos when Fink voiced it.

But along with that stick of calling for longer working lives, Fink offered a carrot. He took note of the many investment products on the market that can help people with insufficient individual reserves grow the retirement savings they have relatively quickly—ideally, enough to finance delayed retirements. But that will only work if people act now.

That’s a view Prudential shares—especially since the company, like BlackRock, handles large volumes of retirement investments.

“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,” Dylan Tyson, president of Prudential’s Retirement Strategies, said in a report accompanying the survey. “America’s 55-year-olds have the opportunity to reimagine and protect retirement outcomes … (and) to safely grow their retirement nest egg while also ensuring a reliable stream of lifetime income.”

Employers can help by organizing and offering their own robust company retirement investment plans—beyond the 401(k) funds Prudential’s survey found Gen Xers already rely on twice as much as boomers. Fink even considered creation of a nation-wide system requiring companies to establish those new saving schemes, automatically enroll employees in them, and transfer any accumulated funds to other plans if workers change jobs.

Small business owners may have a harder time creating and running retirement savings plans on their own. Yet they’re certainly free to consult myriad financial service providers about setting up retirement investment schemes for their company and its employees. Workers heading toward their final working days with larger reserves as a result of that effort will thank their bosses for it—as will their children spared any “Silver Squatter” scenarios in later life.

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