Advisors say the age at which people retire and the definition of retirement are changing.

December 14, 2023 By Josh Welsh

Many Americans’ lives consist of going to school, getting a job, buying a home, having a family and saving for a nice retirement. For Gen Xers, on the other hand, that doesn’t seem to be the case – at least when it comes to retirement.

As the cost of living continues to go up, so do the dreams of Gen Xers who would like to retire, according to the latest survey from Schroders.

Schroders found that Gen Xers – non-retired Americans between the ages of 43 and 58 – on average think they need $1,112,183 in savings to have a comfortable retirement, yet they expect to have just $661,013 saved.

While these results may paint a grim picture, advisors say it’s anything but.

“Most clients I’ve talked to, they’re not looking to do a hard stop in retirement, like hit a certain age and be 100% done, they’re just looking to downshift,” said Jeff Farrar, chief operating officer and managing director at Procyon Partners.

Ferrar, who’s considered Gen X himself, said the definition of retirement is changing and so is the age.

“If you’re still working, even if it’s part-time or a different job, that helps the retirement goal, because you’re still bringing in some cash flow with the longer ability to save,” Ferrar said.

Liz Windisch, certified financial planner at Aspen Wealth Management and also a Gen Xer, said it’s OK for Gen Xers to seek assistance with retirement planning.

“It’s time for them to get professional help,” she says. “I’m not just saying that because those are my clients, but you’re running out of time, and having a professional help you can make a huge difference. It’s time to buckle down, figure out what they need to do.”

The study also found 61% of non-retired Gen Xers aren’t confident in their ability to achieve a dream retirement, compared to 49% of millennials and 53% of non-retired baby boomers.

Generation X – also known as the latchkey generation given their independent childhoods since both parents were working – is preparing to take care of themselves, Ferrar said, with less support from Social Security in retirement.

The Schroders report found just 11% of non-retired Gen Xers say they will wait until 70 to receive their maximum Social Security benefit payments, with 47% concerned Social Security will run out.

“Waiting until they’re 70 to claim Social Security would be a tremendous help if they’re able to do that. It’s something that they should very seriously consider,” Windisch said.

Additionally, 45% of non-retired Gen Xers say they have not done any retirement planning, compared to 43% of millennials and 30% of non-retired baby boomers. With 84% of Gen Xers saying they’re concerned or terrified about the idea of no more regular paychecks in retirement, many still feel the need to keep working.

“I actually have a lot of clients who are very well prepared for retirement,” Windisch said. “They’re terrified of not having a paycheck. They’re still working, even though a lot of them probably could retire or retire soon.

“It’s a long time to live,” she added. “If you retire at 58, you might have 40 years in retirement and that is just a really scary thought.”

The Accenture Life Trends 2024 report found that with the average life expectancy increasing to 78, funding retirement is very different now than it was even 20 years ago. This also comes with long-term planning. 48% of respondents surveyed make plans less than a year ahead, or don’t at all.

“As people are living longer, retirement income products haven’t evolved very well,” said Scott Redell, managing director at Accenture. “Advisors often aren’t really equipped to talk about that with investment and kind of plan in the right way.

“Product-wise, there’s a lot of gaps and silos as well,” he said.

For those Gen Xers who want to start saving for retirement, Ferrar advises clients to “spend less than you earn and invest the difference wisely.

“I’d say the generation is not pessimistic, they’re optimistic,” he added. “They’re in their prime earning years. Their families are growing, kids are graduating from college. They’re just getting ready for the next chapter of their life.”

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