For those born between 1964 and 1978, planning for the new retirement reality is particularly challenging.
Unlike Millennials, who still have plenty of time to save before retirement, and Boomers, many of whom are already in retirement, Generation X is realizing that retirement is getting closer and they may not be ready, nor do they have a clear picture of how to get there, according to a new study by Allianz Life.
Gen Xers’ confidence in their ability to financially support all the things they want to do going forward is the lowest among generations, coming in at 69% versus 76% for Millennials and 86% for Boomers. And while this percentage may not seem so bad, the results show that it is starting to trend downward—from 73% in 2022 and 75% in 2021.
According to Allianz, this lack of confidence could be driven by a lack of financial knowledge. Gen Xers were found to be the least likely to understand the mechanics of saving for retirement. For instance, they apparently have no idea or cannot approximate:
- How long they expect to live in retirement (47% vs. 43% of Millennials);
- How many years their money will last in retirement (59% vs. 49% of Millennials/Boomers);
- How much they will need to save for retirement (54% vs. 47% of Millennials and 40% of Boomers); and
- What their healthcare costs will be in retirement or how they are going to pay for it (62% vs. 44% of non-retired Boomers).
Along with this lack of confidence is an emerging realization among Gen Xers that time may be running out on their retirement planning:
- 25% say they have plenty of time to save for retirement, down from 43% in 2021;
- 25% say retirement is too far away to start worrying about it now, down from 37% in 2021;
- 47% say they can’t even think about saving for retirement right now and are just trying to manage day-to-day expenses, up from 38% in 2022;
- 64% worry they won’t have enough saved for retirement, up 55% in 2021;
- 55% wish they would have saved more for retirement, up from 47% in 2022; and
- 67% say their income is not keeping up with the rising cost of living, up from 54% in 2022.
New Retirement Reality?
The study also finds that the dynamics of retirement planning have shifted as Americans navigate inflation, market volatility, fears of bank failures and other challenges.
Taken together, these factors have created what Allianz describes as a new “retirement reality” that may have fundamentally shifted the long-term outlook for many Americans. According to the survey findings:
- 56% of respondents consider “financial crises” as a permanent part of their retirement planning;
- 46% were forced to reduce or stop saving for retirement, and say they won’t be able to ramp up saving any time soon;
- 53% are hesitant to invest any additional money in the market for the foreseeable future; and
- nearly 40% admit their retirement strategy is derailed and they aren’t sure when or how they’ll get it back on track.
Meanwhile, 61% of respondents say they are more afraid of running out of money than they are of death, but many are not taking the steps necessary to set themselves up for a successful retirement. In this case, Allianz found that:
- 40% of respondents say they don’t have a financial plan for retirement and will just figure it out when they get there;
- 56% don’t know where to start planning beyond having a retirement account like a 401(k) or IRA; and
- only 42% have a written financial plan.
“People’s retirements are too important to leave to chance,” says Kelly LaVigne, Allianz Life’s Vice President of Consumer Insights. “The key takeaway here is that the new retirement reality requires everyone, now more than ever, to have a plan and stick to it. The good news is, even in these uncertain times, proper planning will go a long way toward securing your retirement goals.”
The findings are based on an online survey conducted in February and March 2023 among a nationally representative sample of 1,000 individuals aged 25 or older in the contiguous U.S. with an annual household income of $50,000+ (single), $75,000+ (married/partnered), or investable assets of $150,000.