The generation that came of age in the 1990s and were dubbed “slackers” in the age of Nirvana are now staring retirement right in the face.
The oldest members of Generation X — born between 1965 and 1980 — are turning 59 this year, which means they can start withdrawing their retirement savings without penalty at age 59-and-a-half.
Are they financially ready to enter their golden years? A new survey from Natixis Investment Managers says … definitely maybe.
Out of time?
Among the key findings in the report called Reality Bites: Retirement anxieties grow as Generation X turns 60, Natixis found that adults in this demographic from North America are definitely ready to retire.
On average, they plan to retire at age 60, which is a full eight years younger than Baby Boomers planned to retire. However, the numbers suggest it may not be financially realistic for many Gen Xers to retire in the coming years.
The survey found that this cohort has a median household income of $150,000 and an average of $250,000 saved for retirement, which probably won’t be enough to live 20 or 30 years in retirement.
That may be why 48% of those surveyed said they won’t have enough saved to enjoy their retirement while 41% said it would take a “miracle” to retire securely. Further, 22% said they will never save enough to retire.
In addition, some 44% of Gen Xers accept the reality that they may have to work longer than anticipated, while 30% worry that they will be forced to return to work after retirement.
Ninety-nine problems
The big concerns for Gen Xers are inflation, healthcare costs and the availability of government benefits like Social Security.
Some 85% of those surveyed called inflation a threat to their retirement security while 64% said high inflation is causing them to save less because they are spending more on everyday items.
In addition, roughly 76% of adults in this cohort are worried that rising public debt will lead to a reduction in their retirement benefits. Further, 57% said it will be hard to make ends meet without those government benefits.
Health care is also a major worry, as 31% of Gen Xers believe they’ll go broke trying to cover healthcare costs in retirement.
It is also notable that 76% said companies should offer pensions instead of defined contribution plans like 401(k) plans.
“While it’s not surprising for investors in this ‘pre-retirement’ phase to feel a degree of anxiety, the results of our survey underscore this generation’s unique challenges as they consider their retirement plans,” said Dave Goodsell, executive director of the Natixis Center for Investor Insights. “The original latch-key kids took care of themselves — self-sufficiency is part of their DNA — but maybe it’s time to ask for some help.”
Optimism remains for Gen X retirement
While many North American Gen Xers are pessimistic about having enough money in retirement, they seem to be optimistic about the markets. In fact, they may be viewing the markets as an opportunity to play catch-up, as 46% are comfortable taking investment risks.
That is evident by the fact that investors in this demographic expect to have long-term returns on their investments that average 13.1% above inflation. However, that may be too optimistic, as the average return of the S&P 500 over time is about 10% per year, while financial advisors typically target a 9% return, according to Natixis.
The survey also found that fewer members of this generation in North American seek professional financial advice. Just 38% of Gen Xers in North America say they need financial advice, compared to 56% globally.
Further, the use of advisers in North Americans among this cohort dropped to 44% in 2023 from 46% in 2019.
“Amid the complexities of retirement planning, Gen Xers are at a critical juncture, grappling with concerns over the impact of high costs, market volatility, and dwindling benefits,” added Liana Magner, executive vice president and head of retirement and institutional in the U.S. for Natixis Investment Managers.
“As they seek solutions to address these anxieties, it will be increasingly important for them to utilize resources, including financial advisors, to deploy strategies that help them navigate retirement.”
The lesson for younger generations is to start saving early for retirement as taking the Longview will help alleviate future anxiety.
