As Gen X turns 60, this generation doubts their retirement readiness
This "sandwich generation," more than any others, may need to be made aware of just how short they may be in their retirement savings journey, as well as SECURE 2.0 catch-up contributions, according to a new report.
As the oldest Gen Xers, who were born between 1965 and 1980, are set to turn 60 in 2025, this typically self-reliant generation of employees has a lot of anxieties, as they’re entering the “pre-retiree” phase of planning – and may be looking to accelerate savings, according to a new Natixis Investment Managers report, “Reality Bites: Retirement anxieties grow as Generation X turns 60.”
Gen X is the first generation to enter the job market following the broad shift from pension plans to 401(k)s.
Almost half (48%) of Gen Xers surveyed say it’s going to take a “miracle” to retire securely. As pre-retirees, they see a larger generation – baby boomers – ahead of them, and 37% worry that their Social Security benefits will be cut. They also are afraid they will go broke trying to cover their health care costs.
More down- to-earth advice from advisors and employers would be for Gen Xers to face these three challenges:
Growing concerns about retirement: Gen Xers are worried about coming up short and most are resigned that they have to work longer than expected, however, 47% are worried thy won’t be able to work long enough.
Inconsistent investment expectations: While Gen X investors are optimistic, they may possess misplaced views on risk and have misconceptions about passive investments.
Professional financial planning: Financial planning (48%) and retirement income planning (44%) top the list of financial services that Gen X is looking for.
Employers may want to make Gen Xers aware of the catch-up contributions available to plan participants. SECURE 2.0 is raising the catch-up contribution limit for older workers to help make a comfortable retirement more attainable. Beginning in 2025, retirement plan participants ages 60-63 will have the opportunity to save more.
Showing employees how short they are on their retirement savings journey might be a good motivator for Gen Xers.
Related: Help employees catch up on retirement savings? It’s a balancing act
“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,” said Liana Magner, Executive Vice President and Head of Retirement and Institutional in the US 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.”