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Life and finances can get complicated for those in their 40s and 50s. Gen Xers (those between the ages of 44 and 59) know this all too well: Financial and caregiving responsibilities come at them from multiple generations, homeownership stress and competing priorities abound, and the income needed to pay for everyday living expenses is at its peak.
This generation is right now in the most intensely sandwiched phase of life, as they may be managing parental care, supporting adult children, and perhaps still raising kids under 18. Given this pressure on Gen X, it’s not surprising that a majority (54%) believe they need help from a financial professional to achieve their goals, according to Edelman Financial Engines' 2024 Everyday Wealth in America report.
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The report explored these changing trends, noting that 37% of Americans want a retirement that looks different from previous generations and, despite consensus that the new "normal" retirement age is 67, a third (32%) believe they will never fully retire.
As people are living longer, a growing number of older workers are indicating their preference to reduce their workload instead of retiring - pointing to changing ideals and attitudes toward retirement as a whole. Whether this is a direct result of mediocre savings strategies or just sheer enjoyment of the job, it's interesting as retirement looks drastically different for Gen X than it did (does) for previous generations.
We talked to Rose Faye Niang, Director of Financial Planning at Edelman Financial Engines about the state of retirement (and retirement planning) against the backdrop of both soon-to-be retirees who don't want to fully retire and folks feeling like they can't due to financial pressures.
Q: As Gen X stays in the workforce longer - what does it mean for their retirement?
Niang: Staying in the workforce longer can have a positive impact on the retirement nest egg for Gen X. There is the potential to continue to improve their retirement security by contributing to a 401(k) longer, taking full advantage of the company match and any catch-up provisions, receiving medical benefits and delaying when they will potentially start claiming Social Security. We can’t overlook the benefit to our mental wellbeing from having the sense of purpose and social interaction we get in the workplace. Retirement planning is not just about getting all your financial ducks in a row but also thinking about what will fulfill you after your stop working.Q: How does retirement look drastically different for Gen X than it did for previous generations?
A: Gen X has significantly less access to pensions than the boomer generation so, for most, their retirement is self-funded and self-managed. From a financial perspective, this means they have to figure how much to save and how to make the money last throughout their retirement all on their own. Navigating this alone can be extremely daunting and overwhelming. [They need to] take advantage of any resources available through [their] 401(k) or reach out to a financial planner for help. It is never too early to start saving and planning.Q: Why do a third of people think they'll never fully retire?
A: There can be a lot of reasons behind this sentiment. Our research found that 10% of Americans want to work more or pursue a second career after they retire. The idea of never fully retiring can be driven by the desire to stay engaged, fulfilled and productive in the workforce. Or it is the difficult reality for some people that they financially are not ready to retire.Working with a financial planner can help you understand your retirement income, expenses and any potential shortfalls that need to be addressed. Doing this sooner gives you a time horizon to make changes. More employers are offering holistic financial help that goes beyond the 401(k) and includes financial planning and retirement income solutions. There is enormous peace of mind from being grounded in a plan and it lets you take control of your retirement.
Q: Why do third of Americans want a retirement that looks different than previous generations?
A: As we are living longer and healthier lives, retirement is no longer viewed as the end of the road but rather an exciting new chapter in life. Our research found that Americans seek a retirement that allows them to be more active (42%), adventurous (39%) and ambitious to pursue passion projects (37%).Related: Gen X has $2M retirement goal, but only $100,000 saved: Advisors are closing the gap
Q: What is the ideal retirement Americans are looking for?
A: I have been fortunate as a financial planner to help so many clients transition into retirement, and I can tell you that it looks different for everyone. However, planning both financially and emotionally is key to a successful retirement. While many people start thinking about retirement in terms of when they’d like to leave the workforce, it might be more helpful to think about what you’d like to do with your free time first. Understanding how you’ll spend your time and money in your retirement years is an essential part of developing a realistic financial plan.
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Lynn Cavanaugh
Lynn Varacalli Cavanaugh is Senior Editor, Retirement at BenefitsPRO. Prior, she was editor-in-chief of the What's New in Benefits & Compensation newsletter. She has worked for major firms in the employee benefits space, Vanguard and Willis Towers Watson, as well as top media companies, including Condé Nast and American Media.
