WASHINGTON, D.C. – Tens of millions of workers in Generation X (Gen X) will approach retirement uneasy about Social Security and worried that their retirement savings would be insufficient to fund their expected retirement lifestyles, according to a research brief by the Insured Retirement Institute (IRI).
Further complicating the Gen X retirement income equation is that Gen Xers are significantly less likely to expect retirement income from a public or private pension than Baby Boomers or current retirees, and almost one-third of Gen X does not expect to receive Social Security in retirement.
The IRI survey data shows Gen Xers believe they will need more income than Boomers or current retirees (in today’s dollars). The implication is that many Gen Xers think they need to save aggressively to have sufficient retirement savings to create the income they do not believe will come from Social Security and pensions.
Despite low confidence in their savings lasting throughout retirement, most Gen Xers believe they will have enough income to be secure in retirement, including enough discretionary income for leisure activities.
“Gen Xers have a fundamental disconnect that is consistently observed in IRI and other consumer research focused on retirement income and expenses, namely, that the desire to maintain lifestyle leads to hopeful responses,” said Frank O’Connor, Vice President, Research. “Some may believe they can work longer or part-time, expect to receive an inheritance or plan to sell a home for a significant profit. Whatever the case, retirement lifestyle expectations are out of step with retirement savings levels and confidence measures.”
The study also noted that later-stage workers and retirees overwhelmingly desire their income sources to be guaranteed for life. Generation Xers, in particular, are very interested in investment options that provide downside protection, lifetime income, or both.
“Gen Xers’ desire for guaranteed income should be expected given their lack of confidence in Social Security and the endurance of their savings in retirement,” O’Connor said. “The time is now to hone education and marketing efforts toward Gen Xers and apply lessons learned to the next generation approaching their peak earning years, which also happens to be the largest generation in history: Millennials.”
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Contact: Dan Zielinski
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