A large cohort of adults in their mid-50s, often referred to as “silver squatters,” are woefully unprepared for retirement. These individuals, part of Generation X (aged 43-59), find themselves in financial straits and significantly less prepared for retirement than the baby boomers preceding them. According to a Prudential Financial survey, nearly half of Gen Xers believe they will need to postpone retirement.
For many, saving for the future has been a challenge compounded by a variety of personal and economic hurdles. Take Jim Thomas, a 52-year-old employee at a lumber mill. Despite making “good money,” Thomas had to restart his retirement savings after a layoff, a divorce, and several legal disputes drained his finances.
Currently, he has around $100,000 saved, which is well below what financial advisors traditionally recommend by age 60. Thomas is realistic about his future, acknowledging that he may need to rely on family or government assistance beyond Social Security to make ends meet. For Thomas and many others like him, the struggles reflect broader financial trends among Gen Xers.
The same Prudential survey revealed that the median retirement savings for those in their mid-50s is just under $48,000. Astonishingly, 35% of 55-year-olds have less than $10,000 saved, and 18% have nothing saved at all. Concerns over outliving their savings are prevalent, with 66% of 55-year-olds expressing this fear.
Pete Welsh, managing director of retirement and wealth at Inspira Financial, notes that Gen Xers are not as prepared as boomers and, in fact, are doing worse than millennials in some areas. Welsh attributes the precarious state of retirement readiness among Gen Xers to various factors, including late planning and unique economic challenges, as well as less financial literacy within the generation.
Gen X’s retirement savings dilemma
René, a 50-year-old from Austin, Texas, shares similar concerns. She and her husband had amassed $380,000 in life savings, which was drastically reduced following a medical diagnosis and related expenses. Now, the couple is unsure whether they will receive any additional financial assistance upon retirement outside of their expected pension payments.
With no external family to lean on, René fears having to extend their working years indefinitely. The “silver squatters” face multiple financial burdens and expectations. Many anticipate having to work part-time post-retirement, with 47% of Gen Xers expecting to retire later than initially planned, and 40% planning to work after retiring.
Additionally, a significant portion expects to depend on family support for housing and finances during their retirement years. Experts believe that Gen Xers’ financial challenges could be partly due to the economic conditions they faced, such as being in their prime working years during the 2008 financial crisis. Additionally, responsibilities such as funding their children’s education and supporting aging parents have placed added financial strain on them.
Lower rates of financial literacy exacerbate these issues. According to Prudential, around half of Gen Xers are saving without a solid retirement plan. Many are not factoring in significant expenses such as healthcare or assisted living, and often underestimate how much they need to save due to increasing life expectancies.
In conclusion, without adequate preparation and planning, Gen Xers may face significant challenges as they approach retirement. Financial advisors urge this generation to reassess their retirement strategies and prioritize their savings plans.
