No Retirement: Fewer than One-Third of Gen X Ever Expect to Fully Stop Working, Says New Research
New Scottrade/BetterInvesting survey shows Gen X’s widespread concern about their financial future, the future of Social Security, and how much they need for retirement
ST. LOUIS . – Only 31 percent of Generation X believe they will ever be able to fully retire and not have to work, according to a new survey commissioned by Scottrade and BetterInvesting.
Forty-three percent of Gen Xers (ages 27-42) feel they will never be able to retire fully, and 26 percent were unsure about their ability to ever retire.
The survey also suggests that Gen X has other serious economic concerns related to their retirement. Many (40 percent) are saving more today because they worry they can’t count on Social Security, yet almost all of the respondents (87 percent) believe they deserve benefits from Social Security. The most common retirement vehicles for Gen X are 401(k)s, individual retirement accounts (IRAs) and general savings accounts dedicated to retirement.
“The study shows Gen Xers are the most stressed group financially right now,” said Chris X. Moloney, Scottrade’s chief marketing officer. “They are earning money and paying into Social Security and yet -- they fear they may never see the payback. They feel they deserve it, but it looks like a financial black hole to them right now.”
The root of Gen X concerns
* 24 percent aren’t sure how much they want to have saved by the time they retire
* 40 percent currently have saved less than $25,000 for retirement
21 percent aren’t sure how much they currently have saved
* 37 percent have high expectations and want to have $1,000,000 to over $5,000,000 personally saved for retirement
* 21 percent say they haven’t started saving for retirement
“Gen X is in the middle of a ‘retirement perfect storm’ -- very high expectations, low retirement savings and massive concern about the future of Social Security,” Moloney added.
”Investors are being slammed with tidal waves of discouraging news about the economy, which certainly contributes to their long-term fears about retirement,” noted Bonnie Reyes, president of BetterInvesting, a nonprofit organization dedicated to investment education. “But the good news is, this too shall pass. Those who invest early and regularly and stay the course during these more challenging times are the ones for whom history shows great rewards.”
Gen X takes action
Even though Gen X is concerned, the survey suggests they are nonetheless taking action now to make preparations for the future. Compared to their counterparts in other age groups, Gen X is saving more and spending less. A larger proportion of them are also paying down their debts and curbing their credit card usage to address their fears about the future.
“Gen X is sometimes called the ’baby bust’ generation because the U.S. birthrate decreased tremendously after the post-war baby boom years. As a smaller generation, Gen X also experiences more strain from their financial responsibility for both aging parents in a large boomer generation and young children,” said Moloney. “However, this generation more than others shows that they are trying to prepare for an uncertain future. This is a highly stressed generation, but also a highly motivated one.”
“We may see an increase in IRA contributions due to this unstable real estate market since many people count on the value of their home for retirement,” Reyes said. “When that becomes tenuous, people will be more proactive and dedicated to their IRA contributions.”
About The Scottrade/BetterInvesting 2008 American Retirement Study
The Scottrade/BetterInvesting 2008 American Retirement Study polled 1,000 Americans 18 years of age or older using Synovate’s national online research tool, eNation®, in early January 2008 to gauge Americans’ attitudes and behavioral information about retirement and retirement planning. The sample was balanced to be representative of the general population based upon region, gender, age and household income data from the U.S. Census Bureau. The margin of error was +/- 3 percent. The survey asked questions about a wide range of retirement topics, such as the respondents’ feelings toward Social Security and the amount of money people feel they need for retirement. More data from the survey will be made available in the coming weeks.
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