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What Are Generation Xers’ Biggest Retirement Worries?

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A lot has been written about the retirement savings crisis in the U.S. In a recent blog, we noted that the median retirement account balance for working-age American households is only $3,000. And the National Institute on Retirement Security (NIRS) has calculated a retirement savings deficit in the U.S. of between $6.8 trillion and $14 trillion.

Meanwhile, a survey recently conducted by the Insured Retirement Institute (IRI) has shed some new light on the biggest retirement planning concerns of members of Generation X, which are as follows:

  1. Changes to Social Security, cited by 66 percent of respondents.
  2. High healthcare costs, cited by 64 percent of respondents.
  3. Running out of money, cited by 59 percent of respondents.

A Well-Placed Concern

Gen Xers’ concern about running out of money in retirement might be well-placed. According to the survey, 40 percent of Gen Xers have no retirement savings at all. Among those who do have retirement savings, only 23 percent have saved more than $250,000.

Remember: The oldest Gen Xers — who the IRI defined as those between the ages of 36 and 55 — are only a decade away from the traditional retirement age of 65. So time is clearly running short for these individuals to save enough money to ensure a financially comfortable retirement.

The survey also found that only one-third of Gen Xers have tried to calculate how much money they’ll need to save for retirement, and only 20 percent have talked to a financial advisor. There is a sharp divergence in retirement confidence between those who have and haven’t talked to a financial advisor.

For example, 87 percent of Gen Xers who have talked to a financial advisor say they’re confident they’ll have enough money to cover their basic living expenses in retirement. Among all Gen Xers, this drops to just 58 percent.

Main Retirement Worries

Among Gen Xers who have talked to a financial advisor, saving enough money isn’t their main retirement planning worry. Instead, these Gen Xers are primarily concerned about:

  1. Paying long-term care costs for themselves. Only 63 percent of Gen Xers are somewhat or very confident about this.
  2. Helping pay long-term care costs for their parents. Only 53 percent of Gen Xers are somewhat or very confident about this.
  3. Paying for their kids’ college educations. Only 51 percent of Gen Xers are somewhat or very confident about this.

Long-term care (LTC) insurance can help cover costs incurred for nursing homes and assisted living facilities that may be necessary later in life. This type of insurance may be a smart buy when you consider that the high costs of long-term care can quickly deplete even a healthy retirement savings account.

On the college education front, Section 529 plans can help Gen Xers save money for their kids’ college educations and also receive valuable tax benefits. There are two main types of 529 plans to choose from: 1) prepaid tuition plans that lock in a specified amount of future tuition at today’s prices, and 2) investment savings plans that enabling you to seek market returns on your college savings.

Please contact us if you would like to discuss retirement saving strategies in more detail.

The commentary is limited to the dissemination of general information pertaining to Frontier Wealth Management, LLC’s (“Frontier”) investment advisory services. This information should not be used or construed as an offer to sell, a solicitation of an offer to buy or a recommendation for any security, market sector or investment strategy. There is no guarantee that the information supplied is accurate or complete. Frontier is not responsible for any errors or omissions, and provides no warranties with regards to the results obtained from the use of the information. Nothing in this document is intended to provide any legal, accounting or tax advice and Frontier does not provide such advice. This information is subject to change without notice and should not be construed as a recommendation or investment advice. You should consult an attorney, accountant or tax professional regarding your specific legal or tax situation.