A recent study by Scottrade and BetterInvesting found that 43% of Gen Xers do not expect to ever be able to retire. In addition, 26% were unsure that they would be able to retire one day. Here’s what Chris X. Moloney, Scottrade’s chief marketing officer, had to say about the study:
“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.”
Although everyone died on the boat (and I don’t expect such carnage here), I understand and agree with the implications of the reference to a perfect storm. But is this a generational thing? Let’s go one by one:
Do Gen Xers really have higher retirement expectations? Not the ones I talk to. Heck, the study itself indicates that two-thirds of Gen Xers are unsure they’ll ever be able to retire. Seems like pretty low expectations to me.
Low Retirement Savings
Once again, is this something that is specific to Gen X? I think not. In fact, I bet that in their 20s and 30s, Gen X has saved more of their own money for retirement than any previous generation. Of course, they have received far less from their employer (in the form of accruing pension benefits) than the generations before them did. But whose fault is that exactly? No Gen Xer I’ve ever met has opted out of a defined benefit pension to go buy a latte or been part of the executive committee voting to end the benefit for others.
Massive Concern About the Future of Social Security
Here’s my passionate agreement. You bet there’s massive concern about the future of Social Security! You could call it paranoia, but if there really were ants in my daughter’s bed, is it a bad dream or just really bad uncontrollable circumstances? Gen X, like the Boomers, continues to make huge involuntary payments every paycheck to today’s retirees. Yet few believe they’ll see much (if any) return from that money. Personally, I tell people to treat any Social Security benefits they may see during retirement as gravy. This stinks (I’d use a different word if this were a verbal conversation) because the enormous payroll tax (7.65% paid by you and 7.65% paid by your employer) makes it so much harder for each of us to save.
Maloney had another comment: “[Gen Xrs] 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.”
I like the black hole analogy. But I’m glad we know about it now, when we can still do something about it.
What do you think? Black hole? Perfect storm? Are you getting ready or hoping it goes away?