Gen X Slips Behind in Retirement Planning
Financial advisors with second-wave boomer or Gen X clients who need a push toward more aggressive retirement planning will find a potent tool in a new study from the Pew Charitable Trusts.
The study, “Retirement Security Across Generations,” released last week, found that the typical Gen X couple — those born between 1966 and 1975 — has saved enough to replace just half of pre-retirement earnings, Bloomberg reports. By contrast, early baby boomer couples (born 1946 to 1955) can expect to retire with 82% of their income intact. Later boomer couples (born 1956 to 1965) are closer to their Gen X counterparts, facing retirement with about 59% of former earnings.
Those younger boomers and the Gen X generation, hit particularly hard by the latest recession, “face a real possibility of downward mobility in their golden years,” Pew’s Diana Elliott told Bloomberg. Financial advisors generally recommend that Americans aim to retire with enough wealth and savings to replace 70% to 100% of pre-retirement income.
The recession wiped out 45% of net worth for the typical Gen Xers (less wealthy to begin with), 28% for early boomers and 25% for second-wave boomers, the report found. The study drew from the Survey of Consumer Finances, which the Federal Reserve conducts every three years.