June 21, 2011

Gen-Xers Fear Bleak Retirement, Survey Finds

Study from eRollover.com and Siena College finds 11% ‘very confident’ lifestyle will be retained

An overwhelming majority of Americans aged 29 to 49 are worried about their prospects for retirement, yet they have not begun to save or plan for it. That’s the finding from a new study released Tuesday by retirement planning website eRollover.com and conducted by the independent Siena College Research Institute.

Only about one in ten so-called Generation-Xers is very confident of being be able to maintain their current standard of living when they retire, and 82% cannot say they are well along their path to planning a successful retirement, the study revealed.

“This group admits having its head in the sand about planning for the future,” said Tim Harrington, CEO of eRollover.com, in a statement. “They’re struggling to make ends meet and they don’t know where to turn for retirement advice. Planning for retirement has become a social taboo that many avoid discussing. Our objective is to give our members the tools they need to sweep away the sand, and take control now.”

The eRollover Study revealed that over the past six months, just 41% put aside any money beyond what their employer may have contributed to a retirement plan, fewer than half have a 401(k), and only 19% meet regularly with a financial advisor. Further, 71% agree (38% strongly) that unless something is done, Social Securitycould be bankrupt within the next 20 to 25 years.

“At the same time, their goals for retirement are lofty,” Harrington added. “Like the generation before them, they want to be able to relax, travel, engage in their life passions, move to warmer climates, and help their families. Despite tough economic times, and the current lack of preparation, hope is not lost. Those that are not confident and haven’t adequately prepared can catch up.”

The study, conducted for eRollover.com by the Siena College Research Institute, polled a representative sample of 1006 U.S. residents between the ages of 29 and 49 extensively about their financial situation, savings, investments, retirement expectations, and plans to achieve their goals.

While 71% believe Social Security must be fixed to survive, and 67% of these Americans plan to count on those payments as at least a minor source of retirement income, Gen-Xers are divided on what should be done.

Other highlights of the study include:

  • Even with dreams and plans for retirement, fewer than three in ten have a very clear and organized plan to save for retirement, and 41% believe their quality of life when retired will be worse than those who retired 15 or 20 years ago.
  • On Social Security, 58% either strongly or somewhat agree that those who retire with significant wealth should have a reduced Social Security benefit based on their assets.
  • Sixty percent, however, disagree with the idea of raising the retirement age to 70, and a plurality favor some form of privatization and increasing the payroll deduction to 14.4%.
  • Despite their skepticism about Social Security, 27% expect it to be a major source of their retirement income and 40 percent expect it to be a minor source of income.
  • Among the study group as a whole, only 15% had incomes greater than expenses, 46% track their incomes and expenses monthly, 50% have a savings account with a balance of at least $1000, 31% have at least six months of expenses saved, 48% have a 401K and 19% have a financial advisor.

Among those with incomes above $100,000, however, 29% had incomes greater than expenses, 52% budget more frequently than lower earners, 82% have a savings account with a balance of at least $1000, 59% have at least six months of expenses saved, 85% have a 401K and 38% have a financial advisor.

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