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A study in contrasts: financial outlook of boomers vs. Gen Xers

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When it comes to retirement planning and financial hurdles, America’s baby boomers and Gen Xers are worlds apart.

That’s a key theme of a new report from Allianz Life Insurance Company of North America. The study, “Allianz Generations Apart Study,” explores the different challenges boomers (ages 49-67) and Gen Xers (ages 35-48) face as they prepare for retirement.

Significant majorities of boomers (84 percent) and Gen Xers (92 percent) agree that a “retirement crisis” is coming. Both generational groups also say the crash of 2008 impacted them, and that keeping a job and planning for retirement is more difficult for Gen Xers.

But on the topic of debt, the two groups part ways. Allianz Life finds that the younger generation holds more debt and is “remarkably complacent” about the potential effect of debt on their financial future. What’s more, most Gen Xers view debt as a “necessary way of life.” One in five Gen Xers say that going into debt to pay for daily purchases is “just a fact of life.” That compares with on 1 in 7 (14 percent) of boomers.

The two groups also differ in their approaches to long-term financial planning. When questioned about their “financial philosophy,” half of Gen Xers said to “enjoy and live for today.” That view is shared by only 39 percent of boomers, most of whom (61 percent) believe they should “save and plan for tomorrow.”

Turning to the 2008 market crash, the report notes that certain survey respondents, dubbed “post-crash skeptics,” lost confidence in financial institutions and redirected investments to conservative vehicles in the wake of the downturn. More than 9 in 10 (93 percent) of these people (including both Gen Xers and boomers) say say the event “still haunts them.”

Among the survey’s additional findings:

  • 82 percent of boomers and Gen Xers agree that a traditional retirement is a “romantic fantasy of the past.” More than 8 in 10 (84 percent) from both generations say that retirement starting at age 65 spent “doing exactly what you want” is now unrealistic.

  • More than two thirds (67 percent) of Gen Xers agree that assumed targets stipulating the amounts needed for retirement are “way out of reach.” Fewer than half of boomers (49 percent) share this view.

  • Majorities of boomers (65 percent) and Gen Xers (53 percent) say they “just have this feeling that everything’s going to work out.” Also, nearly half (48 percent) of both generations agree that credit cards are essential to making ends meet.

  • Gen Xers report carrying about 60 percent more mortgage debt than their boomer counterparts. Worse, Gen Xers have 82 percent more nonmortgage debt (student loans and credit cards) than boomers do.

  • Most Gen Xers (92 percent) say that Americans are in the midst of a national retirement crisis; and 94 percent believe that building their financial security is critical. But 64 percent of Gen Xers fail to take action because of uncertainty about how to plan for to retirement.

See the slides beginning on the next page for additional highlights from the Allianz Life survey (click on the images to enlarge).

See also:

Millennial business owners: pictures of confidence (in 6 slides)

How workers’ views on retirement change as they age [Infographic]