Some 80% of Gen X 401(k) participants aren’t sure they will be able to maintain their current standard of living in retirement, a study released Wednesday by Cerulli Associates found.
The asset and wealth management firm said it is incumbent on recordkeepers and advisors to provide Gen X participants with advice and guidance to help them navigate questions and optimize their savings while they are in the workforce.
According to the study, two-thirds of Gen X 401(k) participants have less than $100,000 in individual retirement assets, so it is not surprising that many worry about maintaining their standard of living in retirement. Fifty-two percent said they expect to rely on personal investment accounts as their main source of retirement income.
Cerulli noted that with five to 20 years until retirement, members of this generation are entering a critical window in which a sustained bear market or a recession could significantly influence when they retire and with how much.
Gen Xers, like most 401(k) participants, need advice and guidance for saving during their remaining accumulation years and preparing to manage their savings in retirement. But the study found that 58% of Gen Xers are approaching this period without an advisor to help them plan for retirement.
Nearly half acknowledged that they do not feel qualified to choose their own retirement investments.
Of the majority of Gen X 401(k) participants who do not work with an advisor, 32% said the fees are not worth it, and 29% said they do not know how to find an advisor.
“Given this difficulty in finding an advisor and the belief that they cannot afford one, an opportunity exists for both recordkeepers and advisors to engage with participants, identify their needs and make them aware of how they can access help with planning and investment advice,” Cerulli research analyst Elizabeth Chiffer said in a statement.
The study found that two-thirds of unadvised Gen Xers already rely on their retirement plan recordkeeper or employer as the main source of help with retirement planning.
Cerulli said it is important for recordkeepers and advisors to work together to help these individuals chart a path forward to boost retirement readiness and confidence. It recommends that the two parties leverage perspectives from current clients to demonstrate the value of their services to Gen Xers.
Chiffer noted that three-quarters of Gen X 401(k) participants who work with advisors say their help with retirement planning is very valuable, specifically with creating a savings or drawdown strategy and with understanding how and when to claim Social Security.
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.