How Ready Are You For Retirement?

Abstract: Northwestern Mutual’s 2025 Planning & Progress Study indicates that more than half (54 per cent) of Gen Xers – born between 1965 and 1980 – anticipate that they will not be financially set for retirement when the time comes to do so. Compounding the problem, is that they “think they will need $1.57 million to retire comfortably – $310,00 more than the magic number national average.”

Retirement Anxiety Is Rising

The latest findings from Northwestern Mutual’s 2025 Planning and Progress Study indicate that more than half (54 per cent) of Gen Xers – born between 1965 and 1980 – anticipate that they will not be financially set for retirement when the time comes to do so.

Compounding the problem, a release from the financial planning and life insurance company states, is that they “think they will need $1.57 million to retire comfortably – $310,00 more than the magic number national average.”

In April, Northwestern estimated that total to be $1.26 million; however, the findings of that study revealed that more than half (51 per cent) of  “Americans think it’s somewhat or very likely they will outlive their savings, according to the study. In contrast, only 16 per cent feel confident enough to say the prospect of outliving their wealth is “very unlikely.”

Meanwhile, more than a third (35 per cent) of Americans say they have not taken any steps to address that potential outcome, the firm said.

How Gen X Compares to Other Generations

Other key findings showed that:

• 52 per cent of Gen Xers have three times their current annual income or less saved.
• The generation with the most confidence they will be financially prepared for retirement is Gen Z.
• They began saving for retirement at the age of 24 and plan to  retire at 61 versus Gen X which started nine years later and plan to retire at 67.
• 35 per cent of GenXers say “uncertainty about finances keeps them up at night at least once a month.”

Jeff Sippel, chief strategy officer at Northwestern Mutual says that “many Gen Xers are juggling responsibilities on both ends, supporting aging parents while still helping their children, so, they’re feeling the pressure of being part of the sandwich generation.

They are, he adds, “also the first generation to truly feel the impact of the move from defined benefit plans to defined contribution plans. All of this puts more of the burden of financial planning on their shoulders.”

The Burden of Planning and Protection

According to Sippel, that is where a comprehensive financial plan custom-built by a trusted advisor can make a real impact. It can help Gen Xers get clarity on what they need as they head toward their retirement years and put a realistic gameplan in place to get there.”

In addition, he says that the nature of support is changing: “Parents are living longer and that’s compelling Gen X to provide more extended financial assistance than Boomers did with their parents. Plus, Gen X’s children need more support with the cost of college, childcare, health care, and housing all going up. Gen X is feeling the pinch, and we see it in the data.”

The findings also revealed that Gen Xers are less sure of  themselves as financial planners when compared to Boomers.

According to Northwestern upwards of half of Gen X’ers polls indicated that they have had a “financial blind spot when it comes to managing their finances – they feel they’ve placed too much emphasis on building wealth without dedicating enough to protecting their assets. The numbers for Boomers+ who say the same are significantly lower – 35 per cent.”

Growth without protection can leave people vulnerable, says Sippel, adding that as people age, “safeguarding what they have  built is just as critical as continuing to build. A holistic plan should account for both.”