Are Gen Xers Overly Optimistic About Retirement?

However, Gen Xers’ savings — an average of $404,068, compared with $652,780 for boomers and $624,940 for retirees — will not produce enough supplemental income to meet their expectations. The implication is that many Gen Xers think they need to save aggressively to have sufficient retirement savings to create the income they do not expect to receive from Social Security and pensions.

Despite low confidence that their savings will last throughout retirement, 58% of Gen Xers believe they will have enough income to be secure in retirement, including enough discretionary income for leisure activities. Sixty-three percent of boomers and 76% of retirees say the same thing.

“Gen Xers have a fundamental disconnect that is consistently observed in IRI and other consumer research focused on retirement income and expenses, namely, that the desire to maintain lifestyle leads to hopeful responses,” Frank O’Connor, vice president for research at IRI, said in a statement.

“Some may believe they can work longer or part-time, expect to receive an inheritance or plan to sell a home for a significant profit. Whatever the case, retirement lifestyle expectations are out of step with retirement savings levels and confidence measures.”

The study also noted that later-stage workers and retirees overwhelmingly desire their income sources to be guaranteed for life. Gen Xers, in particular, are very interested in investment options that provide downside protection, lifetime income or both:

Target date funds: 73%
Variable annuities with lifetime withdrawal benefits: 66%
Registered index-linked annuities: 64%
Fixed indexed annuities: 63%

“Gen Xers’ desire for guaranteed income should be expected given their lack of confidence in Social Security and the endurance of their savings in retirement,” O’Connor said.

“The time is now to hone education and marketing efforts toward Gen Xers and apply lessons learned to the next generation approaching their peak earning years, which also happens to be the largest generation in history: Millennials.”

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