Thu. Jul 25th, 2024
alert-–-the-alarming-number-of-gen-xers-whose-401(k)-plan-is-to-retire-in-their-kids’-spare-roomsAlert – The alarming number of Gen Xers whose 401(K) plan is to retire in their kids’ spare rooms

Gen Xers are edging closer to retirement age and realizing that their 401(K) won’t go the distance, an alarming report shows.

A survey reveals that 55-year-old Americans have typically saved less than $50,000 for their pension — far below the $446,565 that’s recommended at this stage.

Nearly a quarter of them expect to be cash-strapped and plan to turn to their children for support.

More than a fifth said they’d likely need to move in to their kids’ spare room or basement as a ‘silver squatter.’

Prudential, a finance group, surveyed the oldest members of Generation X, or people born between 1965 and 1980.

They are now entering their pre-retirement years, giving them about a decade to bank more savings before waving goodbye to their workplaces for good.

Many are worried about Social Security cutbacks eroding what’s left of America’s safety net.

Caroline Feeney, CEO of Prudential’s US Businesses, said many 55-year-old women had ‘especially precarious’ finances as they entered the ‘critical 10-year countdown to retirement.’

She urged Gen Xers to look at their 401(K) and rethink plans so they’re able ‘to live not only longer, but better.’

The rule of thumb for 55-year-olds is to have about eight times their annual salary saved in their retirement accounts.

Instead, the median savings are $47,950.

Only one in five 55-year-olds have saved the recommended $447,000 or more, researchers found.

Many say they’ve struggled to put money aside throughout their careers thanks to the dot-com bubble burst, the housing crisis, the global pandemic, and surging inflation.

Many have also been saddled with taking care of their kids and aging parents simultaneously as a result of lengthening lifespans.

Fully 67 percent said they expected to run out of cash before they kicked the bucket.

That means they’re looking for other options — and plan to turn to their loved ones when the pension pot is empty.

Fully 24 percent said they would turn to their children or other family members for support, and 21 percent said they would likely end up asking a relative to use a spare room or basement.

This may come as a shock to the relatives of these Gen Xers, as nearly half of the respondents admitted they haven’t yet broached the subject with their offspring.

Dylan Tyson, a Prudential retirement expert, says it’s time for many of them to ‘grow their retirement nest egg.’

A 55-year-old starting with $50,000 in retirement savings could end up with a $500,000 pension pot within a decade, but it requires hard work and some good fortune.

They would have to save around $2,000 a month and earn a 10 percent annual return on their investments.

Gen Xers are also taking to social media to complain about their meager 401(K) pots and share tips on banking as much as possible this coming decade.

TikTok financial advisor Jen Walton says ‘most Gen Xers are worried they’re not going to have enough money to see them through retirement.’ 

She urged them to get a side-hustle to build up a bigger nest egg and quit working ‘sooner rather than later.’

Kendra Fejedelem, a Colorado-based nurse practitioner, says she has given up on saving.

The Gen Xer expects to drop dead from work before she reaches 65, saying her ‘retirement plan is to pass away.’

Their fears are compounded by the unraveling of America’s safety net.

Recent data show the funds underpinning social security and Medicaid could dry up in a little more than a decade.

Social Security relies on its trust funds to provide monthly benefit checks to around 70 million Americans.

But an aging population is pushing up the cost of the program as a smaller share of people are paying into it, and spending outpaces income.

In what has been dubbed the ‘silver tsunami,’ around 4.1 million Americans are due to turn 65 in 2024, and every year through 2027, according to a report from the Alliance for Lifetime Income.

The latest annual report from the Social Security Board of Trustees found that Social Security would only be able to pay out full benefits for the next 11 years.

Social Security is financed mainly through payroll taxes that are taken out of paychecks — which are then used to pay retirement and disability benefits.

If the trust funds which the Social Security Administration relies on are depleted, beneficiaries would face cuts to their monthly checks.

This could be significant for millions of disabled Americans, and those who rely on Social Security as their sole income in retirement.

The financial outlook of the Social Security system has long been a point of political contention.

Republicans have suggested the retirement age be raised, while Democrats have offered increasing the cap on payroll taxes as a potential solution.

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