According a recent report from Insured Retirement Institute, the next generation of retirees has a long way to go in saving enough money for a comfortable retirement.
The Great Recession of 2008 greatly impacted Generation X, of which 70 million Americans are classified, setting back gains they had made for their future. IRI defines Generation X as those born between 1965 and 1981.
“Retirement Readiness of Generation X: An Overview of the Next Generation of Retirement Investors,” available here, said:
- “Only one-third of GenXers are at least very confident of having enough money to live comfortably during retirement, cover their medical expenses and pay for their children’s higher education.
- “Just 41% of GenXers have tried to figure out how much money they will ultimately need to save. And, among those who have saved, half have amassed less than $100,000.
- “The economy has played a significant role in how GenXers shape their retirement expectations. Overall, many GenXers felt the sting of the recession, as 15% made early withdrawals from their 401(k) plans, 23% stopped contributing to their retirement accounts and 22% stopped contributing to college saving plans.”
The study also found that GenXers need more help from investment advisors in making investment decisions than previous generations. “According to the Employee Benefit Research Institute (EBRI), only 15% of today’s workers are covered by a defined benefit plan,” the study said. “Additionally, IRI research shows that 56% of GenXers expect their 401(k) plans to provide a major source of retirement income, thereby requiring investment expertise to make the plan’s value stretch over more than two decades of retirement. Yet, while nearly 4 in 10 GenXers believe they are somewhat knowledgeable about investing, only 16% rate themselves as savvy investors, and 45% assess their investment knowledge as low to none.”
“All this comes down to is, Education, Education, Education!” says Dick Billings, CPC, CEBS, ERPA. “Education by the Plan Sponsor, Education by the plan’s Investment Advisor, Education by the plan’s TPA, whether via enrollment books, social media, quarterly statements, emails, website, etc. — all these tools are and will continue to be tools that must continue to be emphasized for all employees.”
Give us a call at Billings and Company to learn how we partner with Investment Advisors and Plan Sponsors in delivering timely information to plan participants. We can be reached at 800-713-401k or go to our Contact Us page.