Retirement bites? Almost half of Gen Xers say they’ll need a miracle to retire.

The oldest members of Generation X turn 59½ this month, the earliest age workers can begin withdrawing retirement assets without penalty. But many Gen Xers are far from ready for their golden years, with nearly half saying it would take a “miracle” to retire, according to a new study from Natixis.

Generation 1980. But the 401(k) puts the onus on participants’ shoulders to figure out how much to save, how to invest, and how to withdraw their money in retirement—a do-it-yourself approach that noted retirement expert Teresa Ghilarducci described as fragile.

That has left Gen Xers largely on their own to plan for retirement, and many are woefully unprepared, not just in the amount of assets they have saved, but in their understanding of important financial information, according to Natixis, an investment bank. . The average retirement savings for Gen X families is about $150,000 — far from approximately US$1.5 million that Americans say they need to retire comfortably.

What Gen X has in common with Jan Brady

Gen “They were the kids left alone after school, and they are also alone in retirement.”

About 1 in 5 Gen Xers worry they won’t be able to afford to leave work even if they can save $1 million for retirement, the study found. And about a quarter are worried that a lack of savings will force them to return to work after they retire.

Other recent studies have also found that Gen X is in poor shape for retirement, with the National Institute for Retirement Security meet earlier this year that a typical Gen X family with a private retirement plan has $40,000 in savings. About 40% of the group hadn’t saved a dime for retirement, the study found.

Still, that doesn’t stop Gen Xers from dreaming about retirement, with survey participants telling Natixis that they plan to retire at age 60, on average. They also believe their retirement will last about 20 years – less than many retirees actually experience.

Such expectations may seem discordant, especially given the lack of retirement savings they will need to finance old age. But Goodsell chalked up the conflicting views on retirement, with half of Gen Xers thinking they need a miracle to retire even if they want to stop working at age 60, as “wishful thinking.”

“The other thing I see is that 48% of people in the survey just stopped thinking [retirement],” Goodsell noted. “I interpret this as a statement that they are stressed. But having your head in the sand is not a good strategy for anything.”

Many are overly optimistic

Gen X also has some unrealistic views about their potential investment performance, with the group saying they expect their retirement assets to have long-term returns of 13.1% above inflation, Natixis findings show. At the current inflation rate of around 3.3%, this would imply a return on investment of 16.4% — well above the typical annual return of about 10% for the S&P 500.

Meanwhile, only about 2% of Gen Xers understood key aspects of bond investing, such as the impact that higher interest rates have on bond prices, the analysis found.

“For a lot of people, when they think about investing, it’s a back-of-the-napkin thing,” Goodsell said. Her advice for Gen Xers is to “learn as much as you can and be realistic about what you can accomplish.”

Still, Goodsell noted, there are some aspects of the reform that are beyond workers’ reach, which can increase people’s anxiety. About 4 in 10 Gen Xers fear they won’t be able to work as long as they want — and that, on the other hand, is based in reality, Goodsell noted.

A 2018 Urban Institute study that followed workers from age 50 to at least age 65 found that most had to stop working before reaching retirement age, with 28% stopping work after a layoff, while others 9% retired because of poverty. health. Only 19% said they voluntarily retired.