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Subjects: Survey, Economic News/Analysis

Faced With Largest Retirement Savings Gap, Majority of Generation X Believe Dream Retirement Is Out of Reach

According to the Schroders 2023 U.S. Retirement Survey, non-retired Americans between the ages 43 and 58 (Generation X) say on average it will take $1,112,183 in savings to retire comfortably, yet they expect to have just $661,013 saved. The resulting savings gap of $451,170 tops the expected shortfall facing Millennials and Baby Boomers.

Millennials (ages 27-42) believe they will need $1,280,892 to retire comfortably and expect to have $877,266 saved, leaving a savings gap of $403,626. Non-retired Baby Boomers (ages 59-77), believe it takes $924,897 to retire comfortably, which exceeds the amount expected to be saved ($633,401) by $291,496.

Notably, 61% of non-retired Gen Xers are not confident in their ability to achieve a dream retirement compared to 49% of Millennials and 53% of non-retired Baby Boomers.

Further, 45% of non-retired Gen Xers say they have not done any retirement planning, compared to 43% of Millennials and 30% of non-retired Baby Boomers.

"The size of the retirement savings gap facing Gen X is concerning, as they are the first generation to rely on 401k plans instead of pensions and the next in line to retire," said Deb Boyden, Head of U.S. Defined Contribution at Schroders. "Fortunately, even the oldest Gen Xers have some time before reaching their full retirement age. Using this time to develop a retirement plan and increase their savings rate is crucial to improving their retirement readiness before it's too late."

Underscoring the need for a plan, non-retired Gen Xers are allocating on average 32% of their assets earmarked for retirement to cash despite their time horizon and sizeable retirement saving gap. When asked about the reasons for investing their retirement assets in cash, almost two-thirds of these Gen Xers (63%) say they fear losing their money and nearly one-quarter (24%) report they are not sure how best to invest their savings.

Perhaps not surprising, Generation X, which is also known as the latchkey generation due to independent childhoods that resulted from being raised by working parents, is preparing to make do with less support from Social Security in retirement. Just 11% of non-retired Gen Xers say they will wait until 70 to receive their maximum Social Security benefit payments with 47% reporting they were concerned Social Security may run out of money. This tops the proportion of non-retired Baby Boomers (38%) and Millennials (44%) who fear potential insolvency for Social Security.

"As the first generation to head into retirement without the safety net of a pension plan, the stakes are higher for Generation X and the margin for error is lower," said Boyden. "Not only are Gen Xers facing a formidable savings gap, our findings suggest a knowledge gap is a formidable headwind that's threatening to prevent many from reaching their dream retirement."

Additional findings:

About the Survey

The Schroders 2023 U.S. Retirement survey was conducted by 8 Acre Perspective among 2,000 U.S. investors nationwide ages 27-79. The survey was conducted from February 13 to March 3 in 2023. The median household income for working Americans surveyed was $75,000.

For more information on the Schroders 2023 U.S. Retirement Survey, visit www.schroders.com/dc.

Schroders plc

Founded in 1804, Schroders is one of Europe's largest independent investment management firms by assets under management. As of 31 December 2022, assets under management were £737.5 billion (?831.3 billion; $887.2 billion). The founding family remain a core shareholder, holding approximately 44% of the firm's shares. Schroders has continued to deliver strong financial results. It has a market capitalisation of circa £7 billion and employs over 6,100 people across 38 locations.

Schroders has benefited from the most diverse business model of any UK asset manager by geography, by asset class and by client type. Schroders offers innovative products and solutions across their five business areas of solutions; institutional; mutual funds; private assets & alternatives; and wealth management. Clients include insurance companies, pension schemes, sovereign wealth funds, endowments and foundations. They also manage assets for end clients as part of their relationships with distributors, financial advisers and online platforms. Schroders' Wealth Management offering reflects their strategic ambition to provide wealth management and financial planning services to clients across the wealth spectrum.

Schroders' strategic aims are to grow their asset management business, build closer relationships with end clients and expand their private assets and alternatives business. Schroders' purpose is to provide excellent investment performance to clients through active management. The business channels capital into sustainable and durable businesses to accelerate positive change in the world. Schroders' business philosophy is based on the belief that if we deliver for clients, we deliver for Shareholders and other stakeholders.

Important Information: All investments involve risk, including the loss of principal. The views and opinions contained herein are those of the author(s) or the individuals quoted and do not necessarily represent Schroder Investment Management North America Inc.'s (SIMNA Inc.). These views and opinions are subject to change. This communication is intended to be for information purposes only and it is not intended as promotional material in any respect. The material is not intended as an offer or solicitation for the purchase or sale of any financial instrument and should not be relied on for accounting, legal or tax advice. Information herein has been obtained from sources we believe to be reliable but SIMNA Inc. does not warrant its completeness or accuracy. No responsibility can be accepted for errors of facts obtained from third parties. Reliance should not be placed on the information in this document when making individual investment and/or strategic decisions.

Schroder Investment Management North America Inc. ("SIMNA Inc.") is registered as an investment adviser, CRD Number 105820, with the US Securities and Exchange Commission and as a Portfolio Manager, NRD Number 12130, with the securities regulatory authorities in Canada. It provides asset management products and services to clients in the United States and Canada. Schroder Fund Advisors LLC ("SFA") markets certain investment vehicles for which SIMNA Inc. is an investment adviser. SFA is a wholly-owned subsidiary of SIMNA Inc. and is registered as a limited purpose broker-dealer with the Financial Industry Regulatory Authority and as an Exempt Market Dealer with the securities regulatory authorities in Canada. SIMNA Inc. and SFA are wholly-owned subsidiaries of Schroders plc, a UK public company with shares listed on the London Stock Exchange. Further information about Schroders can be found at www.schroders.com/us or www.schroders.com/ca.

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