A Generation Gap in Retirement Planning
Almost everyone aims to attain financial security in retirement. But each succeeding generation expects to be more self-reliant than the preceding one, according to a new online survey by Charles Schwab, Age Wave, and Harris Interactive. Americans are depending more on personal savings and investments and less on the government or their employer.
Current retirees depend on the traditional three-legged stool: Social Security, pensions, and personal savings and investments. Each leg supports their retirement to a substantial degree. But generations X and Y expect to rely largely on their own investments, the survey shows.
Survey participants were asked: "Approximately what percentage of your retirement funds will come from the following sources?" Here is how various age groups responded:
| Age group | Social Security |
Employer pension |
Personal savings/ investments |
|---|---|---|---|
| Silent generation (ages 63-83) | 41% | 27% | 32% |
| Baby boomers (44-62) | 35 | 23 | 42 |
| Generation X (32-43) | 27 | 20 | 53 |
| Generation Y (21-31) | 19 | 20 | 61 |
The generations also differ on the path to financial security. Members of the frugal "silent generation" stress living within your means, while generations X and Y emphasize investing wisely.
Survey respondents said the average person will need to have $500,000 to live comfortably in retirement. The median net worth of those in the 55-to-64 age group is only about half that ($249,000), according to the most recent Federal Reserve Survey of Consumer Finances. And all other age groups had a far lower net worth.
Tell us, what's the best path to a secure retirement: frugality or solid investments?
Tags: retirement | savings
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Reader Comments
Political decisions matter the most here
Younger Americans had better get their heads on straight and realize some things. The American Stock Market experience of the last 25 years is unlikely to repeat for a long time. (Because, if nothing else, the baby boomers are going to be SELLING their shares into the market for the next 30 years.)
There is nothing (nothing) more important that average young people can do than elect Washington permanently full of liberals. Without national health care, most of the younger folks are going to find that one single element KILLING their finances and their dreams. YOU (THEY) MUST NOT LET CORPORATIONS RUN THE COUNTRY TO THE EXCLUSION OF CITIZENS.
This is not to say people shouldn't save, save, save and invest as best they can. But thinking that everybody is "smart" enough to get a mythical above-average return is as nutty as Garrison Keillor telling tales of Lake Wobegon (where all the children were also supposedly "above average".)
Divided We Fail
It's time we ensure health and long-term financial security for all. That's why AARP is leading Divided We Fail, an initiative to give voice to millions of Americans who are tired of letting Washington gridlock stand in the way of affordable, quality health care and long-term financial security – the most pressing domestic issues facing our nation. Common sense solutions are needed, and everyone – individuals, businesses and government – has a role and a responsibility in ensuring health and financial security for all. Go to www.dividedwefail.org to learn more.
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