The world is changing rapidly thanks to technology, which is reshaping the digital world. As a result, people are adopting more flexible patterns, lifestyles and retirements. For example, following several studies, Generation X (those people aged between 39 and 54 years are struggling to save money for their retirement. Meanwhile, baby boomers generation (those around 55 and 70) expect to be working after their 65s, while others plan not to retire. Emergency loans are becoming very popular for this generation, as there is a growing need to get cash in a faster way.
In this article, I will highlight how different generations now are thinking (and doing) with regards to their retirement accounts.
If a millennial is starting to save money from the age of 25 and wants to retire at the age of 67, it will have to meet some retirement income targets:
Those who are making a median income (not too high not too low) will have to save 4% to 9% before taxes.
Those who are earning a prosperous income will need to save between 9% and 14% before taxes.
Those people who have a very high income will need to save 14% and 18% pretax.
Following those targets, more than 25% of millennials have no access to an employer-sponsored retirement plan, while 30% have jobs, which do not permit them to save money at all. The less money you put in a company’s retirement, the more you will have to save on your own.
On the other hand, applying for bad credit loans is always a good idea for saving money, as credit scores are not usually hurt.
2. Baby boomers
Baby boomers generation has to face a wide range of challenges if they want to retire sooner. Those who started retiring from 2011, after the big economic crash, have suffered. Most of them lost their savings while others had problems to recover after the crisis. A recent report showed that 30% of baby boomers have not saved anything for retirement. Those who have managed to save some extra money are the baby boomers that were born between 1948 and 1953 were $290,000. In change, those who were born between 1954 and 1959 saved an average of $209,000.
Overall, this generation believes that in terms of money, they will need a salary of at least $45,000. It applies if they want to retire in a relaxed way. However, this will require that their retirement accounts produce around $28,000 in annual income altogether with Social Security benefits. To reach their goals, they would need an annuity costing $430,000 or a similar amount of money placed in their saving or retirement accounts.
3. Generation X
Generation X people, also known as Gen Xers, are those who are between 39 and 54, have not been doing so great when it comes to talking for their retirement accounts. Just in the UK, the average pension savings of a Gen X person is £159,837, which is not enough to set a comfortable retirement. This generation is most probably to find their way to retirement through contribution schemes, running the risk of having to rely on other ways of savings or benefits. Moreover, 55% has admitted that they do not have enough savings to maintain their life-balance during their retirement. On a different note, 22% states that they have no idea regarding what to do with their money in retirement.
On the other hand, around 43% of Gen Xers also said unemployment is the major reason for what they do not have a retirement account. One theory that could explain this part is the fact of mothers leaving work to care for young children during their young years. Moreover, females leaving the workforce to care for their offspring are less common nowadays following recent studies.
To sum up, all generations are struggling to keep up a balance between their retirement accounts and their overall retirement expectations. From millennials to baby boomers and Gen Xers, their salaries are just not enough to keep their expectations. Moreover, this is not a problem that relies on them, as all these challenges need from political actions and commitments to get resolve.