Few retirees dream of spending their retirement years living in their adult children’s basements or begging their families for money.
Unfortunately, that’s a harsh reality for many Gen Xers. according to Prudential’s 2024 U.S. Retirement Trends Survey.
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Of the 905 Americans surveyed in the survey, all age 55, nearly a quarter (24%) expect to need financial support from loved ones in retirement, and 21% say they will likely need housing assistance.
This news may come as a shock to these Gen X relatives, especially since almost half of respondents admitted they have yet to broach the topic with their family members.
The good news is that it’s not time to call the movers just yet: Gen Xers may not have to rely on younger generations to get them through their golden years after all.
Why becoming a “silver squatter” is the destiny of Gen X
As the Prudential study points out, today’s 55-year-olds are “seriously underprepared” for retirement and are less financially prepared than previous generations.
Prudential also found that the median retirement savings for people age 55 is less than $50,000, and 67% of those surveyed admitted to being worried about running out of savings in retirement.
Gen Xers have faced numerous obstacles throughout their working lives, including the dot-com recession and housing bubble, as well as a global pandemic and soaring inflation during their prime earning years.
Many, Sandwich generationLonger life spans mean people are shouldering the burden of caring for both their children and elderly parents at the same time.
While these factors contribute to Gen X’s financial woes, perhaps the biggest cause of their money problems stems from the fact that they are likely to be the first modern generation to reach retirement completely unsaved. social security Support or Defined Benefit Pension Plans – The trust funds for SSA programs are Expected to be depleted By 2035.
These factors have created the perfect storm for financial disaster, leading experts to coin the term “silver squatters” to describe the people likely to turn up at children’s homes with piles of suitcases and empty bank accounts.
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Is it too late to change course?
While it’s not ideal to have an inadequate retirement fund at age 55, that doesn’t mean Gen Xers are immediately doomed to a lifetime of unwelcome renting. For those who are ready to get serious about their retirement savings, there’s still time to change course.
A 55-year-old starting out with $50,000 in retirement savings could eventually amount to $500,000. saving Within 10 years, you will save approximately $2,000 per month and earn an average annual return (AAR) of 10%.
If that’s your situation, that’s a lot of money to invest, but if your employer offers matching contributions and you take advantage of the tax benefits of 401(k) investments, you don’t have to come up with the entire $2,000 yourself.
Waiting to retire until age 70, rather than leaving work at 62 or 65, could get you to that $500,000 goal with a monthly contribution of $763.60 (over 15 years), which may be achievable for many.
You can also earn delayed retirement credits (DRCs), which increase your Social Security benefits, if you wait to claim your benefits until you’re 70. Essentially, you earn credits for every month between the month you reach full retirement age and the month you turn 70.
Of course, if further savings are not possible, it’s best to have a discussion with your family as soon as possible if you think you may need to become a “silver squatter”.
You may be able to arrange to contribute some of your savings to facilitate the purchase of a multigenerational home. This can be a win-win, as it helps your adult children enter the housing market while providing you with a secure place to live.
But there’s one thing Gen Xers shouldn’t do: put off addressing the problem. Whether the solution is saving more for retirement or having honest conversations with family, or both, taking action now is likely to pay off better than suddenly becoming a “silver squatter” in your 60s.
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This article is for informational purposes only, should not be construed as advice, and is provided without warranty of any kind.
