The first members of Generation X are approaching 60, the age at which, according to the regulations of some countries, they can begin their retirement. However, instead of welcoming the prospect of retirement with hope and enthusiasm for a new life, the first members of this generation are worried, according to a survey conducted by Natixis Investment Managers (IM).
According to the data reported in a statement, nearly half of Generation X (48%) believe it will take a miracle to retire securely, while the other half (50%) avoid thinking about their retirement altogether.
Additionally, 60% of the first members of Generation X nearing retirement accept that they may have to work longer. However, many are aware that employment does not offer guarantees, and 47% fear they will not be able to work as long as necessary.
Respondents were asked about their retirement goals and, on average, they said they plan to retire at 60, an early age by many global standards, and anticipate that retirement will last 20 years, a shorter period than many retirees experience today.
Nevertheless, to achieve this, they save only an average of 17% of their annual income. Despite Generation X members being optimistic about their investments and having long-term return expectations of 13%, Natixis warns that this may be hindered by a misguided view of risk.
Inflation and Debt: Critical Issues
According to the survey results, two critical issues seem to be shaping this generation’s thinking about retirement: inflation and debt.
In the short term, members of this cohort face the reality of inflation. In general, 83% of surveyed Generation X investors say that the recent bout of inflation has revealed the magnitude of the threat that rising prices pose to retirement security.
Additionally, nearly seven in ten (69%) say that inflation has affected their ability to save for retirement, and more than half (55%) report that they are saving less due to high daily costs.
While inflation is a relatively short-term phenomenon, Generation X’s retirement outlook is being shaped by another key long-term aspect: public debt.
For this reason, more than three-quarters of respondents (77%) are concerned that the increase in public debt will lead to fewer retirement benefits. Even minimal cuts could have a significant impact, as 58% believe it will be difficult to make ends meet without benefits.
The first members of Generation X nearing retirement face a volatile and challenging landscape, ironically very similar to what they experienced during their working lives, marked by periods of global economic instability, outlined the Natixis study.
For Funds Society, Madrid
For Alba Menéndez
For Beatriz Zúñiga