Retiring Gen X-ers to Face Empty Government Coffers in 19 Short Years

NEW YORK (MainStreet) — Donna Jill Johnson isn't saving money for her retirement, because she can't afford to.

"I have three adult children and 13 grand kids," Jones told MainStreet. "I don't feel prepared at all to retire."

The 48-year-old has worked thirty years, but Social Security payments may not be enough when it comes time to quit earning for good.

"I feel frightened, because there may not be any Social Security money left over," said Jones who works as a nurse's aid in Texas. "By the time it's my turn to retire, I'll still be working part-time."

Read More: When Should You Begin Collecting Social Security?

Other than her descendants, Jones has nothing to count on except her ex-husband's social security benefits.

"That's if he passes away before me," said Jones who has since re-married.

 

Gen Xers are shouldering more responsibility for funding their own retirement years than ever before. That's because the uncertain future of Social Security is redefining how individuals think about retirement.

Read More: The Social Security Mistake More Than One-Third of Retirees Are Making

"Retirement will not mean the same thing for this generation as it did for their parents or grandparents, which is personal savings, a sizeable company pension check and a dependable Social Security payment," said James Nichols, head of retirement income and advice strategy for retirement solutions at Voya Financial.

The combined Social Security retirement and disability trust funds are projected to be exhausted in 2033, according to this year's Social Security Trustees Report. Gen X-ers who are in their 40s now will be entering their sixth and seventh decade right around 2030, making them the most immediate, vulnerable generation of all.

"It certainly makes it difficult to plan," said Cathy Weatherford, president and CEO of the Insured Retirement Institute (IRI).

"Social Security and Medicare form the foundation of almost every American's retirement plan and if there are going to be changes that reduce what workers can expect from these programs, they need time to plan accordingly."

Saving money builds confidence. Without confidence, workers may have no hope at all for their future but the percentage of people who actually feel confident about retirement is now 35%, down from 44% in 2011, according to IRI research.

"Someone who is not very confident about the power of saving for retirement is more likely to jettison healthy savings habits and even withdraw from retirement savings to satisfy a more contemporary urge, such as buying a new TV or the latest computer model," Nichols told MainStreet.

One way to feel more confident about retirement is to attend retirement seminars and take advantage of planning services offered through the workplace because without a plan, many don't save at all.

"The earlier an individual has a plan and the longer they have to achieve it, the more likely they are to develop a solid level of retirement readiness," Nichols said.

Some 36% of Americans have not saved any money for retirement, according to a new Bankrate.com study.

That includes 69% of 18- to 29 year-olds, 33% of 30 to 49 year-olds olds, 26% of 50 to 64 year-olds and 14% of people 65 and older.

"Regardless of age, there is no better time than the present to start saving for retirement," says Bankrate.com chief financial analyst Greg McBride. "The key to a successful retirement is to save early and aggressively, but even those on the cusp of their golden years should have some money allocated toward equities as opposed to all cash and bonds."

Once Gen X-ers hit 50 years old, using the catch up provision to contribute $23,000 a year to an employer sponsored plan can yield them as much as $225,000 tax deferred in ten years. Until then, the slacker generation can prepare for the coming shortage in 19 years by paying down expensive credit cards, controlling spending, saving 15% to 20% of earnings and contributing the maximum to employer sponsored retirement plans.

"It's human nature to put things off that can cause anxiety," Weatherford MainStreet. "If retirement is a source of anxiety, it is likely that they will do the opposite of what they should be doing, which is planning for retirement."

--Written by Juliette Fairley for MainStreet

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