Study: Lost Confidence in Traditional Retirement; Lack of Active Planning
May 7, 2015 — MINNEAPOLIS — The baby boomer generation is in the throes of retirement and Generation X is only steps behind.
According to Generations ApartSM* – a new study on how baby boomers and Generation X (Gen X) are facing their financial future from Allianz Life Insurance Company of North America (Allianz Life®) – the vast majority of both groups believe that the traditional definition of retirement is a “romantic fantasy of the past.”
Old Notions 'Unrealistic'
More than eight in 10 (84%) from both generations said they feel that a retirement starting at age 65 spent “doing exactly what you want” is now unrealistic. Furthermore, the Allianz Life study of 2,000 Americans – including 1,000 baby boomers (ages 49-67) and 1,000 Gen Xers (ages 35-48) – found that Gen X respondents were much more hopeless about their ability to achieve retirement goals and about their overall financial situation than were their boomer counterparts.
More than two thirds (67%) of Gen Xers agreed with the idea that supposed targets for how much you need to retire are way out of reach versus less than half of boomers (49%). Significantly more Gen X respondents also admitted to getting “bogged down with uncertainty when planning for retirement” (64% versus 43% of boomers), believing it is “useless to plan for retirement when everything is so uncertain” (44% versus 31% of boomers), and feeling that they will “never have enough money to stop working” (68% versus 43% of boomers).
“It’s been widely reported that baby boomers are worried about their retirement, but the financial planning and retirement concerns of Generation X have gotten less attention,” said Katie Libbe, Allianz Life vice president of Consumer Insights. “While our study confirms that many boomers still lack confidence about their future, it reveals alarming realities about the significant angst and pessimism Gen X feels regarding the current and future state of their finances. They’re the next generation that’s quickly approaching retirement and their hands-off approach to planning and preparation is alarming.”
Gen X: The Disadvantaged Generation
Each generation in the study generally feels their circumstances have been tougher to manage. For example, both Gen Xers and Boomers think that their generation is burdened with more expenses (90% and 80% agreement, respectively), more uncertainty (86% and 72%) and more risk (78% and 64%) than their counterparts.
However, when it comes to jobs, money, and retirement, even baby boomers agreed that Generation X has it much tougher in the following areas:
- Planning for retirement – 86% of Gen Xers and 65% of boomers agreed Gen X has it tougher
- Saving money – 89% of Gen Xers and 68% of boomers agreed
- Keeping a job – 85% of Gen Xers and 69% of boomers agreed
- Staying out of debt – 90% of Gen Xers and 72% of boomers agreed
- Getting a job – 85% of Gen Xers and 73% of boomers agreed
Warped Reality: “Everything is Going to Work Out”
Despite clear concerns about their financial situations and prospects for a comfortable retirement, both generations are surprisingly relaxed about planning for their financial futures. More than half of each generation (boomers 65%, Gen X 53%) agreed with the statement “when it comes to retirement, I just have this feeling that everything’s going to work out.”
Furthermore, a larger percentage of Gen X respondents think they will “just figure it (retirement) out when I get there” (46% versus 36% of boomers) and “just don’t think about putting money away for the future” (52% versus 32% of boomers).
This “head-in-the-sand” approach to financial planning likely goes back to feelings of hopelessness these generations – particularly Generation X – have about their current situation. Nearly three-quarters of Gen Xers (72%) and 60% of boomers agree that it is “almost impossible to figure out what your (retirement) expenses are going to be.” More than half of Gen X respondents (52%) and nearly a third of boomers (32%) also agreed that with the amount of current expenses, they “just don’t think about putting money away for the future.” As such, nearly half of Gen Xers (48%) and more than a quarter of boomers (27%) say they are not clear on how much money they’ll need to retire.
“The disconnect between planning and expectations from both generations is concerning, but it’s clear the financial services industry needs to provide more resources and support for Generation X,” added Libbe. “Although they are not as close to retirement as boomers, Gen Xers need to understand that a successful tomorrow can only happen through careful planning today. Whether they choose to start making simple changes on their own or get advice from a financial professional, they must move past the negativity and take control of their finances.”
More from the Generations Apart Study
For more information about the Generations Apart study, visit www.generationsapart.com. In the coming months, Allianz Life will release additional data from the Generations Apart study. Topics will include, among others:
- The New Age of Debt – Examining generational attitudes and opinions toward debt, a way of life in 2015
- Lingering Effects of the 2008 Crash – Understanding how the 2008 crash had a significant effect on the way both generations currently manage their finances
- New Preferences for Financial Planning – Exploring the different expectations boomers and Gen Xers have when it comes to getting help with financial planning.
About Allianz Life Insurance Company of North America
Allianz Life Insurance Company of North America, one of FORTUNE’s 100 Best Companies to Work For in 2015, has been keeping its promises since 1896. Today, it carries on that tradition, helping Americans achieve their retirement income and protection goals with a variety of annuities and life insurance products. As a leading provider of fixed index annuities, Allianz Life is part of Allianz SE, a global leader in the financial services industry with 147,000 employees worldwide.
More than 85 million private and corporate customers rely on Allianz knowledge, global reach, and capital strength to help them make the most of financial opportunities. *The Allianz Life Generations Apart Study was conducted by Larson Research + Strategy via online survey in November, 2014 with 2,000 U.S. adults ages 35-67 with a minimum household income of $30K+ and was commissioned by Allianz Life.