“Reduce expenses and increase savings. That’s all they can do,” said Thru the Cycle President John Lonski on “Varney & Co.” Tuesday. “When will they go ahead and make such a move? It’s beyond me. But maybe this consumer spending that happened around 2022 to 2023 might disappear in 2024.”
Schroders’ US Retirement Survey 2023 found that people aged between 43 and 58 say they need $1,112,183 for a comfortable retirement, but only expect to have $661,013. That $451,170 gap exceeds the estimated savings gap faced by millennials and baby boomers.
“As the first generation to retire largely without the safety net of a defined benefit pension plan, the stakes are higher for Generation X and the margin for error is lower,” Schroders’ US Defined Contribution Head Deb Boyden said in the study. .
In addition, 45% of Gen X respondents said they did not do any retirement planning compared to 43% of millennials and 30% of boomers.
What’s more, two-thirds worry they won’t grow their workplace retirement plans as much as they’d hoped.
“The faster consumers pull back spending, the milder the next recession will be. It seems that the longer they hold off on cutting back on spending, the longer interest rates stay higher. And when the downturn comes, it’s going to hurt,” Lonski responded.
Saving as much as possible will help make the recession easier. Getty Images
“A year ago, I saw something like a restaurant sale. They are up almost 10% from a year ago, [in the] the final quarter of 2022,” he continued. “So I said to myself: Oh my gosh, by the last quarter of the year, restaurant sales will be lucky to increase by 5%. Do you know? They are still growing almost 10%. So there may be excess cash out there lingering because of massive stimulus.”
The report also highlights how Gen X’s attempt to close the wealth gap “will not be easy,” as 32% of survey takers own all of their assets in cash and, separately, only 11% will wait until age 70 to receive the maximum Social Security benefits.
Fear is the main reason said to be for this trend, as Gen Xers worry that they will lose all their cash or that Social Security will soon go bankrupt.
In March, a Social Security and Medicare Trustee report found that the Social Security retirement fund could run out of money as soon as 2033, a year earlier than previously projected.
However, there is still some hope, according to Schroders’ Boyden: “Fortunately, even the oldest Gen Xers have some time before reaching their full retirement age. Using this time to develop a retirement plan, increase their savings rate and invest more appropriately is critical to improving their retirement readiness before it’s too late.”
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Source: thtrangdai.edu.vn/en/
