Americans who have about a decade left before reaching retirement age are “critically underprepared,” according to a new survey from Prudential.
The survey found that 67% of 55-year-olds surveyed said they fear they will outlive their savings, compared to 59% of 65-year-olds and 52% of 75-year-olds. To that point, 55-year-old Americans, with just 10 years until retirement, have less than $50,000 in retirement savings, the study reports.
These factors could lead to an increase in the number of 'silver squatters' who are forced to rely on family for housing and financial support.
The survey found that 24% of 55-year-olds surveyed said they expect their family to provide support in retirement, twice the share of current 65 and 75-year-olds who said the same. But almost half of those 55-year-olds have not discussed this need with family.
“Silver squatters” is the term used for people who expect to move in with their adult children, and their plans may surprise millennials and Generation Z.
“You don't necessarily think about that generation that has taken care of their own parents and children and then turns around and needs that help,” said Rob Falzon, vice chairman of Prudential Financial, in an interview with CNBC's senior personal finance correspondent Sharon Epperson.
The 2024 Pulse of the American Retiree Survey was conducted by Brunswick Group from April 26 to May 2, 2024 among a national sample of 905 Americans.
The study concluded that, amid the broader demise of defined benefit plans that supported earlier generations, 55-year-olds are almost twice as likely as 65 and 75-year-olds to rely on employer-sponsored “do-it-yourself” plans . plans such as 401(k) plans to fund their retirement.
Generation X is more likely to have children at home or care for elderly parents than older generations.
“If you ask them right now how much financial support they need, they look at their children on one side and their parents on the other,” says Simon. Blanchard, an associate professor of marketing at Georgetown University's McDonough School of Business, who has researched financial well-being. “It feels very scary.”
It's important for people to manage the negative emotions they have around money so they don't disconnect from their finances, forget about saving because “you only live once” or try a risky get-rich-quick scheme, Blanchard added to it.
There are steps pre-retirees can take now, both financially and emotionally, that can help them prepare, experts say.
Start the conversation
Communicating your needs and expectations to family members is a good start.
“This doesn't mean you have to tell them, 'I'm going to move in with you,' or 'I expect you to complement me financially,'” says Lindsay Bryan-Podvin, a financial therapist based in Ann Arbor, Michigan.
It's much better to start the conversation with something like, “I'm getting closer to retirement age, we need to have a serious conversation about what that will look like for me and how this could impact us together,” Bryan- Podvin explained.
This way, the adult children can be prepared for a serious conversation, Bryan-Podvin said.
She says it's a good idea to streamline these conversations with all siblings at once to avoid confusion.
For pre-retirees with children still living at home, experts advise that you should prioritize your retirement savings instead of helping pay for your children's college education.
“Your child has the gift of time,” Bryan-Podvin said. While the parent may have to deal with job loss, poor health or other factors that could lead to this retire earlier than planned.
Reset expectations
Also, be creative about what your retirement years will look like.
“I think the standard for so long has been to buy a house to let it age and hope everything works out,” Bryan-Podvin said.
She points to new trends emerging, such as having roommates, a trend called “boommates,” cooperative living.
Bryan-Podvin also notes that parents who move in with adult children can be an asset by providing both financial and emotional support, in addition to receiving it.
“Discuss the stigma of ‘this is what I thought retirement would look like,’” says Bryan-Podvin, the founder of Mind Money Balance. “It’s not all doom and gloom. There are new ways to think about retirement and aging outside of what we’ve traditionally been taught.”
Think positive and understand your finances
Experts say gaining a clear understanding of your financial picture is key.
Until then, pre-retirees should have a complete inventory of how much income they expect from Social Security and other savings and what they will need to cover daily expenses.
It is also crucial to have a positive mindset.
“You don't have to die at your desk,” says Gregory Marc Corneille, an investment advisor at Choice Wealth Management, based in suburban Atlanta.
“The first step toward a comfortable retirement is believing it is possible,” he said.
