• Gen X may be even less prepared for retirement than boomers, wealth advisors say.
• A large cohort of adults in their mid-50s have less than $50,000 in retirement savings.
• Many expect to work part-time or receive family help after retiring, a Prudential survey shows.

Jim Thomas, a 52-year-old who works in a lumber mill, is well aware of how far behind he's fallen in saving for retirement. His job pays "good money," he says, but he's still trying to plug the hole in his finances after a layoff, a divorce, and several legal disputes emptied his wallet in the last decade.

Those expenses have dug a hole so deep in his savings that Thomas is only now starting up his 401k from scratch. Currently, he estimates he has around $100,000 in savings, well below the goal that is traditionally recommended by financial advisors, who say you should have around eight times your annual salary saved by the time you're 60.

"I know I won't be able to retire at 65 unless I win the lottery," Thomas told Business Insider. "I expect that I will either need help from my daughter when I can no longer work, or I will need government assistance greater than Social Security."

He's not alone. Thomas is among what retirement experts are calling "silver squatters" — adults in their mid-50s who are even more woefully unprepared than some boomers, despite being about a decade away from retirement. "Squatters" refers to the possibility that many will have to rely on family for housing in later years.

As far as silver squatters go, Thomas's story is fairly common. According to surveys conducted by Prudential Financial, the median retirement savings for those in their mid-50s is just under $48,000, with 35% of 55-year-olds having less than $10,000 saved and 18% having saved nothing at all in 2023.

Two-thirds of 55-year-olds say they're afraid of outliving their savings. That's the highest level of fear among any age group of Prudential's 2024 survey, with 59% of 65-year-olds saying they worried they would outlive their savings.

"As a whole, they are not as prepared as the boomers and actually are doing less well than the millennials," Pete Welsh, managing director of retirement and wealth at Inspira Financial, told BI, though he noted that the youngest Gen Xers still had time to catch up on their savings.

The lack of preparation among the cohort could be due to late planning and the unique economic circumstances of the mid-50s crowd, in addition to less financial literacy among the generation, wealth advisors say.

René, a 50-year-old based in Austin, Texas, has anxiety over whether she and her husband will have enough to live comfortably once they retire. Their life savings — around $380,000 between the two of them — dwindled to next to nothing after a medical diagnosis put her out of work and through a string of surgeries over the course of two years, she told BI.

The couple, who have fallen behind on some of their bills, don't know if they'll be able to get extra financial assistance once they retire, besides their expected pension payments. They have no external family, and they don't want to rely on their daughter for help.

"I was like, oh God, how did we get here?" René said, describing a plea she made with their mortgage provider not to foreclose on their home. "We're just going to have to work and 401k-it, and that's just how it's going to have to be now."

A forgotten generation

Silver squatters share some common characteristics, despite the unique circumstances affecting their retirement readiness. This group of Gen Xers — the generation of Americans aged 43 to 59 — largely expects to postpone or work past their retirement. 47% of Gen Xers think they'll have to retire later than they initially expected, while 40% expect to work part-time after they retire, per Prudential's survey.

A majority also don't expect to receive any inheritance, despite their boomer predecessors holding onto trillions in wealth. Only 12% of the 55-year-old group expect to get money passed down from their family members, Prudential's survey found.

They do, however, largely expect to be reliant on family for support once they retire. Around 24% of 55-year-olds say they expect financial support from their family members, with 21% adding they also needing housing support, the report said.

That compares to just 12% of 65-year-olds who say they will need that kind of help from family.

The gap in retirement readiness could be due to the "unique" challenges of Gen Xers, according to Dylan Tyson, the head of retirement strategies at Prudential. He notes that all of the generation was in their prime working years during the 2008 financial crisis, which could have set them back financially.

Gen Xers could also be in a tenuous stage of life, where a number of surprise expenses have popped up to drain their savings. Think of those who have had to fund their child's college education or are paying for a living facility for their own parents, Inspira's Welsh said.

"You're trying to help out here, you're trying to help out there, and then at the end of the day, there's just not enough on the table to really think about what you're going to do for yourself," Welsh said, adding that some of Inspira's Gen X clients had expressed frustration over their financial responsibilities to their family. "They're just in a very tough, tough spot that, for whatever reason, I guess maybe the boomers didn't have to deal with."

Low rates of financial literacy — which is a widespread issue among every generation in the US, according to a study from the World Economic Forum — doesn't help the situation, Welsh and Tyson say. Around half of Gen Xers are saving without a general plan for retirement, Prudential found.

Most also don't appear to be accounting for major expenses into retirement, with 48% not factoring in healthcare costs and 75% not factoring in assisted living expenses.

Many Prudential clients don't even know how much they need to save, Tyson said, adding that many of the firm's Gen X clients are simply guessing how long they will live. He said he believes many of them are guessing incorrectly due to rising life expectancies in the US.

"If you don't have the cushion — again, this is the group we're talking about, the 60-year-old, undersaved — they really need to be watching every penny and thinking about that," Welsh said.

This article was originally published in August 2024.

• 56 million US workers lack employer-provided pension or retirement savings plans.
• A new AARP report highlights the financial insecurity facing workers without retirement plans.
• Those workers would likely have difficulty living solely off Social Security.

Many Americans don't feel ready for retirement — and their jobs aren't stepping in to fill in the economic gaps.

A new analysis from the AARP Public Policy Institute finds that, in 2022, 56 million Americans — nearly half of the private-sector workforce — worked for employers who didn't offer pension or retirement savings plans.

Workers with less education and lower earnings were less likely to have access to plans. Specifically, AARP said that about 75% of private-sector workers with less than a high school degree, 50% of workers with some college, and 31% of workers with a bachelor's degree do not have a retirement plan. On top of that, about 79% of workers earning $53,000 or less annually and 21% of workers earning over $53,000 do not have retirement plans.

David John, one of the AARP report's authors, told Business Insider that even while those workers would get Social Security benefits, they likely wouldn't be enough to supplement other expenses.

"The fact is that if you are a career lower-income individual, yes, Social Security is going to replace a higher proportion of your earnings, but you still have the emergencies that are going to come up," John said. "And that includes things like car repair, cost of medication, house repair — hot water heaters don't really care who you are at the time they decide to fail."

The AARP report said that, with the average Social Security benefit totaling around $1,767 a month in 2022, most retirees will need additional income sources to stay financially afloat.

"We have a substantial number of people who don't have sufficient retirement savings to supplement their Social Security. Social Security is it for a substantial number of people," John said. "And that means, essentially, that they may not have the kind of retirement that they dreamed of."

The report uses data from the Census Bureau's Current Population Survey on employer coverage, which provides data on Americans' work, earnings, and education, and adjusts it by factoring in additional data from the Survey of Consumer Finances and IRS to bring the findings in line with the overall population, allowing the researchers to break out specific demographic groups.

Financial security remains a top concern for many older adults. A recent report from the Alliance for Lifetime Income's Retirement Income Institute found that in 2024, over 30 million Americans born between 1959 and 1964 — the tail end of the baby boomer generation — will start turning 65, meaning many of them will increasingly start to rely on retirement savings. Without a retirement plan, some previously told BI they would likely have to continue working to supplement their Social Security.

Some states have taken steps to aid workers who do not have access to retirement plans through their employers. California created a program in 2019 called CalSavers, which requires employers in the state who do not sponsor a retirement plan to provide individual retirement accounts that employees are automatically enrolled into unless they opt out. John said that some variation on that type of plan could work at the federal level.

"The basic model or the basic way the state programs are structured can be a guide to help create a national solution to the retirement coverage problem," he said.

The latest Social Security and Medicare Board of Trustees report found that Social Security will only be able to pay out full benefits for the next 11 years if Congress does not intervene.

John said that the lack of coverage goes beyond just weighing down individuals — it could also have a drag on the wider economy.

"If we have a substantial number of people who don't have sufficient resources, they're going to put pressure on governments," he said. Those retirees will likely be more dependent on government programs like housing, healthcare, and senior citizen centers. "There is an expense to the economy and there is an expense to frankly the future by not dealing with this problem."

Do you not receive retirement benefits through work and are worried about your future? Contact these reporters at [email protected] and [email protected].