Retirement is for Old People: Why Generation X and Generation Y May Never Retire

I was born on the cusp between Generation X and Generation Y (a.k.a. the Millenials).  As a member of the middle-child demographic recently dubbed Generation Catalano, I have some insight into how members of both of these generations view retirement. And I have to say, it isn’t pretty.

Pessimism and the American Dream

According to the results of a spring 2011 Gallup poll, confidence in the American dream is faltering. Defined by Gallup as the opportunity for each generation to earn a better life than previous generations, the data show that indeed, the American dream appears to be slipping away.

Only 44 percent of respondents said it was very/somewhat likely that today’s youth will have a better life than their parents, the lowest since 1983. This lack of optimism is most pronounced in the 50-plus demographic, with nearly two-thirds expressing pessimism for the future of younger generations.

But Don’t Just Take Gallup’s Word for It…

A few weeks ago I asked a bunch of Gen Xers and Millenials what they thought about their prospects for the future. By and large their views were consistent with the sentiments Gallup uncovered. They expressed pessimism, but also offered something not found in the poll—some insights as to why they felt that way.

  1. Social Security is Broken – This is well explored and contentious territory, so I’ll keep it brief, but most experts agree that financing Social Security in the current method soon will become unsustainable. It may happen in five years, it may happen in 20 years, but when it does happen, the root cause will be that elderly Americans will be drawing more than working Americans can afford to pay.
  2. Lack of Job Security – Despite recent gains, the United States still faces 8.5 percent unemployment, 15.2 percent underemployment and quite a bit of uncertainty about the job market. These dim facts are not lost on members of the younger generations, as many of them have been hit hard by the Great Recession without the benefit of many years of working and saving to cushion the blow. The bottom line is that lack of full-time employment means no steady salary and no company-matched 401 (k) or corporate pension plan.
  3. Stock Market in the Dump – Although data show that the stock markets are recovering steadily over the last three years, a significant number of people my age don’t perceive it that way. This is partially due to shell shock from watching their burgeoning portfolios (or their parents’ portfolios) disintegrate and partially due to a lack of education and understanding about investment and savings strategies. Other contributing factors are cynicism over corporate corruption and a deep distrust of government financial institutions, large investment banks and “Wall Street”.

No Clear Path to Retirement

These three factors combine to form a bleak view of the future, with no obvious way forward for members of Generation X and the Millenials. Those who are optimistic enough to still expect to retire in some form also typically expect to work past normal retirement age. Indeed, there is research indicating this trend has already begun and is picking up steam. The results of the Survey on Generational Retirement Perspectives indicate that three out of four respondents believe working part-time after age 65 best represents what it means to retire for most people.

The real bummer is that delaying retirement past 65, even as late as age 80, still may not provide enough income to cover basic retirement expenses, according to a study by the Employee Benefit Research Institute.

Stay Tuned for Our Next Episode…

So, like I said at the beginning, it isn’t pretty. The research suggests a need for Generations X and Y to redefine their expectations for the future. In my next post, I will talk about what those expectations are, ways to manage those expectations and some reasons why things might not actually be as bad as they seem.

10 thoughts on “Retirement is for Old People: Why Generation X and Generation Y May Never Retire

  1. Nice article,I think that people in our
    age group(50-65),are still not sure if
    we have saved enough,health care is
    a big issue & most people are not
    leaving the jobs because of that.
    There are many seniors who will face
    retirement with too much debt,many
    families are living together now to
    simply get by.

    • Shelia – so true. Much of the research I have done supports what you are saying about many older Americans not feeling prepared for retirement and not wanting to leave their jobs.

  2. Why have X’ers and Y’ers lost faith in the system? I think there is a lot more to it than a broken SS, lack of job security and the stock market decline. It has been reported for some time that X’ers do not seem to be satisfied with a job and long-term prospects – they bounce around, jumping from job to job and are unable to gain seniority or really start to put away a nest egg in any one place. Gone are the days when you got a job and stuck with it for 10, 15 or mas years. The grass always seems greener over there.
    SS may be broke, but a person’s ability to save, even meager amounts, isn’t broke. But X’ers need instant gratification, gotta have the latest technology, that 54 inch plasma TV is much more important than saving for a rainy day. I think many of them expected SS to take care of them in older age without being willing to do their part with private savings. Then, when they see that things aren’t going exactly like they believe they are entitled to, they get depressed, all the while building-up substantial credit card bills that they are unable to pay. Spending habits, lack of financial discipline, and the instant gratification syndrome are more likely to be at the root of the problem than the three reasons mentioned above.
    Even though one may be poor financially and unemployed, continuing their bad spending habits, lifestyle and job-hopping isn’t going to solve anything. Spending in accord with ones means, making do, saving, hard work and diligence can make a difference. “Use it up, wear it out, make do, or do without” is an old Quaker saying, I believe. Our X’ers and Y’ers need to stop trying to multi-task everything, they need to ditch all the instant gratification and get in gear or stop wining about how bad off they are.

    • Living within your means is something Warren preaches on the regular. That is actually one of the themes of this blog—ordinary people, ordinary life, ordinary retirement. While we would all like to retire on a yacht in the Mediterranean, it is important to set realistic goals and then figure out how to live with them.

  3. Great post! As Andrew observes, happiness is all about perception and state of mind. I remember when the Dow Avg. was struggling to hit 1000. I’m in my late 50’s and I can also clearly remember thinking that Social Security might not be there for me when I retire, which stimulated me to save as much as I could to help achieve financial independence in later life (haven’t quite made it yet). As for job security…….it is an illusion. As my father-in-law once said……”If you think work is anything more than a days work for a days pay, you’re only kidding yourself”……and this from a guy who worked for one company for 40 yrs. Another qote I love is…..”life is 10% what happens to you and 90% how you react to what happens to you.” Find something you like to do, do it well, and even though you might not get rich, you’ll always have work. Happiness is totally a state of mind.

    • One of the things I have noticed researching this and related topics is that the American concept of “work” has shifted. The idea of it just being a “days for for a days pay” became “I want to do something I like, something that speaks to my personal values and inclinations”. It started with the Baby Boomers and has become more and more pronounced in Generation X and Generation Y.

  4. Such astute observations on our world today. It is your generation that is going to have to make the changes, as mine did a darn poor job of managing most things .
    While I agree with some of what Robert observed, I think he paints your generation with too broad a brush. I know many X and Y’s (both generations and chromosomes !) who have tried to stay at one job, put money away, (hard to do in this economy) and forgone instant gratification, and still can only look forward to working till they die.

    • There is certainly a perception that Gen X are slackers and Gen Y are entitled. I explore both in the follow up post, which will be published next week.

  5. Thanks everyone for the thoughtful comments. There are certainly some fantastic observations coming from everyone. I don’t want to say too much in the comments here because I have a follow up post in the final stages of approval that already addresses some of what has been brought up here. Glad you all enjoyed the post. Please keep reading and commenting!

  6. Pingback: You Can’t Always Get What You Want |

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