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Brother, Can You Spare A Million?

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It comes as quite a shock to me to realize that the oldest members of Generation X will hit the big 5–0 next year.

The 50th birthday celebration means that senior discounts are right around the corner, followed by retirement. Gen X is realizing that as they are closing in on retirement, they also are closing in on the window of time they need to fund that retirement – and they believe the cost of that retirement will be steep.

A new survey reveals that most of Gen X believes they will need anywhere from $1 million to $2 million in savings in order to fund their retirement. But in order to reach that goal, they will have to kick-start that retirement saving soon; the average Gen X household has only $70,000 in retirement savings.

These numbers come from the Transamerica Center for Retirement Studies, which surveyed Generation Xers as part of a study on retirement security.

Gen X has reason to worry about their retirement, according to the Transamerica survey. Most Gen Xers (83 percent) are concerned that Social Security won’t be there when they’re ready to retire, and the majority (85 percent) think they’ll have a much harder time achieving financial security than their parents did, according to the report. Only 14 percent are very confident they’ll be able to retire one day with a comfortable lifestyle, and about a third expects a lower standard of living in retirement.

The study results show some good news/bad news regarding Gen X’s retirement saving. The good news is that 84 percent of Gen Xers who are offered a 401(k) or similar plan do contribute to the plan. The bad news is that their median annual contribution rate is 7 percent of their annual salary – far short of the 10–15 percent that experts say they need to put away.

Other findings from the survey:

• 54 percent of Gen X plan to work past age 65 or don’t plan to retire.

• 61 percent have a retirement strategy, but only 14 percent have a written plan.

• 65 percent say they don’t know as much as they should about retirement investing.

• 35 percent of those who are investing for retirement use a financial advisor.

That last statistic shows a group that is ripe for advice on retirement. Reach them now and help them sock away that million.

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Susan Rupe is assistant editor for InsuranceNewsNet. She formerly served as communications director for an insurance agents' association and was an award-winning newspaper reporter and editor. Connect with Susan →

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