Americans aged 55 ‘very poorly prepared’ for retirement, survey finds

Americans with about 10 years left before they reach retirement age are “seriously underprepared,” according to a new study from Prudential.

The study found that 67% of 55-year-olds surveyed fear outliving their savings, compared with 59% of 65-year-olds and 52% of 75-year-olds. Today, just a decade away from retirement, the average 55-year-old American has less than $50,000 in retirement savings, the study found.

These factors could lead to an increase in the number of “silver squatters”, forced to rely on their families for housing and financial support.

The study found that 24% of 55-year-olds surveyed said they expected their family to support them in retirement, twice as many as 65- and 75-year-olds who said the same. But nearly half of those 55-year-olds did not discuss this need with their family.

“Silver squatters” is the term coined for people who plan to move in with their adult children, and their plans might surprise millennials and Gen Z.

“We don’t necessarily think about this generation that has provided for their own parents and their children and needs help,” Rob Falzon, vice chairman of Prudential Financial, said 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 found that amid the general disappearance of defined-benefit pension plans that supported previous generations, 55-year-olds are nearly twice as likely as those 65 and 75 to rely on employer-sponsored “do-it-yourself” plans, such as 401(k)s, to fund their retirement.

Generation X is more likely to still have children at home or to care for aging parents than older generations.

“If you ask them about what financial support they’re going to need at this point, they look at their kids on one side, and they look at their parents on the other side,” said Simon Blanchard, an associate professor of marketing at Georgetown University’s McDonough School of Business who has researched financial well-being. “It’s very daunting.”

It’s important for people to manage any negative emotions they may have about money so they don’t disengage from their finances, forget to save because “you only live once,” or try risky get-rich-quick schemes, Blanchard added.

Early retirees can take steps now, both financially and emotionally, that can help them prepare, experts say.

Communicating your needs and expectations to your family members is a good place to start.

“It doesn’t mean telling them, ‘I’m going to move in with you,’ or ‘I’m waiting for you to complete me financially,’” said Lindsay Bryan-Podvin, a financial therapist based in Ann Arbor, Michigan.

It’s best to start the conversation with something like, “I’m getting closer to retirement age, we need to have a serious conversation about what that’s going to look like for me and how it might impact all of us,” Bryan-Podvin said.

This way, adult children can be prepared to have a serious conversation, Bryan-Podvin said.

She notes that it’s a good idea to streamline these conversations with all siblings at once to avoid confusion.

For pre-retirees with children still at home, experts advise prioritizing your retirement savings over helping fund your children’s college education.

“Your child has the gift of time,” Bryan-Podvin said. While the parent may be facing job loss, poor health or other factors that may lead them to retire earlier than expected.

Also be creative about what your retirement years will look like.

“I think for a long time the default trend has been to buy a home to age in place and hope for the best,” Bryan-Podvin said.

She points to new emerging trends, such as having roommates, a trend called “boommates,” cooperative living.

Bryan-Podvin also notes that parents moving in with their adult children can be a benefit by providing both financial and emotional support, in addition to receiving it.

“We need to address the stigma of ‘this is what I thought retirement would look like,’” said Bryan-Podvin, 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 been traditionally preached.”

Experts say having a clear understanding of your financial situation is essential.

At this point, 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 their daily expenses.

Having a positive mindset is also essential.

“You don’t have to die at your desk,” said Gregory Marc Corneille, an investment advisor at Choice Wealth Management, based in suburban Atlanta.

“The first step to achieving a comfortable retirement is believing it is possible,” he said.