Retirement Is Looking Less Rosy This Year. Or Is it?

What does this mean for you and your retirement? Possibly not much. If you’ve been saving diligently for a while now, or you’ve had a recent wake-up call and are now saving more, this doesn’t really describe you. You’re doing the best you can.

External factors are also easing the pressure: 

• Inflation, a frequently cited worry, is cooling. (Which, on the flip side, will probably lead to a lower Social Security COLA in 2024.)
• When the EBRI survey was conducted (Jan. 5 through Feb. 2), recession was still on people’s minds. Now, a recession has yet to materialize, and the stock market's strong first half-year bodes well for the remainder of 2023.

What if you’re one of those people who is worried about retirement? Take steps now. Even small changes — turning up your retirement contributions by 1% or 2%; maxing out your IRA — can make a big difference over time.

For more on confidence (or the lack thereof) in retirement, read Brenden Rearick’s story.

— Jill Cornfield, deputy editor

Gen X isn’t counting on Social Security to help fund their retirement, according to a study by Transamerica Center for Retirement Studies (TCRS). Fully half of employees born between 1965 and 1980 expect their own savings, whether from workplace retirement plans such as 401(k)s and 403(b)s, or IRAs, to provide the bulk of their retirement income.

One reason for Gen X’s dependence on their own savings: Very few have pensions. In a comment for the study, Catherine Collinson, CEO and president of Transamerica Institute and TCRS, says this generation did begin working in the 1980s and ‘90s as pension plans were starting to be replaced by 401(k)s, “but relatively few workers had access [to workplace savings plans].”

In other words, Gen X got the short end of the retirement stick: disappearing pensions, but limited access to the still relatively new 401(k). 

• Two certified financial planners walk you through some changes in SECURE 2.0, such as Roths, catch-up contributions and required minimum distributions. (podcast)
• Scouting a retirement relocation? Check out these perspectives on how to pick the perfect spot. (podcast)
• After a long list of career changes (fashion designer, surgeon, rock star, stewardess, business exec, TV chef), here’s what Barbie’s 401(k) might look like now.

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