Only 1 in 5 workers approaching retirement is financially on track:

The rule of thumb for people who are 55 and have another decade of work before they reach traditional retirement age is to have already put away about eight times their salary in their retirement accounts. But today’s average 55-year-old has just $50,000 in savings, far from enough to fund a secure old age, according to a new study.

In fact, only 1 in 5 people who are 55 years old have $447,000 or more saved for retirement, or eight times the median U.S. salary, Prudential Financial’s 2024 Pulse Survey of American Retirees found. The report links to another recent study on Gen X’s retirement readiness, which found that half of respondents believe it would take a “miracle” for them to retire.

The new findings come as the oldest members of Generation X, or people born between 1965 and 1980, are now entering their pre-retirement years, giving them a short window in which to build up their savings. them before they retire. But many who have already fallen behind in these savings moments may end up unprepared — at least financially — for retirement, given that it’s likely to be difficult, if not impossible, to build a nest egg. big nest in just a few years.

However, a Plan B is emerging with the group, with a quarter of today’s 55-year-olds telling Prudential they plan to rely on financial support from family in retirement, and twice as many 65- and 75-year-olds saying the same. About 1 in 5 Gen Xers, the so-called “silver squatters,” also expect to need housing support in old age, Prudential said.

“If you know you’re in trouble, you know you’ve got to get money from somewhere,” David Blanchett, head of retirement research at Prudential, told CBS MoneyWatch. “It could be from their parents, if they’re still alive, but it could also be their children.”

He added, “Maybe parents made a big sacrifice to send their kids to college,” and there may be a sense of financial obligation that will come back. But at the same time, those expectations could put more economic pressure on younger Americans like Gen Z, born between 1997 and 2012, who themselves may be struggling to buy a home or save for retirement.

The truth is, workers — and retirement planners — need to be realistic about what’s possible in the last decade of one’s career, Blanchett said. For example, he noted that he often hears from retirement planners that their clients will have to work well past 65 to save enough to retire, but that ignores the reality that most people retire at retirement years before they had planned, he said.

“hard choices”

For example, an Urban Institute study that tracked workers from their early 50s to at least age 65 found that only 19% retired voluntarily, with most having to stop working before reaching retirement age. retirement due to layoffs, ill health, or other issues beyond their control. The typical worker retires three years ahead of schedule, Blanchett said.

“Planners say, ‘Oh they’re behind, they’re just going to work until they’re 70 or 72,’ and it’s like people retire before they plan,” Blanchett said. “If you’re already behind, you’re just going to be further behind.”

In other words, people who are 55 today may only have seven more years of work, not a decade, which puts them under more pressure to figure out how to fund retirement, he noted.

“What can you do over the next seven years to get you in better shape? It’s going to come down to tough choices,” Blanchett said.

While saving more can help, most workers don’t have a lot of extra money to put into their retirement accounts, he noted. But if a worker ends his career before he had planned, he can take a part-time job or switch to another type of job later in life, with the goal of earning enough to at least pay for expenses. of the house, which would help them. avoid withdrawing their retirement savings.

Second, older workers should plan to delay claiming Social Security as long as possible, since the monthly benefit increases with each year of delay until one reaches age 70. This means that the monthly benefit is more than 75% higher at age 70 than if someone claims at age 62, the earliest age to start receiving the benefit.

“The key is to save until you’re 63 or 64, but try not to claim or use your benefits” for as long as possible, Blanchett said.