June 15, 2012
--- Being eligible to participate in a 401(k) is critical in closing the
retirement savings gap for Generation X, according to the Employee Benefit
Research Institute (EBRI). ---
Generation
Xers with at least 20 years of future eligibility are projected to have a much
lower financial shortfall ($23,000 per individual) than those without any
future years of eligibility ($78,000 per individual), according to EBRI’s
latest Retirement Security Projection Model.
EBRI’s
estimate includes nursing home and home health care expenses, which EBRI says
leads to a more realistic projection.
“Ignoring
the impact of nursing home and home health care costs in retirement
significantly overstates the likelihood of retirement income adequacy,” said
Jack VanDerhei, EBRI’s research director.
When
nursing home and home health care expenses are taken into consideration, 68% of
single male Gen Xers look to have no financial shortfall in retirement. If
these expenses are not factored in, a much larger percentage (90%) has what is
actually a falsely optimistic picture of retirement adequacy.
Earlier
EBRI research has found that about 44% of both Baby Boomer and Gen Xer
households are likely to be at risk of running short of funds during
retirement, assuming they retired at age 65 and retained any net housing equity
in retirement until other financial resources were depleted. (See “More
Workers Estimated To Be Retirement Ready.”)
The full
report is available in the June issue of EBRI
Notes.
Jay Polansky