The number one reason keeping Generation X and Baby Boomers from saving more for retirement is an unwillingness to sacrifice their current quality of life, cited by 34% of Gen X and 29% of Boomers, Charles Schwab found in a survey of 1,000 investors.
For Gen X, other reasons they are not saving more, in order of importance are: saving for their children’s education (cited by 32%), needing money to pay basic monthly bills (28%) and still having to pay down student loans (14%). Boomers’ additional obstacles include: basic monthly bills (20%), a child’s education (10%) and student loans (6%).
Only 58% of Gen Xers know how much they will need for a comfortable retirement, and just 53% think they are saving enough to be able to retire when they want to. This group is also the most likely to have taken a loan from their 401(k), with 31% having done so, compared with 13% of Millennials and 29% of Boomers.
“Borrowing from a 401(k) is like stealing from your future
self,” says Catherine Golladay, vice president of participant services and
administration at Schwab Retirement Plan Services. “A 401(k) loan can severely
derail your savings plan and comes with steep tax penalties if you leave your
job and can’t repay the loan, so it should be viewed as a last resort for
everyone, regardless of age.”
Among Boomers, only 63% think they are saving enough to retire when they want to, 65% think they will be comfortably retired in 15 years, and 22% think they will retire at a lower standard of living than what they would like. They are also more concerned about being healthy enough to enjoy retirement (61%) than having enough money to enjoy it (39%). However, on the bright side, 40% of Boomers are getting investment advice, compared to 7% of Millennials and 10% of Gen Xers.