As the landscape of retirement shifts dramatically, many retired Americans are finding themselves re-entering the workforce, driven by a combination of economic pressures and changing perceptions of what retirement should look like. A recent survey conducted by D.A. Davidson reveals that nearly 40% of retirees are anxious that their savings will not sustain them through an increasingly lengthy and expensive retirement.
This trend is particularly pronounced among Generation X and Baby Boomer retirees, who are now taking on roles as substitute teachers, real estate agents, and rideshare drivers. Andrew Crowell, vice chair of wealth management at D.A. Davidson, remarked, "The definition of — and classic timeline for — retirement is changing. A side gig doesn't have to be a last resort in retirement. It can actually be an integral part of retirement planning, supplementing savings while also encouraging engagement in the community and keeping the mind sharp."
The survey indicates that inflation, volatile stock markets, and worries about the future of Social Security are pushing these generations back into the labor force. Almost 60% of respondents expressed a desire for auxiliary income, but only 20% cited debt as their primary motivator. Instead, 55% of those surveyed highlighted social and mental benefits as key reasons for seeking additional income, echoing a pattern seen among younger workers who often moonlight to pursue passions alongside financial gain.
Patrick Doherty, senior vice president at Wealth Enhancement Group, emphasized the importance of financial planning in this evolving retirement landscape. He stated, "Unlike past generations, current retirees are staying active longer in retirement and living longer, which increases the amount of money they need throughout retirement." He advises clients to prioritize their finances by funneling gig earnings into 401(k)s or brokerage accounts before indulging in discretionary spending.
As the traditional image of retirement—characterized by leisure and relaxation—undergoes a transformation, experts suggest that a hybrid model is emerging. This new model blends work and leisure, with retirees actively seeking extra income while also engaging with their communities. Interestingly, the trend isn't limited to retirees; nearly two-thirds of adults under 35 have either started or plan to launch a side business.
While the older generations grapple with their financial futures, Generation X, often dubbed the "sandwich generation," faces its own unique challenges. This cohort, which is now in its prime earning years, is often caught between caring for aging parents and supporting their own children, many of whom are entering adulthood amid tough economic conditions.
According to a Kiplinger article, a staggering 48% of Gen Xers (those aged 44 to 59) have not engaged in any retirement planning, a statistic that surpasses the 41% of Millennials and Baby Boomers who also lack a concrete savings strategy. This oversight can have serious implications as they approach retirement age.
To bolster their retirement savings, experts recommend that Gen Xers start maximizing their contributions to 401(k) plans. For those aged 50 and above, the IRS allows catch-up contributions up to $7,500, and in 2025, a new “super catch-up” option will permit an additional contribution, which could be as high as $11,250 for those aged 60 to 63.
Additionally, many Gen Xers may not be fully aware of the range of financial products available to them. With pensions becoming less common, it’s crucial for this generation to explore options like Roth and traditional IRAs, as well as annuities that provide stable payments over time. Whole life insurance policies, which accumulate cash value, can also serve as a source of supplemental income, a fact that many may overlook.
Financial professionals suggest that Gen Xers consider life insurance retirement plans (LIRPs), which allow policyholders to use their life insurance policy’s cash value to support themselves during retirement. Furthermore, long-term care insurance is becoming increasingly important, especially for those with family histories of chronic conditions.
Despite their relatively young age, Gen Xers should not neglect estate planning. A comprehensive estate plan—including life insurance, a will, a medical directive, power of attorney, and financial trusts—is essential for preserving and passing on wealth to future generations. As the saying goes, failing to plan is planning to fail, and the last thing anyone wants is for their loved ones to be embroiled in disputes over assets.
In summary, Generation X has made significant cultural contributions, but now it’s time for them to focus on their financial futures, particularly as they approach retirement. By prioritizing retirement contributions, expanding their knowledge of financial products, and establishing solid estate plans, they can secure their financial well-being and ensure a comfortable retirement.
As the dynamics of retirement continue to evolve, it’s clear that both older and younger generations are adapting to a new reality—one where work and leisure coexist, and financial planning is more critical than ever.