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Gen-Xodus from NYC Looms: AARP Survey

Stressed Out by Unaffordability and Lack of Savings, Two Thirds of City Voters 35-50 Looking to Flee in Retirement

Two thirds of New York City’s Gen-Xers are considering fleeing the Big Apple in retirement as they struggle with affordability and savings, according to a new survey of city voters commissioned by AARP.

The survey found a looming “Gen-Xodus,” with 66 percent of Gen-X voters saying they’re at least somewhat likely to move out of New York in retirement along with 56 percent of Baby Boomers – that is, if they even have enough money to retire.

As Gen-Xers started turning 50 this year, AARP conducted its first city survey of the generation, High Anxiety NYC GenX & Boomers Report. The poll of 800 city voters, split between Gen-Xers and Baby Boomers, found that 34% of Gen-Xers and 42% of Boomers have no retirement savings account at all. Other findings:

  • 78% of Gen-Xers and 66% of Boomers worry about not saving enough.
  • 70% of Gen-Xers and 61% of Boomers worry about not planning enough for retirement.
  • 64% of Gen-Xers and 59% of Boomers worry about being able to afford the rent or mortgage in the coming years.
  • 23% of Gen-Xers and 29% of Boomers are not confident they’ll ever be able to retire.

Three of every 10 city Boomers said they’re either “extremely” or “very” likely to leave New York in retirement, as are 36% of Gen-Xers – the first generation to approach retirement age with a new playbook, having lived the entirety of their working years during the rise of 401k plans and a shift away from traditional pension plans.

“We should take these survey results as a warning sign and confirmation that solutions are needed now to stop the impending mass exodus of the Boomers and Gen-Xers from New York City upon retirement,” Joyce Rogers, AARP Senior Vice President of Government Affairs, said today at Baruch College, where the report was unveiled and discussed by a panel of experts. “One out of two households is at risk of having a financially insecure retirement. This does not mean that they are missing out on a life of leisure or travel, but rather that middle class households will be unable to afford food, medicine, and utilities without assistance. AARP is sounding the alarm.”

“Gen-Xers and Baby Boomers have more in common than one might have guessed if they live in New York City,” said Beth Finkel, State Director of AARP in New York State. “Neither generation thinks they can afford to retire in the city.”

Key worries are even more pronounced among the city’s African-American, Hispanic and Asian-American populations:

  • 29%, 32% and 28% of the Gen-Xers in those groups, respectively, are not confident they’ll ever be able to retire.
  • African-Americans (74%) and Hispanics (70%) are concerned about being able to make rent or mortgage payments in the future.
  • African-Americans and Hispanics also are less optimistic about being able to afford utility bills, bills in general, and
  • Asian-Americans are more likely to worry about job security of older workers (41%) relative to other financial concerns.
  • African American GenX-ers (39%) and Boomers (23%) are more likely to currently have student loan debt, while Hispanic student loan holders are more likely to feel student loans have made it hard to save for retirement (77%).

The survey, and independent research, show looming retirement savings troubles among both Gen-Xers and Boomers. The average 401(k) account balance in New York was only $30,811 as of last year, according to the National Institute on Retirement Security – which found that in 2013 the average American household had just $3,000 in total assets in savings, and just $12,000 for those nearing retirement.

Yet the survey found 60% of city Gen-Xers and 46% of Boomers who are in the labor force and confident they’ll be able to retire say they plan to stop working by age 65, revealing a retirement “reality gap.”

Mayor Bill de Blasio’s Office of Pensions Director John Adler delivered the keynote address at today’s event. City Comptroller Scott Stringer’s Chief Investment Officer Scott Evans, Asian American Federation Executive Director Jo-Ann Yoo, New School Professor of Economics Teresa Ghilarducci, TIAA-CREF Managing Director Tim Lane, AARP’s Rogers and Angela Houghton, AARP senior research advisor and chief survey architect, discussed the findings and potential solutions to head off retirement savings woes during the panel discussion moderated by City & State Executive Editor Michael Johnson. The event was co-sponsored by City & State and attracted over 100 policymakers and community leaders. Video of the event is available online.

“I’m completely freaked out,” said Gen-Xer survey respondent James Born, 37, of Brooklyn, a married father of a three-year-old daughter who works as an electrician. “We have no savings.” Born said he doesn’t want to leave the city, but “I feel like it’s definitely on the table.”

“I don’t feel I’ve done enough to prepare,” said survey respondent and Gen-Xer Susanna Austin, 40, of Brooklyn, who is switching careers from market research to mental health. “I really haven’t been able to save a lot.”

Austin, who is single, said it’s the uncertainty that makes her most anxious - “not knowing what the future will hold, how long your money will last and whether you’ll be able to maintain a decent lifestyle.” Does she have student loans? “Yeah, I do and they’re outrageous.”

Survey respondent Virginia “Ginger” Illiano, 55, of Brooklyn, said debt is eating into her own retirement savings. She’s a divorced, retired elementary school teacher who’s working as a consultant and paying off her 25-year-old daughter’s student loans.

Paying for children’s education (52%) is second only to not having enough money left after paying bills (65%) as the top obstacle to saving enough for retirement, the survey found.

For those with student loans, more (65%) said that debt has made it harder for them to save for retirement than to afford a home (40%) or make ends meet (54%).

While 32% of Gen-Xers currently have student loans, another 37% expect to take them on in the future – meaning 69% of the generation has or likely will have student loan debt.

But there’s another huge obstacle to retirement savings for more than 3.6 million New Yorkers across the state – over half of all private sector workers: lack access to any kind of employer-sponsored retirement savings plan – no pension, no 401k.

If they could, most would participate in such plans. The survey found 82% of the city’s Gen-Xers and 74% of Boomers who lack access would enroll if they had the option.

Americans earning between $30,000 and $50,000 a year are 15 times less likely to open retirement savings plans such as IRAs on their own than if their employer offered an option, according to the Employee Benefit Research Institute. A “Work & Save” state-facilitated retirement savings option – with no ongoing taxpayer costs – could help millions help themselves achieve financial independence in retirement and avoid the need for expensive, taxpayer-funded public assistance.

Three quarters of survey respondents – 78% of Gen-Xers and 74% of Boomers – support the creation of such a state-facilitated retirement savings program – including 76% of small business owners and employees.

And among small business owners and employees surveyed, 73% said they would take advantage of a plan to save for retirement if one were available to them through work.

The program would address another predominant worry the survey found: that 83% are concerned some New Yorkers who have not saved for their retirement could end up reliant on public assistance.

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