Members of Generation X are now, roughly, ages 44 through 59, and they still have a chance to make retirement work better.
Jason Fichtner, one of the top U.S. economists with an interest in income planning, has an idea for how Congress could possibly help.
He suggests that the federal government could create annuity tax incentives that young boomers, Gen Xers and members of future generations could use to bridge the income gap between the day they leave their last "real jobs" and the day they begin collecting retirement benefit checks from Social Security.
"That's most people's fundamental retirement income source," he said last week.
Fichtner was speaking at a press briefing that Prudential Financial held to present the results of a new survey of 905 Americans ages 55, 65 or 75 on the day they were interviewed.
What it means: Eventually, a sequel to the Secure Act and Secure 2.0 could include a tax break for early retirement bridge annuities based partly on Fichtner's thinking.
Why this thinking matters: Fichtner started out as an economist at the Internal Revenue Service.
He later was a senior economist at the Joint Economic Committee in Congress, chief economist at the Social Security Administration and chief economist at the Bipartisan Policy Center in Washington.
He is still a senior lecturer at Johns Hopkins, a policy fellow at Stanford and executive director at the Alliance for Lifetime Income's Retirement Income Institute, which helps life insurers, asset managers and other companies involved in the annuity and pension markets show policymakers and policy influencers how retirement income works and why it matters.
Prudential's survey: Prudential brought Fichtner to New York to help draw attention to the 55/65/75 survey.
Prudential found that only 21% of 55-year-old respondents are expecting to collect defined benefit pension income, just 6% plan to use individual annuities in retirement and only 29% have calculated how long their retirement savings will last.
For many, projecting their retirement savings timeline would lead to grim results, because their median reported level of savings is just $47,950.
"We have a retirement challenge the likes of which we have not seen before,' said Carolyn Feeney, the CEO of Prudential's U.S. businesses.
The bridge annuity: Many life and annuity agents and financial planners already use annuities in efforts to help clients cope with moves to retire early or postpone claiming Social Security benefits.
Nassau Financial is an example of an annuity issuer that has developed an annuity product designed explicitly to help clients put off collecting Social Security. Purchasers can set the annuity to pay one level of income before the anticipated claiming data and another level of income after the anticipated claiming date.
Fichtner pointed out that the typical individual who could collect a $1,000 monthly Social Security check at 67, the current full retirement age, would get just $700 at 62, the earliest retirement benefits claiming age, and $1,240 at 70, when the monthly benefit reaches its top value.
That means that 55-year-olds who can wait until they're 67 to begin collecting Social Security may collect twice as much monthly Social Security income for the rest of their lives as those who start at 62.
