The rise of ‘silver squatters’: 1 in 4 Americans in their mid-50s will need financial support from family in retirement — only have median of $50K in savings. Is it too late to change course?

Why becoming 'silver squatters' could be Gen X's fate

As the Prudential survey notes, 55-year-olds today are “critically underprepared” for retirement and less financially secure than previous generations.

Prudential also found that 55-year-olds have a median retirement savings of less than $50,000, with 67% of those surveyed admitting they fear they’ll outlive their savings.

Gen X has faced multiple roadblocks throughout their working life, including recessions via the dot-com bubble burst and the housing bubble — not to mention a global pandemic and surging inflation during their prime earning years.

Many are also part of the sandwich generation, saddled with taking care of their kids and aging parents simultaneously as a result of lengthening lifespans.

While these factors have contributed to the financial woes of Gen X, perhaps the biggest reason for their money trouble stems from the fact they're likely going to be the first modern generation to enter retirement without full Social Security support or defined benefit pension plans — the SSA program’s trust fund is expected to run dry by 2035.

These factors have created the perfect storm for a financial disaster — leading experts to coin the term ‘silver squatters’ in reference to those most likely to show up at their kids’ doors with a pile of suitcases and empty bank accounts.

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Is it too late to change course?

Not having enough retirement savings at 55 isn't ideal, but it also doesn't immediately doom GenXers to a lifetime as reluctant tenants. There's still time to change course for those ready to get serious about retirement savings.

A 55-year-old starting with $50,000 in retirement savings could end up with a $500,000 nest egg within a decade by saving around $2,000 a month and earning a 10% average annual return (AAR).

If you're in this situation, that's a lot to invest. However, if your employer provides matching contributions and you take advantage of tax breaks for 401(k) investing, you don't have to come up with the entire $2,000 yourself.

Waiting until the age of 70 to retire — instead of leaving work at 62 or even 65 — would allow you to hit that $500,000 target with contributions of just $763.60 monthly (over 15 years), which may be doable for many.

You could also earn delayed retirement credits (DRCs) that increase your Social Security check if you wait to claim benefits until 70. Essentially, you can earn a credit for each month during the period between the month you attain full retirement age and the month you turn 70.

Of course, if saving more isn't possible, it's best to talk with your family ASAP if you suspect you may need to become a 'silver squatter.'

You may be able to make arrangements to contribute some of your savings to facilitate the purchase of a multi-generational home — which could be a win/win if it helps your adult kids get into the housing market while also providing you with a secure place to stay.

One thing no GenXer should do, though, is put off dealing with the problem. Whether the solution is stepping up retirement savings or having a frank conversation with family members — or both — acting quickly is likely to result in better outcomes than becoming a surprise 'silver squatter' well into your 60s.