Gen Xers: 5 things you can do today to prepare for retirement

Most of the talk around retirement planning in recent years has focused on the needs of the baby boomer generation, a group of people who are now in their 70s or close to it. Largely drowned out by all the noise are the 64 million or so following in their wake — Generation X.

Many Gen Xers are now in their 50s and the oldest of them just entered their 60s, which means that they, too, should be planning for their lives in retirement. The problem: Many are still recovering from the “Great Recession” of 2008, which put a dent in their savings.¹ According to our research, more than half of Gen Xers say they’re not on track to save enough to maintain the lifestyle they want in retirement.²

A study by the National Institute on Retirement Security has shed some light on how Gen Xers are doing with their retirement savings:

• The typical Gen X household only has $40,000 saved for retirement.³ 

• Thirty-five percent of Gen Xers have less than $10,000 saved and 18% have nothing.⁴ 

• The median account balance for private retirement accounts among Gen Xers was only $10,000.⁵ 

With so little allocated to retirement, many Gen Xers may be forced to downscale their standard of living in retirement. This could mean moving to a smaller place, cutting back on vacations and dining out, and giving up some of life’s little luxuries. Not exactly what they may have had in mind when they pictured their retirement. But it’s not too late! Most people in this generation are still about 10 to 15 years away from their full retirement age and have time to improve their financial situation.

So, if you’re a Gen Xer thinking about retirement, here’s what you may want to consider doing today:

Don’t do it alone. Whether you have access to a service through work or prefer to find independent financial help, it's important to speak to someone who understands the ins and outs of retirement planning.

Forty-six percent of Gen Xers say they have regrets about how they’ve prepared financially for retirement so far.⁶ A financial professional with a specialty in retirement can do a full assessment of your current finances and work with you to craft a savings plan that will fit your unique situation. Working with someone you trust means you’ll have a partner to get you where you want to go, and you can even continue to work with them throughout your retirement to make sure you’re staying on track.

Take stock of your finances. If you don’t already have a budget and retirement savings plan in place, start tracking your expenses to get a better idea of what your average costs will be in retirement. You’ll want to make sure to update your budget to prioritize retirement savings.

If you're in a relationship, talk with your partner about your retirement lifestyle dreams. You should be on the same page as you plan for retirement and may be able to take their income and savings into account when planning for your retirement together.

Be mindful of inflation. As you think about your retirement needs, keep in mind how inflation may affect your buying power. Inflation reduces your purchasing power, which directly impacts your budgeting. If you’re investing, keep a diversified portfolio to help protect yourself.

Contribute more now. When possible, make sure that you’re contributing to your employer-sponsored retirement plan and taking advantage of matching contributions (if offered). If a plan is not available, consider opening another retirement savings plan, such as an IRA, or even potentially a deferred income annuity.

Plan for income in retirement. Our research found that 51% of Gen Xers are very concerned about having a guaranteed source of income in retirement.⁷ Once you figure out your budget and know approximately how much you’ll need in retirement, talk to a financial professional about creating a steady stream of income for yourself in retirement. You can plan to take on a few hours of gig work per week, portion out your savings, or consider an annuity, which is a guaranteed stream of income for your retirement.⁸

Retirement is a time to look forward to in life. Though planning for it can be daunting, starting with these five tips is a great first step.