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But it’s never too late to start saving more aggressively for long-term goals. In fact, Gen Xers are at the perfect age to do just that, says Barry Glassman, a certified financial planner and founder and president of Glassman Wealth Services.
“In general, people in their late 40s and 50s are oftentimes in their peak earning years,” he says. “And peak earning years is definitely not a too late period to adjust, or to save more for retirement.”
And even if you’re not excited about the totals in your investing accounts, there is more than one way to fund your lifestyle in retirement, which may not cost as much as your lifestyle today, says Jason Stein, a CFP and founder of Bluepoint Wealth Advisors.
“Depending on where you can access dollars from, you might not need to generate the same amount that you are today,” he says. “And I think that that is what stresses out a lot of people.”
Here are three things Gen Xers can start doing as soon as today to ease their retirement worries.
For many Gen Xers, saving for retirement has been placed on the back burner as they juggle other expenses. Of those who regretted not saving more, 61% prioritized day-to-day necessities, with 40% focusing on paying down credit card debt.
You may be able to pare back some of your regular expenses to put more money toward your financial goals, but if you still have high-interest rate debt, it’s best to prioritize paying it down before bulking up your retirement savings, Glassman says.
That’s because paying back a loan is akin to earning a return on that money equivalent to the interest rate on the debt. Given current interest rates on credit cards, the choice is a no-brainer, says Glassman.
“If a credit card is charging 22% a year, there’s no investment that can guarantee a 22% return like paying off that credit card,” he says.
Many Gen Xers may not feel as though their retirement savings are up to snuff, but they may well have a different type of wealth, Glassman says.
“If I were to generalize about the different generations, the Gen Xers, I believe, were more fortunate in real estate gains,” Glassman says. “Gen Xers who had purchased a home and then refinanced and refinanced over the years, they likely have greater real estate wealth and possibly not as much liquid or retirement wealth.”
Seventy-one percent of Gen Xers are homeowners, compared to a little over half of millennials at 52%, according to 2023 Redfin data. And while home equity doesn’t show up in your 401(k) statement, it can be a valuable tool in retirement, Stein says.
Nearly 40% of regretful Gen Xers say they would have saved more for retirement had they not been paying down housing debt, but that’s not necessarily a bad thing, says Stein. Having a paid off home means you won’t have to use your investments to fund a major chunk of your housing costs in retirement.
Plus, if your home has increased in value by the time you retire, you can sell or refinance and use the extra cash gains to replenish your nest egg.
“I’m in southern California, where property values are very valuable,” Stein says. “And choosing to downsize to something that’s more appropriate for a retiree, that can also open up a lot of wealth that can be invested and carry somebody through retirement.”
If Gen Xers have sufficient emergency savings in place and aren’t carrying any high-interest rate debt, they’d be wise to devote more of their available cash toward retirement savings, Stein says.
“It’s tough to argue against contributing more to those accounts if you’re trying to save more for retirement,” Stein says. “That’s under the assumption that their cash flow supports it. I would not want somebody to max out the retirement accounts if it means incurring credit card debt or not supporting their obligations today.”
For 2024, most savers can stash up to $7,000 in an IRA and up to $23,000 in a 401(k). And many members of Gen X can save even more. Those aged 50 and over can contribute an extra $1,000 to an IRA and an extra $7,500 to a 401(k) in the form of so-called catch-up contributions.
“If you do max those out or you don’t like the options available to you, you could still invest into just a brokerage account, and earmark those investments with retirement in mind,” Stein says.
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