Key Takeaways

• The oldest Gen Xers are already eligible to withdraw from retirement accounts penalty-free.
• Gen Xers are often underprepared for retirement but can improve by increasing savings and adjusting their budget.
• Unlike baby boomers with pensions, Gen X relies heavily on 401(k)s.
• During their highest earning years, Gen Xers can maximize retirement savings.
• Roth IRAs and 401(k)s can offer tax advantages for Gen Xers in retirement.

Sandwiched between the more populous boomer generation and even more populous Millennials, Gen Xers often find themselves overlooked when it comes to financial planning resources.

However, retirement is on the horizon for the oldest members of that group, born in 1965. Many are over age 59 1/2 and can withdraw from retirement accounts without a penalty.

Mike Rogers is part of Generation X. After the 2008 global financial meltdown, he and his wife, Christy, decided to focus on their retirement savings and overall financial situation.

“We got serious about eliminating consumer debt and leveraged raises and bonuses to eliminate debt and ramp up retirement savings,” said Rogers, a 52-year-old construction manager in Kingsport, Tennessee, in an email.

“We kept our lifestyle below our means and aggressively saved higher incomes and any windfalls,” he said.

Gen X Facing More Challenges Than Boomers
In many ways, Gen X has had a tougher slog than the boomers, particularly boomers born before 1960.

“Gen X is saddled with heavier student loans than their parents. This debt has severely restricted cash flow and delayed life decisions like buying a home and having children,” said Kevin Estes, founder and financial planner at Scaled Finance in Bellevue, Washington, in an email.

Because they often started families later than the boomers, many Gen Xers now find themselves with children still at home while also caring for their parents and trying to save for retirement.

There are still more challenges, Estes noted.

“Housing prices have grown faster than income for decades. Homes are generally less affordable for Gen X than they were for baby boomers,” he said.

Seeing the Bigger Picture
Despite Gen X’s challenges when saving for retirement, it’s far from being a lost cause.

“When I work with Gen X clients, I often show them various scenarios for how much they might be able to spend in retirement given different savings rates, including their current savings rate,” said David Seery, a certified financial planner at Forum Financial Management in Thousand Oaks, California, in an email.

Seeing an illustration, he added, allows Gen X clients to conceptualize what their savings level would deliver for them in retirement.

“This can serve as a wake-up call for many if they need to ramp up their retirement investing and revisit their budget,” Seery said.

For some investors, financial education may come from discussions with friends or family, websites or limited guidance from a certified public accountant.

“While they might hear bits and pieces of financial guidance from various sources, it is not often put together in a comprehensive manner that allows them to understand how the pieces fit together and what it all means for their particular situation,” he said. “With a few changes, it is possible to get on track to make retirement dreams a reality.”

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