Gen X – Salute to Turning 50

Welcome to the midlife checkpoint for Generation X, those born between the years 1965 – 1980! As members of this unique generation, you’ve weathered tremendous economic shifts, technological revolutions, and societal changes. Now as you approach the milestone age of 50, it’s time to assess your retirement savings. In this blog post, we’ll explore the importance of retirement planning, factors influencing Gen X’s retirement, and how much you should ideally have saved by the age of 50.

As a member myself, during our lifetime, we have experienced some major economic factors that influence where we are financially. Graduating college during an economic downturn, a time influenced by high-interest rates and the aftermath of the savings and loan crisis. Heading into our 30s, there was the Dot.com bubble burst, leading to a significant stock market decline severely impacting the technology industry. Then there were the 9-11 terrorist attacks that shifted global dynamics creating market volatility and increased security spending. In the mist of expanding our families, it was “The Great Recession” that resulted in an international financial crisis that led to widespread unemployment, housing insecurity, and financial turmoil. As many of us turned 50, we were hit with the Covid-19 epidemic that drove the world to shut down, supply chain disruptions, and market volatility. With all these major economic crises, it has had a major impact on income and savings growth.

Gen Xers, also referred to as the sandwich generation, are caught between funding our own households and that of our aging parents. It doesn’t surprise me the new data recently issued by the National Institute on Retirement Security – a typical Gen X household has retirement savings of around $40,000. The conclusion is that many in Generation X are not on target to meet their retirement savings goal. That is because by age 50, it is recommended that you have approximately six times your salary depending on your specific needs. (If your income is $100,000, your approximate retirement savings should be around $600,000.)

Reaching age 50 is a major life milestone. It brings a lot of things into perspective. For me, it has come with a lot of reflection and contemplation about the future. Assessing what we have saved and what our next steps should be as we prepare for retirement. Here’s what we are doing and you should too:

1. Assess Your Current Financial Situation: Review your current income, expenses, and overall financial health. Take stock of your assets, including savings, investments, and any retirement accounts.

2. Set Clear Retirement Goals: Determine the lifestyle you envision during retirement. Consider factors like where you want to live, travel plans, healthcare needs, and potential hobbies.

3. Calculate Retirement Savings Needs: Use retirement calculators to estimate how much you’ll need to maintain your desired lifestyle. Factor in inflation, healthcare costs, and potential longevity.

4. Maximize Retirement Contributions: Contribute as much as possible to retirement accounts such as 401(k)s, IRAs, or other employer-sponsored plans. Take advantage of catch-up contributions available to those aged 50 and older.

5. Diversify Investments: Ensure your investment portfolio is diversified to manage risk. Review and adjust your asset allocation based on your risk tolerance and retirement timeline.

6. Prioritize Debt Management: Work on reducing high-interest debt, such as credit cards and loans. Consider paying off your mortgage before retirement to reduce fixed expenses.

7. Build an Emergency Fund: Maintain an emergency fund to cover unexpected expenses. Aim for three to six months’ worth of living expenses.

8. Optimize Healthcare Planning: Understand your healthcare needs during retirement and plan for potential costs. Consider long-term care insurance to cover future healthcare expenses.

9. Consider Skill Development: Keep your professional skills up-to-date to remain competitive in the job market. Explore options for phased retirement or part-time work if you wish to transition gradually.

10. Consult with a Financial Advisor to Create a Personalized Plan: Regularly review your retirement plan and make adjustments as needed.

Have your financial planner keep you informed about changes in the economy, tax laws, and investment markets.

By taking these steps, we, Gen Xers, can work towards building a solid foundation for a comfortable and secure retirement. Don’t forget to consult with a financial planner to tailor these general guidelines to your specific circumstances and goals.