The possibility of outliving one’s retirement savings is a concern for every generation, but it’s an especially alarming worry for Gen Xers, partly because so many of these 44-to-59-year-olds are not in strong financial shape. Only 14% of Gen Xers believe that they have saved enough money for retirement, according to Schroders’ 2024 U.S. Retirement Survey. Additionally, Gen X carries more credit card debt than any other generation, according to recent data from Experian.
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The clock is ticking for Gen X to get their financial ducks in a row before bidding adieu to working life. If you’re a Gen Xer worried about outliving your retirement savings, here are five steps to take now.
Know How Much You’ll Need for Retirement
Very few of us know how long we’ll live, but most of us hope to live well into old age. To plan effectively, ask yourself:
- At what age do I plan to retire?
- What is the annual cost of living in the place I’m retiring? Can I relocate to somewhere cheaper?
- What are my monthly expenses, and how might they change in retirement?
The goal is to determine how much money you’ll need after taxes for retirement. It’s often best not to assume Social Security will fully cover your needs, given that funds are projected to be depleted by 2035. A retirement calculator can help estimate your needs.
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Destroy Your Credit Card Debt
We noted that Gen Xers carry more credit card debt than any other generation. If you’re saddled with this high-interest debt, you may have become used to it as just a routine monthly bill, or set of bills, to deal with. And you may be thinking, “What’s the point of eliminating it if I’m used to it and already budget for it?”
Credit card debt grows over time. The longer you carry it, the more interest you pay. The average U.S. credit card interest rate is currently 24.28%, a burden that can seriously erode your retirement savings. Imagine paying that interest on your mortgage instead of just the principal — it’s a similar drain. Eliminate this debt before it eliminates your financial flexibility.
Cut Expenses
Even if you already live frugally, ask yourself: can you live even more strategically to pay off debt, maintain a robust emergency fund, and invest? Retirement doesn’t remove the need for a financial cushion.
Some everyday expenses may be easier to cut than you think: apps, cloud storage, dry cleaning, bank fees, subscription services. Small, recurring costs can add up, and trimming them often won’t be missed.
Diversify Your Investment Portfolio
A diversified portfolio is essential to avoid outliving your retirement savings. For Gen X, the pressure is higher: there is still time to get on track, but every year counts.
It’s a good idea to talk with a financial advisor, even for a single session, to develop a strategy that balances risk and growth. Focus on hedging against inflation and protecting yourself from stock market volatility. Some risk is unavoidable, but a smart plan ensures it works in your favor rather than against you.
Ensure That 20% of Your Income Is Being Saved For Retirement
Why take all these steps — cutting expenses, tackling credit card debt, diversifying investments? To put your money where it counts: toward retirement savings.
Many financial experts recommend saving 15% of your income, but Gen X is on a tight timeline. To catch up, aim for at least 20% of your paycheck going toward retirement. Aggressive saving now is essential to avoid outliving your nest egg.
This article is part of GOBankingRates’ Top 100 Money Experts series, where we spotlight expert answers to the biggest financial questions Americans are asking. Have a question of your own? Share it on our hub — and you’ll be entered for a chance to win $500.
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This article originally appeared on GOBankingRates.com: Gen X: 5 Steps To Take Now To Avoid Outliving Your Retirement Savings
