The oldest Gen Xers are turning 59 this year, and once they reach 59½, they can begin making penalty-free withdrawals from their 401(k)s and individual retirement accounts.
However, nearly 70% of Gen X, which is comprised of Americans between the ages of 44 and 59, feel behind on their retirement savings, according to a new retirement savings survey from Bankrate. That’s the highest percentage of any generation, per the survey.
So, how much do Gen Xers actually have saved? The average 401(k) balance for people in their 50s, who make up the majority of Gen X, is $214,100. But the median balance is less than a third of that at $64,700 as of the second quarter of this year, per data from Fidelity Investments.
The good news: Many Gen Xers are already taking strides to get their retirement savings where they want them to be. Nearly 30% say they’re contributing more to their retirement investment accounts now, compared with last year, per Bankrate’s report.
Plus, they’ve increased their IRA contributions by 30% to the highest level in five years, per Fidelity’s second quarter retirement analysis.
“Those who strive to prioritize retirement savings, as they should, have reason to believe they can achieve their goal,” Mark Hamrick, Bankrate’s senior economic analyst, says in Bankrate’s report. “It takes information, focus and hard work, but the good news is that it can be done.”
Here’s a look at some of the external factors that have impacted Gen X’s ability to save for retirement and how they can catch up.
Gen Xers started saving for retirement later
One of the reasons Gen Xers’ retirement savings may not be as built up as they’d like is because many started contributing later than younger generations.
Gen X started saving for retirement at a median age of 30, according to data from the Transamerica Center for Retirement Studies. That’s five years later than millennials and a whole decade later than Gen Z, per the report.
When Gen Xers entered the workforce in the 1980s and 1990s, defined benefit plans like pensions were beginning to disappear and employers were only just beginning to offer 401(k) plans. Plus, employees had to manually choose to participate in their employer’s 401(k) plan, instead of being automatically enrolled the way many new hires are today.
“Participation rates are typically as low as 60% when people have to sign up themselves, but over 90% when they’re automatically enrolled,” Anne Lester, a retirement expert and author of “Your Best Financial Life: Save Smart Now for the Future You Want,” told Make It in June.
Many Gen Xers are also part of the “sandwich generation” that is juggling the costs of raising children and caring for aging parents at the same time. This has likely impacted their ability to set aside more money for their own retirement, Lester says.
“If you’re spending money on daycare and housing and all of those things, it takes a huge bite out of your wallet,” she says. “People are inevitably allocating finite resources, so they may find themselves contributing less than they should.”
How Gen X can get their retirement savings on track
Although the amount of money you need to retire will depend on various personal factors, such as where you plan to live or how much you’ll want to travel, Fidelity recommends aiming to have around six times your income saved for retirement by the time you reach age 50 and eight times your salary saved by age 60.
For Gen Xers who aren’t there yet, there’s still time to give your retirement savings a boost.
Fidelity recommends a savings rate of at least 15%, inclusive of any employer match, but Gen Xers who have nothing saved for retirement so far may need to double that to 30%, Lester says.
People age 50 and older can funnel additional money into their tax-advantaged retirement accounts, including 401(k)s and IRAs, in the form of catch-up contributions.
In 2024, qualified account holders can put an extra $7,500 above the annual limit toward their 401(k), 403(b), governmental 457(b) or SARSEP plan. People in that age group can make an additional $1,000 contribution to their traditional or Roth IRA.
Gen Xers may also want to consider ways they can downsize their lifestyle in order to put more in savings, such moving into a smaller home, as well as how they can recalibrate when lifestyle changes occur, such as kids no longer needing day care.
“As expenses drop off for things like child care, plan to redirect that money to your retirement,” Lester says. “Plan for that ahead of time so that when you get that extra bit of money, you’ll be prepared to save it.”
