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Many Gen Xers are focused on strengthening their retirement savings as they move through their peak earning years. With fewer traditional pensions and questions about the future of Social Security, Gen X retirement funding strategies call on a mix of tax-advantaged accounts, strategic investing and catch-up contributions. Maximizing 401(k) plans, IRAs, and other investment opportunities can help increase long-term savings. Those who are behind may benefit from adjusting their asset allocation and taking advantage of compounding growth.
A financial advisor could help you create a personalized retirement plan based on different goals and needs.
Many Gen Xers find themselves facing a significant gap between the resources they want to have for retirement and their current reality. According to Nationwide's 10th Annual Advisor Authority study, while 20% of Gen Xers believe they need at least $2 million to retire comfortably, only 7% have reached that milestone. Another 16% report having saved at least $1 million, but 30% have less than $100,000 set aside for retirement.
Schroder's 2024 U.S. Retirement Survey describes a similar shortfall. Gen Xers it surveyed estimate they will need $1,069,746 to retire comfortably but anticipate having just $602,944 saved-a $466,802 gap that exceeds the expected shortfall of both Baby Boomers and Millennials. Additionally, only 14% of Gen Xers feel confident they have saved enough, and 54% worry about outliving their assets in retirement.
These surveys reflect Gen X expectations, which can vary significantly from actual experience. For example, Gallup polls over many years have consistently found that three of four retirees say they have enough money to live comfortably. Still, these figures underscore the financial challenges this generation perceives as they approach their retirement years.
For Gen Xers looking to grow their retirement savings, the following strategies could help improve financial preparedness and maximize retirement assets.
Taking full advantage of a 401(k) or 403(b) can significantly boost savings. In 2025, employees can contribute up to $23,500, with an additional $7,500 in catch-up contributions for those 50 and older. If an employer offers matching contributions, contributing at least enough to receive the full match provides an attractive and immediate return on investment.
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For those who have maxed out their workplace plans or need additional savings vehicles, IRAs offer a tax-advantaged solution. A traditional IRA allows tax-deferred growth, while a Roth IRA provides tax-free withdrawals in retirement. Gen Xers earning within IRS limits may contribute up to $7,000 annually, plus an extra $1,000 for those 50 and older.
A health savings account (HSA), available to those with high-deductible health plans, offers a triple tax advantage: tax-deductible contributions, tax-free growth and tax-free withdrawals for qualified medical expenses. Healthcare can be a major retirement expense and an HSA can help offset future costs while serving as an additional savings vehicle. In 2025, the IRS permits individuals to contribute up to $4,300 to an HSA, while those with family coverage can contribute up to $8,550.
Carrying high-interest debt, such as credit cards, can make it hard to save for retirement. Prioritizing debt repayment frees up cash flow for investments and long-term financial growth. Debt management strategies like the snowball or avalanche method can help accelerate payoff.
While Gen Xers can begin claiming Social Security at 62, waiting until full retirement age – or even delaying until 70 – results in higher monthly benefits. For those who can afford to wait, this strategy can significantly increase guaranteed income during retirement.
A diversified portfolio that includes equities, fixed income and alternative investments can help Gen Xers achieve better long-term growth. Those behind on savings may consider a higher allocation to growth-oriented investments, such as stocks or real estate, while balancing risk tolerance and time horizon.
Even small increases in retirement contributions can add up. A strategy like increasing contributions by 1% annually or committing a portion of raises and bonuses to retirement accounts can accelerate savings without major lifestyle adjustments.
For those 50 and older, catch-up contributions provide a valuable opportunity to boost savings. Increasing contributions to 401(k)s, IRAs and HSAs in the final working years can help close savings gaps before retirement. Thanks to a provision of the SECURE 2.0 Act, those with 401(k)s and similar workplace retirement plans can contribute even more than the standard catch-up contribution limit between ages 60 and 63. In 2025, that means eligible participants can save an extra $11,250 in a 401(k) or similar plan, instead of just $7,500. As a result, Gen Xers can contribute up to $34,750 in 2025.
If full retirement savings goals are not met, part-time work can provide supplemental income and delay withdrawals from retirement accounts. This can help stretch savings and improve long-term financial security.
A financial professional can help create a personalized retirement plan, optimize tax strategies, and ensure investment choices align with long-term goals. For Gen Xers navigating complex financial decisions, professional guidance can provide clarity and direction.
Let's take a look at a hypothetical 52-year-old Gen Xer who has saved $150,000 for retirement but realizes that they need to boost their savings. They earn $120,000 annually and decide to implement several strategies to improve their financial outlook.
First, they increase their 401(k) contributions to the 2025 limit of $23,500 and take advantage of the $7,500 catch-up contribution, bringing their total annual 401(k) contribution to $31,000. If they maintain this rate for the next eight years until age 60, assuming a 7% annual return, their 401(k) balance would grow to more than $575,000.
At 60, they can further accelerate their savings under the new catch-up contribution rules, allowing $11,250 per year for those aged 60-63. With this increase, they contribute $34,750 annually for four years. If they continue earning a 7% return, their balance could reach approximately $940,000 by age 64.
They also open an IRA, contributing $8,000 per year (including the $1,000 catch-up limit), and invest in an HSA to offset future healthcare costs. With strategic debt reduction and delaying Social Security until 67, they significantly improve their retirement outlook, bridging much of their initial savings gap.
Gen Xers looking to strengthen their retirement savings have a range of options to improve their financial outlook. Making the most of tax-advantaged accounts, adjusting investment strategies and increasing contributions over time can help build a stronger foundation for the future. Managing debt, considering part-time income and delaying Social Security benefits where possible can also provide more flexibility in retirement.
A financial advisor can help you determine when to retire and how to build a nest egg for you to live comfortably. Finding a financial advisor doesn't have to be hard. SmartAsset's free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you're ready to find an advisor who can help you achieve your financial goals, get started now.
Most retirement account holders must make an annual withdrawal for a minimum amount from pre-tax retirement accounts after reaching a certain age. SmartAsset's RMD calculator estimates the size of these future required minimum distributions (RMDs).
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