How Gen Xers Can Catch Up on Their Retirement Savings

Are you a member of Generation X? Feeling uncomfortable about your preparedness for retirement? You’re not alone. A recent study from Transamerica found that only 12 percent of Gen Xers feel secure about their ability to retire. The study found that the average Gen X household has only $69,000 in retirement savings.

Retirement Planning for Gen Xers

Generation X is generally defined as individuals born between the mid-1960s and the early 1980s. They’re also known as the “sandwich generation,” because they’re squeezed between two much larger generational groups—baby boomers and millennials. Most Gen Xers are in their 40s or 50s. While they still have time to save for retirement, their window is quickly closing.

Are you a Gen Xer who’s behind on retirement? If so, now may be the time to take quick action. You can still reach your savings goal if you are disciplined and focused. Below are a few tips to help you get started:

Estimate Your Retirement Number

Have you ever gone on a road trip without knowing your final destination? Probably not. Without an endpoint, it would be impossible to develop a route or track your progress. The same is true in retirement planning.

Your retirement strategy should have an endpoint in the form of a retirement number. That’s how much you need to save to fund your expenses and desired lifestyle in retirement. Obviously, you can’t predict every expense you may have in retirement, but you can develop an informed estimate based on your current spending and inflation.

You can also project your sources of retirement income, such as a pension or Social Security. If those sources don’t cover all your expenses, you’ll have to fund the difference with distributions from your savings. Multiply that difference by the expected duration of your retirement, such as 30 years, and you’ll get a ballpark retirement number estimate.

Obviously, this exercise is simple and doesn’t include other factors such as inflation, increasing health care costs or investment returns. However, it’s a good starting point to see where you need to go. A financial professional can help you develop a more precise retirement estimate.

Cut Your Expenses and Save the Difference

There’s no more effective retirement strategy than to simply spend less and save more. Of course, that may be easier said than done. One way to reduce your spending is to implement a budget, as it helps you manage your spending and track your progress toward large financial goals such as retirement. Unfortunately, nearly 60 percent of Americans don’t use a budget.

If you’re among that group, now may be the time to make a change. You can use an online budgeting program or a simple spreadsheet, or even a pencil and paper. Look for areas to cut back, like on entertainment and dining out. Perhaps you could consolidate debt and reduce your interest costs. Every dollar in spending you can cut is a dollar you can allocate toward retirement.

Protect Yourself Against Risk

Even if you’re saving a sufficient amount of money, all it takes is one outsize risk to throw a wrench in your retirement plans. For instance, you could suffer a disability on the job. Or the unexpected death of you or your spouse could create financial difficulty. The financial markets could decline sharply.

Work with a financial professional to evaluate your risk exposure and take preventive action. For instance, you could use an annuity that has principal guarantee and no downside risk. Or you could use an income annuity to generate a guaranteed lifetime income stream once you enter retirement. A financial professional can help you develop a risk management strategy.

Ready to develop your retirement strategy? Let’s talk about it. Contact us today at America’s Annuity. We can help you analyze your needs and goals and develop a plan. Let’s connect soon and start the conversation.