Gen Xers Must Step Up Retirement Savings

If you're a member of Generation X ”in the range of 35 to 51 years old” and aren't saving enough for retirement, start now.
Melinda Kibler
Published: March 29, 2016
If you’re a member of Generation X — in the range of 35 to 51 years old — and aren’t saving enough for retirement, start now.

If you wait too long, you might have to delay retirement and keep working a lot longer than you’d like. Gen Xers are generally less prepared for retirement than the Baby Boomers because of the switch from employer-paid pensions to 401(k) plans, investment losses, higher debt, and lower savings. Pew Charitable Trusts in 2013 estimated that Gen X households lost 45 percent of their wealth between 2007 and 2010. Pew predicts the average Gen Xer will be able to replace only about half of their preretirement income.

Since neither employers nor Social Security will fully fund a decent retirement, you have to take the initiative. Complacency is the first barrier, so becoming aware of the need to save for retirement is the first step.

Next, create a budget. The process of going through your expenses is enlightening because it unveils spending habits and helps you pinpoint where you can reduce spending. Otherwise, you’re likely to reach the end of the year without having saved and not knowing why.

Without a formal budget, you’ll be too lax and won’t reach your goals. Once you’ve set your goals and built a budget to reach them, you’re on your way.

Reduce debt, starting with loans carrying the highest interest rate first — usually credit-card debt. Build up your savings to cover six to 12 months of living expenses in case of an emergency. If you don’t have to tap into the emergency fund, it will eventually become part of your retirement nest egg.

Now, begin socking away money for retirement. If your employer offers a 401(k) or 403(b) plan, this should be your primary place for retirement savings, particularly if your employer offers matching contributions — essentially, free money.

Once you have maxed out your 401(k) contributions, consider opening up a traditional or Roth IRA if you have additional cash available. If your employer doesn’t offer a retirement plan, it’s even more important to save in a traditional or Roth IRA — or a SEP-IRA or Keogh plan if you’re self-employed.

Don't Be Afraid of Stocks
Gen Xers who were hit hard by the market downturn may be afraid to invest in stocks and decide to stick with safe investments like CDs and short-term bonds. But being too conservative is as risky as being too aggressive, because safe investments produce very low returns these days.

Second, learn from prior mistakes. Maintain your target allocation during market downturns instead of bailing on your stock holdings. Investors who sold out of their stock positions in late 2008/early 2009, locked in those losses giving up their opportunity to let those investments recover as the market improved.

Most Gen Xers will want to put the bulk of their retirement in stock funds that offer growth potential — dividing equity investments among a U.S. large-cap fund, a U.S. small-cap fund and an international fund for starters. Having bond and money market fund exposure in your investment portfolio as well, though it may be more advantageous to invest in bond funds outside your retirement plan.

Make a plan and stick with it instead of trying to time the market. Think long-term. As you get closer to retirement, slowly take risk off the table and increase your holdings of bonds while maintaining an appropriate level of stocks.

Saving for retirement takes discipline. There are lots of competing demands on your money, but by the time you get to your mid-30s, it’s very important to save, even if you have to start small.
Melinda Kibler is a Certified Financial Planner and portfolio manager with Palisades Hudson Financial Group with its Fort Lauderdale, Florida, office. (Palisades Hudson is headquartered in Scarsdale, N.Y.)  She can be reached at Palisades Hudson ( is a fee-only financial planning firm and investment manager based in Scarsdale, N.Y., with more than $1.1 billion under management.  Branch offices are in Atlanta; Austin, Texas; Fort Lauderdale, Fla., and Portland, Oregon. Read Palisades Hudson’s daily column on personal finance, economics and other topics at

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