If you’re part of Generation X (born between 1965 and 1980), you’re likely thinking a lot about retirement. A recent survey found that Gen X is the least confident about retirement compared to any other age group currently in the workforce.
Here’s a simple guide to help you prepare for the retirement you want.
Get a Grip on Spending
Before you can plan for retirement, you need to understand where your money goes today. This matters because your retirement savings goal depends largely on your expected expenses in retirement. If you know what you spend now, you can estimate how much money you’ll need later.
A rule of thumb is to plan on spending about 80% of your current income annually in retirement. So, if you make $90,000 now, plan for about $72,000 a year in retirement.
Tracking every expense might sound overwhelming, but there are some great tools out there that make it easy. This will help you see exactly what you’re spending on and where you could cut back if needed.
Build an Emergency Fund
Life throws curveballs-car repairs, medical bills, or unexpected home fixes. That’s why having a dedicated emergency fund can save you from financial stress.
If you don’t have one yet, start small with $1,000 and aim to grow it to cover 3 to 6 months of essential expenses. This fund is your safety net so you don’t have to dip into your retirement savings when surprises happen.
Ditch the High-Interest Debt
Credit card debt and other high-interest loans can seriously eat into your ability to save. Paying them off quickly frees up money to invest in your future instead of servicing old expenses.
Two solid strategies are the “snowball” method-paying off the smallest debts first for quick wins-and the “avalanche” method-targeting the highest interest rates to save money on interest.
Both work; pick the one that motivates you most.
Maximize Your Tax-Advantaged Savings and Invest for Growth
Make the most of retirement accounts like 401(k)s, IRAs, and even Health Savings Accounts (HSAs). These accounts let your money grow tax-deferred or tax-free, which can supercharge your savings over time.
Aim to save around 15% of your pre-tax income, including any employer match, but adjust based on your personal situation.
Investing in growth assets like stocks. Stocks have historically offered higher returns than cash or bonds, growing your money faster and potentially shortening the time to retirement. Keep a diversified portfolio to balance risk and reward.
Check If You’re on Track
Retirement income doesn’t just come from savings. Factor in Social Security, pensions, or other income streams. A solid retirement plan balances guaranteed income, growth potential, and flexibility to adapt to life’s changes.
Use a retirement calculator to see if your current savings will provide the income you need. If you find you’re behind, there are ways to catch up. If you’re 50 or older, take advantage of higher contribution limits to turbocharge your savings.
Or consider working a few extra years to boost savings and reduce the number of retirement years you need to fund.
The Bottom Line
Saving for retirement is like planting a tree—the best time was 20 years ago, but the second-best time is now.
If you still feel overwhelmed, work with a financial planner who can tailor a plan just for you.
Are you ready to retire with confidence?
Book a no-obligation initial call to see how we’ve helped hundreds of clients like you craft a personalized retirement plan that’s uniquely you.