A lot of us Gen-X’ers feel like we’re facing a retirement catastrophe. Many of us feel that the picture of Generation X and retirement is grim. We’re afraid we’ll run out of money in retirement and never be able to stop working. More than half of us don’t have any retirement savings, according to some studies. Roughly 45 percent haven’t done any retirement planning – and Generation X’s retirement years are coming up fast for the oldest folks in our cohort. Not only that, but a high percentage – 60 percent – are uncertain or anxious about finances all the time.

These figures are far higher than comparable statistics for either the Boomers before us or the Millennials after us. Why are we so afraid of catastrophe?

Well, Gen X was the first to face many financially difficult events, that’s why. In our young adult years, companies began moving away from defined benefit plans like pensions and toward defined contribution plans, like 401(k)s. With 401(k) and similar retirement plans, the burden is on the individual to save. Not everyone has the funds to do that after their other needs are met, and not everyone is comfortable doing it.

We may have substantial student debt – an issue that has continued for our children and grandchildren, who we might be helping. We are the first to have widespread dual-caretaking roles, where we are taking care of our children and our aging parents concurrently or with a great deal of overlap. To top that off, in terms of retirement, a lot of us are concerned that Social Security won’t be there for us when the time comes.

If any of this sounds familiar, stop and take a deep breath. Gen-X still has time to head off retirement catastrophe. Here are 5 of the best ways to avoid that prospect.

1. Make a realistic financial plan

Nothing beats a financial plan for dealing with fear and uncertainty. A Greeneville, Tennessee financial advisor can help you put together a comprehensive plan for retirement and other aspects of your financial life, such as monthly cash management, investing, estate planning, and more.

A financial plan is organized around your specific goals. Take some time to think through what you want your retirement to look like. Do you want to travel? Work in your garden? Start a part-time business? Once you know your goals, a financial advisor can develop a plan to help you work toward it.

Financial planning includes analyzing your income and expenses now and estimating both for your retirement years. Once you know what your income and expenses currently are, you can use them as a preliminary blueprint to think about retirement. Are any of your expenses likely to change, such as commuting costs? Will your mortgage be paid off? What will your income sources be?

No financial plan is set in stone, but analyzing and estimating now can do wonders to relieve stress and uncertainty.

2. Save and invest for retirement

Next, save and invest as much for your Generation X retirement as you can. If you have access to a tax-advantaged defined contribution plan like a 401(k), they can power your retirement savings while giving you a tax break. Contributions to 401(k)s are taken pretax, which lowers your taxable income. The funds also grow tax-free until withdrawal. Many companies match employee contributions. If yours does, your retirement savings could grow even more. 

If you don’t have a 401(k) or similar plan, you can also boost your Generation X retirement savings with Individual Retirement Accounts (IRAs). A traditional IRA is tax-deductible and the money grows tax-free until retirement. A Roth IRA isn’t tax deductible when you contribute, but provides an excellent tax advantage when you withdraw it: the funds aren’t taxed at all as long as you’ve held them for 5 years. (Traditional IRA withdrawals are taxed at the rate applicable at the time of withdrawal.)

3. Review your spending

Ordinarily, a comprehensive financial plan is not about reining in your spending. It’s about achieving your goals. But frankly, for some Gen-X’ers, a review of spending might help them plan and save for retirement. It’s always advisable to regularly review both categories and amounts of expenditure because if they’ve come to be counterproductive, reducing them can help you save for a comfortable retirement.

Are there areas you can save in, such as financially helping your children and grandchildren? Can you pay down expensive credit card debt, especially with an eye to eliminating it before you plan to retire? Can your mortgage be substantially reduced by your golden years?

4. Build up an emergency savings

Financial advisors routinely advise saving for emergencies, in an amount of several months’ expenditures. Why? Because the unexpected can hit us anytime and anywhere. A car repair or weather damage to a house can set us back beyond normal monthly expenditures. 

As we age, our need for emergency savings doesn’t decline. It may even go up. What if you should need home health care for a medical condition when retired, for example, or a stay in a long-term care facility? Medicare doesn’t always cover these. An emergency fund for older age is a very prudent idea.

5. Plan for wealth transfer

If anxiety about retirement is an issue in your life, rest assured that the outlook is not by any means gloomy. Not only will the advice here help you, but many observers believe that our generation is in for a significant wealth transfer from our parents, older relatives, and friends. The generation before us has accumulated significant assets, in financial markets such as stocks, in real estate (housing) and in other assets they’ve gathered through a lifetime. When the time comes to bequeath those assets, it is likely that Generation X and subsequent generations will receive some of them.

It’s prudent to plan for wealth transfer by clarifying plans, if appropriate, and seeking financial advice. Sudden wealth can enhance your life and the lives of your descendants; it shouldn’t be spent without a plan.

Contact Us To Discuss Your Gen X Retirement in Tennessee

At Sapiat Asset Management, we are Generation X financial advisors. We are a fiduciary fee-only financial advisory firm located in Greeneville, Tennessee. Contact us today for more information on retirement and comprehensive financial planning.