How Gen Xers are managing retirement savings

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How Gen Xers are managing retirement savings

Gen Xers are currently in their 40s and 50s and account for about a fifth of the U.S. population. As the next generation in line to retire behind the Baby Boomers, their experience may be a cautionary tale for those coming up behind them.

The average Gen X retirement savings balance suggests that many high earners may not be saving enough, if these savings are intended to be one's main source of income in retirement. For many, this is a likely scenario, as most people won't have a pension, and Social Security benefits for high earners are intended to replace only a quarter to a third of one's income if one retires at 'full' retirement age - which is 67 for Gen Xers.

As lawmakers haven't addressed the program's long-term solvency, it's possible that Social Security benefits for some might ultimately be reduced. In 2034, social security will only pay 80% of promised benefits, which is when Gen Xers will begin retirement.

Many are far off recommended marks.

The selection of benchmark goals can be challenging due to the fact that each individual's situation is different and may change over time for better or worse. One broad recommendation suggests that by 45, one should have saved two to four times one's household income, three to six times by age 50 and four-and-a-half to eight times by 55.

How much should anyone have saved by retirement varies based on a variety of factors - including age, marital status, where and how they plan to live, whether they will have a steady monthly salary from a pension, how much can they expect from Social Security and how much may come from other potential income sources in retirement, such as part-time work or a rental property.

In retirement, what likely sources of income and income-producing assets will you have? If you receive a benefit estimate here, you can request a benefits estimate to determine what Social Security may pay you based on your earnings to date. Fidelity, Vanguard or T Rowe Price, among other 401 providers, often have calculators online to aid you in checking if you're on the path to having sufficient savings in retirement.

If you can afford it, you may also get helpful advice, from a fee-only certified financial planner or a financial adviser, who has a stated fiduciary responsibility to serve your interests only and who is not paid a commission to put clients' money into specific investment products. Have your employer set up an employee assistance program that offers free or subsidized financial coaching.

The auto IRA contribution model is an easy, tax-efficient way to save and invest for retirement through automatic deductions from their paycheck. Some employers can make contributions to their employees' accounts, while others do not.

Changes to an existing saver's Credit may also lower income Gen Xers' income. The Credit will become a saver's match starting in 2027 and, significantly, it will become refundable, meaning a tax filer will not have to have a tax liability in order to claim the match. 's Match's contribution will equal 50 percent of a tax filer's retirement plan contribution, up to a $2,000 maximum match, and the match will be deposited directly into the filer's retirement plan account.