Retirement Bites: Why Gen X Needs a New Game Plan

Preparing for retirement can be challenging for anyone, but Gen X might have the toughest road ahead. They’re approaching this next chapter with fewer safety nets, more financial stressors and a growing realization that they might not be as prepared as they hoped.

On a recent episode of “Your Money Map,” host Jen Chatzky spoke with personal finance journalists Kerry Hannon and Janna Herron, co-authors of “Retirement Bites: A Gen X Guide to Securing Your Financial Future.” Their new book breaks down why this “forgotten generation” faces such a difficult landscape, and the practical steps they can take to shore up savings, build a steady retirement income and enter their next act with confidence.

WHY GEN X FACES A STEEPER CLIMB

Hannon and Herron saw Gen X’ers’ anxiety firsthand when working together at Yahoo Finance, where they saw thousands of comments and inboxes full of questions from those in this age bracket (ages 45-60) worried about what comes next. “This is what my friends and my sister and brother were talking about – Gen X’ers worried about retirement, dealing with children and dealing with aging parents,” says Herron, a Gen X’er herself. “It’s just that really gnarly part of life where you might be making a lot of money, but a lot of money is going out the door.”

The book outlines what put Gen X in this spot, namely shrinking pensions, late-arriving 401(k)s and multiple financial crises during their prime earning years. The fallout is clear. Research from the Alliance for Lifetime Income shows just 41% of Gen X’ers say they are confident their savings will last their lifetime, compared to 62% of Boomers who say the same.

A major driver? Gen X started saving later, and when 401(k)s arrived, the rules were unclear. “There was no playbook on what you were supposed to do…and frankly, there weren’t a lot of choices in these plans to invest in, nor could you put a lot of money into them,” says Hannon. “There was a real issue of people not understanding they needed to start saving in them.”

Today’s workers benefit from automatic enrollment and automatic contribution increases, which are advantages Gen X never had. “Nobody was automatically putting anything aside for us,” she adds. “That’s hugely impactful for people starting to save.”

START SMALL WITH THE STEPS THAT MATTER MOST

For Gen X’ers feeling discouraged, the authors offer a clear message – you can start making meaningful progress today.

The first step is simple, but powerful. Build a budget. Gen X’ers are typically in their peak earning years, which means small changes can free up real money. “It’s good to know what you value, and then also where you’re spending your money,” stresses Herron. “See where you can pull back, and maybe that goes into your 401(k) so you can max it out, or you can even do your catch-up contributions if you’re 50 or over.”

Longer-term changes matter too, especially when it comes to your health. One study estimates a 65-year-old may need $172,500 in after-tax savings for retirement healthcare alone.

While writing the book, Herron had her own wakeup call. She discovered she had high blood pressure. It reframed how she thought about retirement costs. “If I can get my blood pressure down and I can avoid heart failure, then I’m not going to be spending as much in retirement on my health,” she shares.”Those kinds of things really resonate with me, because I’m like, that’s something I can do.”

MASTERING DECUMULATION: YOUR RETIREMENT PAYCHECK

Hannon and Herron emphasize one of the most overlooked pieces of retirement planning – turning your savings into a paycheck. Alliance for Lifetime Income research shows that just 35% of Gen X consumers are confident they can do that. “There’s a real psychological shift there,” says Hannon.

Her advice? Start early, and get help. A financial professional can bring clarity to the whole picture. “That’s someone who can get up on the balcony and really look at your total wealth package…everything you have, not just your retirement accounts,” Hannon adds. “Ask how you can create a paycheck for yourself that will last.”

TWO TAKEAWAYS FOR GEN X’ERS

As Hannon and Herron emphasize, building a stronger retirement plan doesn’t rely on perfection; it requires momentum. These two principles can help you create it:

• Start with one step – any step: “It’s always scariest before you actually dive in, then when you start to tackle these things, step-by-step – figuring out your net worth, your cash flow, etc. – once you start getting this information, the scariness starts to go away,” says Herron.
• Your retirement number isn’t magic – it’s personal: “There’s no magic retirement number you need to save,” says Hannon. “It’s going to reveal itself over time. Get started doing those basic nuts and bolts. Try to look with a positive attitude, because I think that’s going to give you the energy to move forward 100%.”

RELATED CONTENT:

• One way to feel more confident about your retirement plans? Working with a financial professional. Here’s why people say getting help is essential to their peace of mind.
• Looking for your license to spend? Retirees with assets that annuitize income spend twice as much as those with non-annuitized savings.
• Americans are facing a retirement crisis unlike any other before. Take time today to check off the basics and determine how much income you will need to cover your essential monthly expenses in retirement.