Is Generation X Preparing Adequately for Retirement?

If you were born during 1965-80, you belong to “Generation X.” Ten or twenty years ago, you may have thought of retirement as an event in the lives of your parents or grandparents; within the next 10-15 years, you will probably be thinking about how your own retirement will unfold.

 

According to the most recent annual retirement survey from the Transamerica Center for Retirement Studies, the average Gen Xer has saved only about $72,000 for retirement. Hypothetically, how much would that $72,000 grow in a tax-deferred account returning 6% over 15 years, assuming ongoing monthly contributions of $500? According to the compound interest calculator at Investor.gov, the answer is $312,208. Across 20 years, the projection is $451,627.

 

Should any Gen Xer retire with less than $500,000? Today, people are urged to save $1 million (or more) for retirement; $1 million is being widely promoted as the new benchmark, especially for those retiring in an area with high costs of living. While a saver aged 38-53 may or may not be able to reach that goal by age 65, striving for it has definite merit.

     

Many Gen Xers are staring at two retirement planning shortfalls. Our hypothetical Gen Xer directs $500 a month into a retirement account. This might be optimistic: Gen Xers contribute an average of 8% of their pay to retirement plans. For someone earning $60,000, that means just $400 a month. A typical Gen X worker would do well to either put 10% or 15% of his or her salary toward retirement savings or simply contribute the maximum to retirement accounts, if income or good fortune allows.

 

How many Gen Xers have Health Savings Accounts (HSAs)? These accounts set aside a distinct pool of money for medical needs. Unlike Flexible Spending Accounts (FSAs), HSAs do not have to be drawn down each year. Assets in an HSA grow with taxes deferred, and if a distribution from the HSA is used to pay qualified health care expenses, that money comes out of the account, tax free. HSAs go hand-in-hand with high-deductible health plans (HDHPs), which have lower premiums than typical health plans. A taxpayer with a family can contribute up to $7,000 to an HSA in 2019. (The limit is $8,000 if that taxpayer will be 55 or older at any time next year.) HSA contributions also reduce taxable income.

 

Fidelity Investments projects that the average couple will pay $280,000 in health care expenses after age 65. A particular retiree household may pay more or less, but no one can deny that the costs of health care late in life can be significant. An HSA provides a dedicated, tax-advantaged way to address those expenses early.

 

Retirement is less than 25 years away for most of the members of Generation X. For some, it is less than a decade away. Is this generation prepared for the financial realities of life after work? Traditional pensions are largely gone, and Social Security could change in the decades to come. At midlife, Gen Xers must dedicate themselves to sufficiently funding their retirements and squarely facing the financial challenges ahead.

Office Locations

Louisville

2201 High Wickham Place
Louisville, KY 40245
502.753.0609

Cincinnati

100 E-Business Way
Suite 110
Cincinnati, OH 45241
513.842.1700

Bowling Green

1048 Ashley Street
Suite 301
Bowling Green, KY 42104
270.843.4115

Indianapolis

5750 Castle Creek Parkway North Drive
Suite 170
Indianapolis, IN 46250
877.634.9757

Grand Rapids

607 Cascade West Parkway
Grand Rapids, MI 49546
844.476.2744

Elizabethtown

2901 Ring Rd

Elizabethtown, KY 42701
866.568.9719

Lexington

176 Pasadena Drive
Suite 3B
Lexington, KY 40503
859.286.5085

Paducah

4730 Village Square Drive
Suite 100
Paducah, KY 42001
270.443.8711

All information herein has been prepared solely for informational purposes, and it is not an offer to buy or sell, or a solicitation of an offer to buy or sell any security or instrument or to participate in any particular trading strategy. Portions of the content on this website were prepared by Marketing Library Inc.

Please note: When you link to any of the websites provided herewith, you are leaving this site. We make no representations as to the completeness or accuracy of the information provided at these sites. Nor is the company liable for any direct or indirect technical or system issues or any consequences arising out of your access to or use of third party technology, sites, information and programs made available through this site. By clicking on links above you will leave our website and assume total responsibility and risk for your use of the site you are linking to.

Respective services provided by ARGI Investment Services, LLC, a Registered Investment Adviser, ARGI CPAs and Advisors, PLLC, ARGI Business Services, LLC, and Advisor Insurance Solutions. All are affiliates of ARGI Financial Group. View our privacy policy here.

Argi Gateway Login

Forgot your password?

Call 866-568-9719