Gen X: Do Your Finances Need Attention?

The global pandemic, job instability and the fluctuations of the market have left many Gen Xers fearful for their financial future. Despite nearing their peak earning years, significant numbers of Gen Xers are falling behind when it comes to saving for retirement.

As a group, Gen X often has large mortgages and substantial credit card balances. Many are still paying off student loans while looking for ways to pay for college for their kids. Gen X is becoming the new “sandwich generation,” caring for both children and aging relatives, making it difficult to set aside money for emergencies or retirement. If this is your situation, don’t despair. There are steps you can take to help get back on track.

Establish a Time Frame

Identify short- and long-term goals. Saving becomes easier when you have a specific goal in mind. Short-term goals may include paying off credit card debt, which is costly. Do you need a newer car, or just need to pay off a current loan? Consider driving an older car, which may make financial sense. Think about long-term goals, such as when you want to retire and what your retirement will look like. Will you work part-time? Travel? Start a business? Once you know how many years you have before retirement and how you’ll spend your time, you can determine how much you’ll need to save to potentially reach your goal.

Contribute More

Ideally, you should strive to contribute the maximum to your workplace retirement plan. But, if that’s not possible, make sure you invest enough to take advantage of any employer matching funds. Increase the amount you’re contributing each time you get a raise. Even a small bump up in savings can make a difference over time.

Spend Less

Reducing spending is the simplest and most effective way to have more money to invest. Look for places in your budget to cut back. Build a realistic spending plan and stick to it.

Leave the Money Alone

Don’t withdraw money unless an emergency or a hardship leaves you with no other option. Taking money out of your retirement account deprives you of future earnings on those funds, reducing the amount you’ll have at retirement and withdrawals could trigger taxes and penalties, too.