The Best Money Tips For Generation X To Avoid A Retirement Crisis

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With all the media hype surrounding baby boomers and millennials, two behemoth generations, it’s easy to forget about Generation X, sandwiched in the middle. Ironically, Gen X is also entering the sandwich stage of life, meaning their financial resources are being pulled in a million different directions, making it difficult to save for retirement.

Gen-Xers range in age from the late 30s to early 50s and are currently in the thick of their financial lives – trying to pay mortgages, remodel or buy larger homes, save for their childrens’ college tuition, care for aging parents, and sock away money for retirement. Couple these responsibilities with a lack of financial education and it’s no wonder that saving for retirement has taken a back seat.     

Throw in a divorce or unexpected medical issue and this already challenging financial situation can quickly turn into a disaster and push retirement even farther into the future.

As a member of this forgotten generation, I know all about this difficult financial reality. So if you’re interested in hearing a firsthand account about how I righted my financial ship before it sank and getting some expert guidance from the pros at TIAA on how you can do it too, keep reading, my friend!

Financial Cruise Control In My 20s

Hey, life’s a beach, right? I guess I’m showing my age with that saying, but who cares, I’m proud to be a Gen-Xer!

I mostly grew up in the 80s and 90s and embraced all that that entailed. You know, Atari, Madonna, BIG hair. Yep, I lived through it all. And since I am on the younger side of the generation, I also got to enjoy the early 90s as part of my youth. While grunge bands from Seattle were taking the stage, I was spreading my wings and taking flight from the nest.

In my 20s, I was laser-focused on getting a college education. I spent the early part of this decade working full-time so I could afford to pay tuition at a local community college before transferring to a 4-year school. I wrapped up my Bachelor’s degree when I was 26 years old, and after that, I was off and running as a full-fledged adult.

Since I worked my way through a local community college before transferring to the 4-year school, I was able to avoid significant student loan debt. I walked away with my education and owing $25,000 – not a small sum, but not staggering either.

Before exiting my first adult decade, I had completed a college education, obtained a job with a higher-than-average salary, and was contributing 15% to my 401(k) and maxing out my Roth IRA. Every single year.

I was determined to change the course of my family tree. And, since I was the first in my family to ever go to college (and graduate) and achieve such a high savings rate at a young age, I was well on my way to a successful, financially-secure future! #winning

Then, I allowed LIFE to get in my way – a relationship, to be more precise.

Financial Crisis In My 30s

Turning 30 was insignificant to me. I didn’t have a meltdown or have a blow-out party to usher in my next decade. In short, I just didn’t care. I saw myself as SUPER young with my whole life in front of me.

I never had dreams of getting married, buying the house with the picket fence, or having children. My dreams consisted of getting an education, saving a lot of money, and just having fun. Check, check, and check!

Oh, did I mention I was already engaged and living in my dream house with an in-ground pool at 30? Given my scenario, getting married and having kids could happen at any given time. No need to stress about it because I had all of my ducks in a row.

Except, there was a big elephant in the room that I continued to ignore. I wasn’t happy with my relationship. Despite having everything I ever wanted – an education, a high-paying job, and a big house…with a pool – I was downright miserable. Bottom line, my fiancé and I just weren’t a good match.

Not surprisingly, a year into my 30s that relationship fell apart. I left my fiancé, my dream house, the possibility of marriage and children within the near future, and all the validation that went along with it.  

There I was, in my early 30s, in a position I never imagined. I was rebooting my life from the ground up. I moved into an apartment with 4 lawn chairs and my 2 cats. This was the exact moment my financial descent spiraled out of control. To say I was depressed would be a gross understatement.

In addition to having to reboot my life, I was also subsidizing my parents’ living situation to the tune of about $800/month. They depended on that extra money and I couldn’t let them down.

When I was engaged and in the big house, it wasn’t a big financial hit. After things fell apart and I left the big house, it was a HUGE financial hit. So huge, in fact, that I had to make some financial sacrifices.

In an attempt to make my situation more bearable and more closely resemble the life I lost, I stopped all retirement savings to make financial room for a plasma TV, new furniture, dinners out with friends, and a gas-guzzling SUV. In essence, I sacrificed my future financial health for more immediate emotional needs.

Unfortunately, this scenario isn’t an unusual one. It happens quite often and I’m sure you might even be able to relate to it.  

Emerging From My Financial Fog

Nearing the end of my second adult decade, I met someone that turned out to be a perfect emotional fit! As you might expect, we married and lived happily ever after. Haha, wrong.

My husband and I were going down the path of normal. We were acting like we were just out of college and had our entire lives ahead of us.

While we did have plenty of time ahead, we were both pretty far down the path of adulthood. Regardless, we were livin’ it up. We were going out for fancy dinners, shopping for a bigger house, and not paying much attention to saving for the future.

Add on top of it, car loans, student loan debt that still wasn’t paid off, saving for our daughter’s college education, and taking care of my mom, and we had a recipe for financial disaster on our doorstep.

Just before taking the biggest financial leap of our lives to buy a huge house we couldn’t comfortably afford, we both experienced a moment of lucidity. And when I say lucidity, I mean panic. Our anxiety was off the charts because we knew it was not a wise financial move and it would make saving for our future even more difficult.

Signing on the dotted line and moving into that house would’ve put us on a direct path to a personal retirement crisis, so we pulled the plug. We changed our spendy ways. We started making smart financial decisions. And we started saving for retirement with fervor.   

The way everyone does this will be different, so you need to work out your own path. Some people might open up a savings account, others might consider the differences of IUL vs Roth IRA, or perhaps you want to pay off your mortgage more quickly and use your equity as a retirement fund. You do whatever you need to do to make sure your retirement is a comfortable one.

Thankfully, our newfound outlook on life and money persists to this day.

Related content:

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• The Looming Retirement Crisis And Steps You Can Take To Avoid It
• Be Coachable If You Want To Build Massive Wealth

Getting My Financial Act Together In My 40s     

Ever since turning 40, I have realized how quickly the years pass and how important it is to stay the course when it comes to retirement savings. Had I not allowed myself to get distracted and caught up in my emotions during the better part of my 30s, I might be financially independent today.

With that said, I was able to turn things around starting in my late 30s when I got serious about each financial decision and began funneling significant amounts of cash into my retirement accounts.

As my account balances grow with each passing month, my excitement about my financial future builds. Needless to say, it’s a great feeling.

Hopefully, I am able to sustain my current shift in mindset and continue charting this course toward financial well-being. I’ll keep you posted.

Assuming you’re in a similar financial position as I was a few years ago, you’ll want to read some encouraging words from an expert at TIAA.

Lindsey Prokay, CFP® and AAMS® – TIAA Wealth Management Advisor based in Charlotte, NC, weighs in on how you can boost retirement savings now so you can live your best life later. Take it away, Lindsey!

Expert Tips From TIAA To Grow Your Tiny Nest Egg

Many Gen-Xers have begun saving for retirement (although not all), but when you’re still working, you likely have multiple financial goals that you’re juggling. You might be saving to send your children to college. Maybe you are planning to purchase a new home or remodel your existing one. How about taking a vacation, or paying down debt?

Coordinating all your financial goals is key to getting more of what you want out of life. Here are some tips for people who have some retirement savings, but are trying to balance many priorities.

• Try to increase your retirement savings. This needs to be a consistent priority in all phases of your financial life. Why? Unlike a home purchase, college tuition for your kids, and physical care for your parents or home renovation projects, you can’t borrow for retirement. You need to put as much money aside for your retirement as you can, during your entire working life.
• Consider disability and life insurance. Along with saving for the future, it’s important to protect what you already have, beyond having an emergency fund. Is there anyone who depends on your income? If you were to get hurt and couldn’t work for six months, would you be able to pay your bills? Do you have any debt that would need to be paid off if you died unexpectedly? These are difficult questions, but there are ways to ensure that you don’t leave yourself—or your loved ones—vulnerable. The right combination of disability insurance (which provides you with income if you can’t work) and life insurance can help.

Juggling multiple financial goals and figuring out how to save and invest for each goal might be more than you can handle on your own. An experienced, professional financial advisor can offer a helping hand and reassuring guidance.

Make sure you schedule regular “checkups” with your financial advisor. You may want to revisit your goals and investment plans if you have a major life change such as a marriage, divorce, getting a new job, or adding a child to the family. By doing so, your appointments can become routine, helping to keep you on track to reach your goals.

TIAA Offers Tips For Each Life Stage  

While you’re never too young to begin saving for retirement, you can also start saving when you are older, although you will likely have to put more money aside. Here are some tips for people in their 30s, 40s, and 50s.

• In your 30s: With student loans, mortgages and other personal milestones, it’s not uncommon for people to put off saving until their 30s. Luckily, it’s not too late to make up for lost time. Your contribution goal should be 15% of your salary (again, not including the employer match). 
  • TIAA offers free education and insight to younger investors via monthly live webinars where they can get the benefit of our professionals’ knowledge on everything from budgeting to investing strategies to retirement planning. Learn more here: https://www.tiaa.org/public/offer/insights

• In your 40s: It’s never too late to start saving and now that you are well-established in your career, you will be to set aside a larger portion of your salary. Aim to put 20-25% of your paycheck into your retirement plan *if* you can.  Many individuals in this stage of life are often entering the “sandwich” phase, which means they’re facing the financial pressures of saving for their teenagers’ college expenses while simultaneously beginning to care for aging parents. Do the best you can with your particular situation.
• In your 50s: At this stage, retirement is just around the corner for some, but it’s better late than never when it comes to saving. If you can swing it, aim to set aside at least 30% of your salary. Fortunately, those aged 50 and older can take advantage of 401(k) and 403(b) catch-up contribution limits to save $6,000 above the $18,500 yearly limits. By starting a bit later, you should also expect to retire later than the average retirement age. If you earn, say, $100,000 per year, the $24,500 contribution limit is only 24.5% of your yearly salary. You can use an IRA to make up the rest.

What To Do If Retirement Is On The Immediate Horizon

If you haven’t saved enough and you’re still working with retirement on the horizon, it may be worth working a few more years. This is especially important if your expected income from Social Security, pensions and savings won’t cover your fixed expenses.

The benefits to pushing out retirement can include delaying claiming Social Security by a few years, which can increase your monthly benefit, and giving your retirement savings additional time to compound, and having fewer years that your savings will need to support you in retirement.

A trusted financial planner can help you decide whether you need more time or if you have enough saved to live in retirement.

Free Tools To Help You Plan For Retirement

If you’re ready to take action and start saving or boost your current savings, check out these super useful and free tools to get you moving in the right direction:

• Retirement Advisor – Receive a customized retirement action plan with savings and investment recommendations.
• Retirement Budget Worksheet
• Life Wizard – Do you need life insurance and how much do you need?
• Healthcare Calculator – How much will healthcare cost in retirement?
• Resources like Preparing for Retirement can also help with your planning.  

Final Thoughts

As a proud member of Generation X, I know it’s difficult to always make the right financial decisions – especially when there are so many decisions to be made and only so much cash to go around. It wasn’t until I nearly made that catastrophic home purchase that I realized the gravity a single financial decision could have on my future wellbeing.

So if you’re a member of Generation X with little in the way of retirement savings because LIFE is getting in the way, know that you are not alone and it’s not too late to change your financial course. By following some of the tips listed above, you, too, can accumulate enough wealth to have a comfortable retirement after all.           

How do you deal with competing financial responsibilities?