3 Ways to Start Planning for Retirement: Regret Not Saving More, Gen Xers

A majority of Gen Xers admit to regretting not saving enough for their retirement.

A study by Allianz Life found that 55% of Americans born between 1965 and 1980 wished they had saved more.

It's never too late for Gen Xers to start saving more aggressively for their long-term goals, according to Barry Glassman, a certified financial planner and founder and president of Glassman Wealth Services.

"According to him, people in their late 40s and 50s are typically in their highest earning years, and it's not too late to adjust or save more for retirement."

Although you may not be thrilled about the totals in your investment accounts, there are various ways to finance your retirement lifestyle, which may not be as expensive as your current lifestyle, according to Jason Stein, a CFP and founder of Bluepoint Wealth Advisors.

"The amount of dollars you need to generate may vary depending on your accessibility, which can cause stress for many people."

Gen Xers can ease their retirement worries by starting to do these three things today.

1. Take care of expensive debt

Many Gen Xers have put saving for retirement on hold while managing other expenses, and among those who regretted not saving enough, 61% prioritized daily needs and 40% focused on paying off credit card debt.

To achieve your financial goals, you may need to reduce some of your regular expenses, but if you have high-interest rate debt, it's crucial to pay it off first before increasing your retirement savings, advises Glassman.

Earning a return on a loan by paying it back is equivalent to the interest rate on the debt, according to Glassman.

Paying off a credit card that charges 22% interest annually is the only investment that can guarantee a 22% return, according to him.

2. Recognize your mortgage as a future asset, not an expense

Glassman suggests that many Gen Xers may not believe their retirement savings are sufficient, but they might possess a different form of wealth.

"Glassman believes that Gen Xers were more fortunate in real estate gains and have greater real estate wealth due to refinancing their homes over the years. However, they may not have as much liquid or retirement wealth as a result."

According to 2023 Redfin data, 71% of Gen Xers are homeowners, compared to 52% of millennials. While home equity is not included in your 401(k) statement, it can be a valuable asset in retirement, says Stein.

According to Stein, nearly 40% of regretful Gen Xers admit that they would have saved more for retirement if they had not been paying off their housing debt. However, Stein argues that having a paid-off home can actually be a good thing in retirement as it means that you won't have to use your investments to fund a significant portion of your housing costs.

If your home value increases during retirement, you can sell or refinance and use the extra cash gains to supplement your retirement savings.

"Stein explains that property values are high in southern California, and downsizing to a more suitable retirement home can free up wealth to be invested and sustained throughout retirement."

3. Explore ways to save more with different accounts

Stein advises Gen Xers to allocate more of their available cash towards retirement savings if they have enough emergency savings and no high-interest rate debt.

"Stein argues that it is difficult to dispute the idea of contributing more to retirement accounts if one is trying to save for the future. However, this suggestion assumes that the individual's cash flow supports it. Stein advises against maxing out retirement accounts if it means incurring credit card debt or not fulfilling current obligations."

In 2024, savers can save up to $7,000 in an IRA and $23,000 in a 401(k). Additionally, Gen X members can save even more, with those aged 50 and over able to make catch-up contributions of $1,000 to an IRA and $7,500 to a 401(k).

Stein suggests that if you don't like the investment options available or want to maximize your investments, you can still invest in a brokerage account and allocate those investments for retirement.

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