Did that AARP notification take you by surprise? If so, you’re not alone. Some members of Generation X — those born between the early 1960s and late 1970s — are feeling caught off guard by how quickly retirement is approaching
When it comes to preparing for retirement, 34 percent of Gen Xers are likely to say that they have no strategy planned according to the Transamerica Center for Retirement Studies. This is a higher percentage than both Baby Boomers and Millennials. The average Gen X household has about $64,000 in retirement savings, and it’s not surprising that many feel concerned about the prospect of their golden years.
Ok Xers, it’s time to put together a strategy and look for ways to align your timeline with your goals. Here are a few things that can help you get on track.
First of all, you need to determine your timeline for retirement and the lifestyle you want. Think about your expectations for things like housing, travel, entertainment and hobbies along with their associated costs. Once you have an idea of the monthly income you’ll need to support your desired retirement, you can work backward to see what you should set aside now, as well as what other tools and strategies can help you reach your goals.
People call Gen X the “sandwich generation” for good reason. You’re dealing with aging parents at the same time your kids are going to college. There’s a good chance that you have some monetary obligations causing additional stress as you prepare for retirement. Put together a plan that prioritizes retirement savings and look for other ways to support your parents and children. You might not be able to help financially as much as you’d like, but now is the time to make sure you’re taking care of your needs. You can’t help others if you fall too far behind yourself.
If you have debt, start to address it immediately. Tackle high-interest debt first, getting rid of the most expensive obligations, and work your way down from there. Negotiate with creditors for lower interest rates. You don’t have to be completely debt free by the time you retire. But the less you have, the better your position will be.
Custodial care can quickly eat up a lifetime of retirement savings. But the right long-term care policy can help defray costs during this time. Most policies take your age into account when determining price. The earlier you sign up, the more affordable it’s likely to be. This is one area in particular where procrastination can be costly.
Once you turn 50, IRS rules allow you to set aside more money in tax-advantaged retirement accounts. This is a good time to ramp up your retirement savings and bolster your portfolio. If you need to beef up your retirement accounts, start doing so now. If you’re lucky enough to get a yearly bonus, this is a good use for it.
Those born in 1960 or later can begin collecting benefits at age 62, but they’ll receive less each month than if they wait until their full retirement age at age 67. Consider your timeline and lifestyle preferences as well as your tax-advantaged retirement accounts. Work with a WellCents financial professional to help you weigh when you should start collecting Social Security and balancing it with withdrawals from other accounts.
Gen Xers are known for their independence. But you don’t need to go it alone when it comes to your retirement. Take advantage of the resources available to you to make sure you’re on track to the retirement you want. Contact your WellCents financial professional today.