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Who wants to be a millionaire? Gen X’ers sound off on their expected retirement needs
Believe it or not, the first Gen X’ers1 are turning 50. Members of the 401(k) generation – the first group of workers to come of age when defined benefit (pension) plans were starting to disappear – Gen X’ers were given the responsibility to save for retirement on their own. So, how have they fared?
The majority of Gen X’ers estimate that they will need to save $1 million for retirement. This is troubling as the average Gen X’er only has about $70k in retirement accounts. Even the 20% of Gen X’ers who have more than $250,000 in retirement savings are still a long way from the $1 Million nest-egg most Gen X’ers say they will require. These six findings from the 15th annual Retirement Survey by the Transamerica Center for Retirement Studies®* can help guide Gen X’ers toward solving their retirement shortfall.
- If college tuition bills are paid, try upping the contribution level now that you can afford to. The median 401(k) contribution rate among Gen X’er’s is 7%. This time before retirement should be peak savings years.
- Build an emergency fund of cash. Nearly one-third of Gen X’ers have taken a loan or early withdrawal from a 401(k) or IRA. With an emergency fund, you can potentially avoid early withdrawal. ”Leakage” from retirement plans will severely limit your retirement savings growth.
- Keep a balanced mix of retirement and non-retirement assets and you’ll thank yourself later. 58% of Gen X’ers are currently saving for retirement, and building non-retirement plan savings will provide you more flexibility to avoid high tax rates in retirement. Remember, money taken from Traditional IRA’s and 401(k)’s in retirement is considered taxable income.
- Take advantage of the “catch-up” contribution. 49% of Gen X’ers are unaware of this. These rules allow workers aged 50 and over to contribute an extra $6,000 in 401(k)’s and $1,000 in IRA’s annually.
- A well-defined, written plan can show you what it will take to reach your retirement goal. While the majority of Gen X’ers have a retirement strategy, only 14% have a written plan. Don’t dream about your retirement needs, calculate them.
- Use the “Let’s Talk” tool on the right-hand sidebar and we’ll call or email you back. Only 35% of Gen X’ers are using a professional advisor. An advisor can help you develop a plan or show you if your current plan is on track.
While these six steps can help guide Gen X’ers towards a better retirement, they are also useful for anyone saving for retirement!