While the financial media has largely remained fixated on Millennials and Gen Zers, both are projected to benefit from the ongoing Great Wealth Transfer. Meanwhile, there’s a generation quietly slipping through the cracks: Generation X.
Unlike the younger generations that follow them, many Gen Xers — now 45 to 60 years old — may not be positioned to receive a significant inheritance or windfall.
This generation grew up during some pretty tough economic times, bookended by the dot-com crash and the global financial crisis. Many entered adulthood saddled with student debt, only to face stagnant wages and multiple economic crises during their prime earning years.
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The Kiplinger Building Wealth program handpicks financial advisers and business owners from around the world to share retirement, estate planning and tax strategies to preserve and grow your wealth. These experts, who never pay for inclusion on the site, include professional wealth managers, fiduciary financial planners, CPAs and lawyers. Most of them have certifications including CFP®, ChFC®, IAR, AIF®, CDFA® and more, and their stellar records can be checked through the SEC or FINRA.
Yet, despite these setbacks, this resilient generation still has a meaningful window to get back on track for retirement.
Let’s explore some of the key challenges facing this overlooked generation and some good opportunities to help them catch up.
The savings gap
Many Gen Xers faced challenges early on. Burdened with student loans and lower-than-expected earnings, they often had to choose between paying off debt and saving for retirement. It is no surprise that savings took a backseat.
Then came the global financial crisis, and many who had managed to set aside some money were forced to dip into their savings, including 401(k) accounts, just to stay afloat.
The result? A generation now late into their work lives, nearing what should be their golden years, but often with very low retirement balances.
Despite having been in the workforce for more than 25 years, the median retirement savings for Gen Xers sits at $40,000, based on a National Institute on Retirement Security study released in July 2023.
The good news is that consistent, automated contributions — even started later in life — can still make a meaningful difference.
By employing a "set it and forget it" contribution strategy that automatically increases deposits to retirement accounts over time, Gen Xers can begin to gradually close their savings gap.
Catch-up contributions — a lifeline
One of the best available tools for Gen Xers who are trying to make up for lost savings time is the ability to make catch-up contributions to retirement accounts.
For those 50 or older, the IRS allows an additional contribution of $7,500 to 401(k)s and similar retirement plans for 2025, bringing the total possible annual contribution to $31,000.
In addition, thanks to the Secure 2.0 Act, starting in 2025 there is a “super” catch-up contribution for those ages 60-63, allowing them to pump up to $11,250 more into their 401(k), 403(b) or 457(b) account.
Not everyone knows about these options, but for those who can find room in their budgets, taking advantage of these catch-up contributions can be a game-changer.
Health crises can wreck budgets
Health problems have the potential to unravel even the best-laid financial plans. A major illness or injury could mean expensive treatments, time away from work and significant out-of-pocket costs.
Medical costs are also the leading cause of bankruptcy, affecting about 67% of those who file, according to RetireGuide. One smart defensive move may be to fully fund a health savings account (HSA) to cover future health care costs.
HSAs offer a triple tax advantage. Contributions are tax-deductible, earnings grow tax-free and withdrawals for qualified medical expenses are also tax-free.
Selecting appropriate health insurance
Choosing the right health insurance becomes even more critical as Gen Xers approach their 50s. This is when chronic conditions, such as hypertension and diabetes, often emerge, making comprehensive coverage a necessity rather than a luxury.
Carefully comparing employer plans or options on health care exchanges can help ensure that premiums, deductibles and provider networks align with both health needs and financial realities.
With premiums for a 50-year-old averaging close to $700 per month, it may be tempting to opt for cheaper, minimal coverage, but underinsuring can be a costly mistake down the line.
Recovering from a divorce
"Gray divorce" (or one that occurs after age 45) can deliver a uniquely devastating financial blow, particularly for women, who face standard-of-living declines of as much as 45% post-divorce, according to an article in The Journals of Gerontology.
Beyond the emotional toll, splitting assets midlife can derail even carefully constructed retirement plans.
The recovery road map typically involves working with your financial adviser to revisit your entire financial plan.
Steps like rebuilding credit where necessary, adjusting retirement expectations, fine-tuning your budget and updating any estate documents will be critically important.
Debt is harmful to your retirement
Gen X carries the highest non-mortgage debt burden of any generation, averaging about $31,000 per household, according to Experian. Gen Z, by comparison, holds less than half that amount of debt, at about $15,000.
From lingering student loans to credit card balances, these obligations dogging Gen X can consume cash flow that should be funding retirement accounts.
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The path forward involves strategic debt repayment, whether through consolidation loans, the avalanche method (targeting the highest interest rates first) or working with credit counselors. The key is creating a realistic timeline that balances debt reduction with continued retirement savings.
Resilience may be Gen X's greatest asset
While some Gen Xers face financial headwinds, their characteristic resilience can position them well to tackle these challenges. Many have already been through multiple economic cycles and adapted to changing circumstances, experiences that can serve them well in this pre-retirement phase.
The path forward involves focusing on what can be managed: maximizing savings opportunities, optimizing insurance coverage and developing strategic debt-repayment plans.
Financial advisers can play a key role in helping to create realistic, personalized strategies that account for each client's specific situation.
For Gen Xers without an adviser, now could be a great time to seek professional guidance. With thoughtful planning and the right support, this generation can still build meaningful financial security, confirming it's never too late to take control of their financial future.
Their story isn't about missed opportunities, but about the potential that still lies ahead.
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