The way we retire has changed over the generations. Previously, you’d work for 40 years and retire with a pension, which guaranteed you an income for the rest of your life. Your employer took on the responsibility of your retirement funds as one of the perks of decades of loyalty.
While pensions still exist in the public and private sectors, they’re now rare. Members of Gen X, born between 1965 and 1980, are starting to enter retirement and have thus been dubbed the “401(k) retirement generation.” They are the first generation whose retirement is primarily funded by 401(k), Roth IRAs, IRAs and individual savings accounts.
However, these individuals’ fear is not having the certainty of a pension as they enter retirement. According to a 2024 Goldman Sachs retirement survey, 45% of Gen X feels that their retirement savings are behind schedule.
Here’s what Gen X’s fears about retirement can teach future generations, as well as advice from licensed financial professionals on what Millennials and Gen Z can do to get a jump start on saving for retirement—even if it’s small steps.
Fears about retirement exist in all generations
The uncertainty of being unemployed and living only on the money you’ve saved can be nerve-wracking. Healthcare considerations and the increasing cost of living will inevitably affect how much you need to withdraw from savings like your stock portfolio. But if the stock market experiences a down year, you’ll be watching that portfolio shrink.
Dan Erickson, a soon-to-be Gen X retiree with half a million saved, says he’s uncomfortable with retiring. “Half a million might seem like a lot of money, but if you’re gonna live… 20 more years, what’s half a million in 20 years?“ he says. “[That’s] $20,000 a year.… That’s not a lot.”
However, Erickson not only fears how much he has saved but also how much he’ll have to pay for healthcare. “The other reason [I’m not retiring yet] would be medical,” he adds. “I’m almost 62… [and] I still have medical insurance by continuing to work. If I stop, I’m gonna have to pay that medical out of pocket until I’m 65 and can get Medicare.”
Erickson isn’t alone in his fears. Chris Englert, a member of Gen X who retired early at age 49 with almost two million in assets, says she tries not to look at her portfolio daily.
“I would go nuts, especially in the current economy,” she says. “I just keep the long view and keep to my plan… and just hope that nothing really drastic happens and really have faith… [that] I will continue to be able to live the lifestyle I have.”
What to do when your retirement funds are low
It’s important to know what to do if your funds decrease or disappear. Staying calm and looking at your options objectively can help you avoid spiraling when there’s uncertainty about money, especially in retirement.
Martin Matthews, a licensed financial advisor and co-founder of M Wealth Group, suggests examining what expenses you can cut when funds are low. “Gen Xers turned 60 years old this year, and a lot of them are supporting their millennial children,” he says. “When your funds get low in retirement, you have to start looking at where [your money is] going. Can you cut down on some of these expenses?”
Anita Niefeldt, a certified financial planner and founder of Viridian Wealth Management, says that while nerves may be high during times of uncertainty, it’s best to sit down with a financial planner to work things through.
“Even though there’s a lot of volatility in the market… that doesn’t necessarily mean that your plan is in trouble or that you may not be able to retire when you wanted to,” she says. “So it’s important to have the financial plan done. Take a look at [it]: Are there any shortfalls?”
Fear around retirement and the desire to make sure you’ll have enough money is natural. However, there are some practical things you can do to help yourself:
- Talk to a licensed financial professional to evaluate or adjust your retirement plan.
- See if there are any places you can cut expenses, whether that’s in your daily spending or in how and where you retire.
- Add extra income through a part-time job or side hustle. The idea of going back to work or working longer may not be appealing—but you can make it something you enjoy doing. For example, Englert feels like she has enough saved for retirement but continues to make money selling books through her website.
Gen X’s advice for Millennials and Gen Z
If you’re a millennial or a member of Gen Z, you can learn from the first 401(k) generation.
“No matter what generation you’re from… start early, start young and live under your means,” Englert says. “[If] you’re offered 401(k)… and matching plans… or whatever retirement vehicles that come your way when you start working at age 21 or 22, start investing at the maximum amounts and put time on your side—because it works.”
Similarly, Erickson advises getting a job now that offers benefits, such as a 401(k) or some kind of retirement. “I started a job when I was 38… and I stayed with the same job… [because it] had retirement benefits…. After you worked there so many years, the matching went up, and I just faithfully kept working and kept putting that money away—and before [I knew it], it add[ed] it up.”
One of the most important lessons to learn is personal responsibility. Being disciplined with saving and investing for retirement, starting early, and staying consistent will put you in a much stronger position later on.
“We always tell people [that it’s] not how much money you’re putting away but just the habit of doing it. So the small step would be just deciding on an amount whenever you get paid,” Matthews says. “If you’re saying, ‘I can only save 1% of my income and put it away for the future,’ that’s a start. But then you get that discipline in.”
Photo by Yuri A/Shutterstock.com
