9 Steps Gen Xers Should Take to Prepare for Retirement
Step 2: Get your savings on track
If, after crunching the numbers, you foresee a shortfall in savings, you’ll want to course-correct. One way to turbocharge your nest egg is by taking advantage of catch-up contributions to your retirement accounts.
Most employees enrolled in workplace plans like a 401(k) or 403(b) can contribute up to $23,500 to those accounts in 2025, but those 50 and older can put in an additional $7,500, for a total of $31,000. Workers ages 60 through 63 have a higher catch-up limit of $11,250, for a total contribution of $34,750. The individual retirement account (IRA) contribution limit in 2025 is $7,000, plus a $1,000 catch-up contribution for adults 50 and older.
If you still feel like you won’t have enough saved for retirement, go back to the spending review from step one. “It can help identify where to pare back,” Power says. Even simple cost-cutting measures, like getting rid of some streaming subscriptions or negotiating a lower rate with your internet provider, can yield significant savings over time.
Step 3: Build a rock-solid emergency fund
Generation X is doing a slightly better job when it comes to stashing away money for emergency expenses, with a median savings of $868 compared with $600 for Americans overall, according to a 2024 survey by retirement plan provider Empower. That’s a good start, but Naffa says Gen Xers should aim to have an emergency fund that can cover at least three to six months’ worth of expenses.
Once you retire and no longer have a paycheck, an unexpected expense could force you to dip into your retirement account or rely on credit cards if you don’t have a rainy-day fund. “A solid emergency reserve acts as a safety net, keeping your retirement assets invested and working for you,” Naffa says. Setting up monthly automatic transfers to a high-yield savings account now can help you build a sufficient emergency fund for retirement.
Step 4: Wait as long as you can to claim Social Security
You can start drawing Social Security retirement benefits as early as age 62, meaning the oldest Gen Xers will become eligible in 2027. However, financial advisers typically recommend delaying your claim, especially if you’re counting on Social Security to cover a significant portion of your spending in retirement.
That’s because “the longer you defer Social Security, the bigger the benefit,” Power says. Claiming at 62 will permanently reduce your benefit by as much as 30 percent. You get your full benefit amount if you wait until full retirement age — for Gen Xers, that’s 67 — and a further boost of two-thirds of 1 percent for each month you delay until age 70. Waiting until then will get you your full benefit plus 24 percent, for life.
Step 5: Tackle debt
Gen X has an average of $30,879 in non-mortgage debt, more than any other generation, according to a 2024 Experian analysis. Paying off debt can create space in your budget to increase your retirement contributions and prevent interest from chipping away at your nest egg.
“Prioritizing the highest-interest-rate debt first is a good rule of thumb,” Naffa says. Many financial advisers recommend taking out a lower-rate personal loan to pay off high-interest debt, or transferring credit card balances to a card with a 0 percent introductory rate and paying it off before the intro rate expires.
Keep in mind that not all debt is created equal. There may be less urgency about paying off your mortgage, especially if you locked in a low interest rate during the pandemic, when rates dropped to record lows. You’ll see a better rate of return by funneling extra cash into your retirement account.