I Asked Money Experts: What Are the Biggest Threats to Gen X’s Retirement Savings?

With retirement on the horizon, Gen X faces a mix of economic pressures, rising costs and shifting family demands. Financial experts said several overlooked factors, not just one, could threaten Gen X’s ability to retire comfortably, and the biggest risks may not be the ones Gen X expects. Here are some of the biggest threats to Gen X’s retirement savings.

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Delayed Planning

The single biggest threat to Gen X’s financial future is delayed planning, according to Christopher Stroup, a CFP and owner of Silicon Beach Financial. With many juggling peak career demands plus caring for aging parents and kids, retirement planning often slips to the bottom of the list, he pointed out.

“The result is missed tax opportunities, inefficient portfolios and emotional decision-making at a time when every dollar needs to work harder.”

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Rising Debt Loads

Gen X carries some of the highest levels of credit card, mortgages and student loan debt of any generation. Worse, a large percentage of Gen Xers lives paycheck to paycheck, added Jay Zigmont, CFP and founder of Childfree Trust. Debt reduces cash flow, limits investing potential and leaves little room for long-term retirement contributions or tax-advantaged saving.

“The key to catching up is to first get out of debt, then build an emergency fund and finally to work on maxing out your 401(k),” Zigmont said, noting that “the order matters.” While investing is great, it won’t give you a bigger return than paying down debt. “Paying off your debt is effectively a risk-free, tax-free return of the interest saved and this just can’t be beat in the market.”

Long-Term Care Costs

Healthcare and long-term care are also among the most underestimated risks for Gen X. Stroup warned that many Gen Xers assume Medicare will cover most of their needs, which he called a “costly misconception.” The costs of skilled nursing, extended care needs and out-of-pocket medical expenses can rapidly drain savings.

Zigmont pointed out that long-term care in a skilled nursing facility costs an average of $125,000 per year, and men will spend an average of 2.2 years in care and women 3.7 years. “The cost is increasing by 5% annually. If you want to self-fund long-term care, then you need to set aside and invest $500,000 just for care.”

A smarter move is to purchase long-term care insurance.

Caregiving Responsibilities

Gen X sits in the “sandwich generation,” often supporting aging parents while still helping college-aged kids or young adults still finding their footing. “Caregiving can quietly drain assets through reduced work hours, higher out-of-pocket costs and disrupted saving habits,” Stroup warned. This can create “multiyear detours” from retirement planning.

Additionally, Zigmont explained that Gen Xers caring for their parents will be impacted by their parents’ plans or lack thereof. “If your parents have not planned for long-term care and are expecting you to fill the gap, it can result in collapsing your retirement plans,” he said.

Market Volatility

As Gen X nears retirement, market volatility matters more, Stroup said. Losses early in retirement or in the years leading up to it “can permanently shrink lifetime income.” He recommended stress-testing withdrawal plans and having a very robust emergency fund. Zigmont agreed, saying that the only real solution to market lows in retirement is “having more saved” and cutting future spending.

Under-Saving and Poor Investment Strategy

Many Gen Xers either take on too much investment risk or not enough out of fear of volatility, Stroup said. “Others chase performance late in the cycle or hold concentrated employer stock.” Both experts agree that making risky investment bets will not help you reach retirement goals.

“The most effective path is increasing savings rate, often by 2% to 5% annually,” Stroup said.
Zigmont harked back to his earlier point about debt, suggesting that getting out of debt is the biggest move to make with the biggest return.

Missed Tax Opportunities

Gen X has access to powerful tax-advantaged tools like Roth conversions during low-income years to catch-up contributions, Health savings accounts (HSAs) and carefully structured IRA distributions. However, many fail to use them. Maximizing tax efficiency during the “tax desert” years can dramatically improve long-term outcomes, Stroup noted.

The Essential Step Gen X Should Take This Year

The good news is that Gen X can still catch up but only with decisive action. Stroup urged, “Create a written, projection-based retirement plan.” The plan should lay out a clear vision for projected income, taxes, healthcare costs and future spending. “With a roadmap in place, every financial decision becomes more intentional and far more effective.”

For Gen X, the path to a more secure retirement starts with urgent, intentional steps that protect savings before time runs out.

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This article originally appeared on GOBankingRates.com: I Asked Money Experts: What Are the Biggest Threats to Gen X’s Retirement Savings?