Retirement Plans in Crisis: Why This Generation Feels the Most Unprepared

For Generation X—those born between 1965 and 1980—retirement is looming. Yet, this generation, more than others, has faced tough challenges preparing for the years ahead.

Whether it’s due to having to care for aging parents and children, burdensome debt, rising healthcare costs, lack of investing confidence, or their outlook on Social Security and the economy, Gen Xers’ belief that they’re financially unprepared for retirement is widespread.

Yet, there are powerful ways available to them to take control of their financial futures. Read on to learn more.

The Challenges Gen Xers Face

Gen Xers projected that they’d need about $1.18 million in savings to ensure a comfortable retirement.

“Gen X is in a tough spot,” says Michael Rodriguez, CFP® and an advice-only financial planner at Equanimity Wealth.

“Many are caring for both aging parents and adult children while also trying to prepare for retirement. They’re the first to navigate retirement without pensions—just 401(k)s, often without auto-enrollment or good default investment options early on. Add in market crashes during peak earning years and rising healthcare costs and it’s no wonder this group feels behind.”

Carrying heavy debt loads, particularly in the form of student loans and credit card balances, contributes to their inability to save effectively for retirement as well.

Add on the ever-rising costs of healthcare and the inevitability of inflation, and it becomes evident why Gen X has struggled to save for retirement.

Focusing on this crucial task has proven extremely difficult, as has finding extra income to save and invest.

Other age groups face many of the same hurdles but Generation X is closer to the retirement finish line so they have less time left to rally.

Gen X as Savers

Given their undeniable financial challenges and their experience with the late 1990s dot.com bust, the financial crisis of 2007-2008, the Great Recession, and the COVID pandemic, it’s perhaps no wonder that Gen X’s financial outlook is jaded and their preparation lackluster.

“Gen X has challenges that can make retirement much harder for them than for other generations,” says Trevor Houston, CEO at ClearPath Wealth Strategies.

The bottom half of earners in this age group have put away very little for retirement, according to the National Institute on Retirement Security—literally just a few thousand dollars.

Overall, the average Gen X household has saved only $40,000.

And about 40% of Gen Xers have saved nothing at all.

A 2025 survey by the Western & Southern Financial Group indicates that 2% of the Generation X population expects that side hustles will provide a significant source of their retirement income.

Importantly, only 32% felt they were capable of managing their retirement money well enough to provide for financial security, according to research by Corebridge Financial.

How to Regain Control

There’s good news for Generation X. You have a solid window of time to save and invest before you stop working (the eldest among you is just age 60). That’s especially true if you foresee working beyond the official U.S. retirement age of 67.

Here are some steps you can take to simplify your savings efforts and grow your account balances.

If You Don’t Have One, Open a Retirement Account Now

Whether it’s a 401(k) or an individual IRA, or both, don’t wait. Make the largest contribution you can every year (up to the maximum allowed). Be sure to learn about both traditional and Roth plans and which might be better for your circumstances.

Make Catch-Up Contributions

Rodriguez suggests taking advantage of catch-up contributions to retirement accounts, if possible. The Internal Revenue Code (IRC) and the SECURE 2.0 Act of 2022 have made this option more possible.

“You can contribute more to your 401(k) or IRA at age 50,” Rodriguez says, “and those ages 60 to 63 can put away even more, thanks to SECURE 2.0.”

The IRC allows those who are age 50 or older to contribute an additional $1,000 per year to an IRA. This increases to $7,500 for many 401(k), 403(b), and 457 plans as of 2025.

A “super” catch-up limit applies to these plans for those who have reached age 60, 61, 62, and 63. They can save $11,250 a year rather than just $7,500. This is on top of the standard $23,500 and $7,000 limits that apply to everyone.

Consolidate Accounts

Houston suggests streamlining retirement accounts to save money and effort. “Consolidating multiple retirement accounts can help you lower fees and make it easier to manage than being spread over multiple 401(k)’s and IRAs.”

Check for Forgotten Accounts

He also recommends checking for any lost accounts through 401(k) finder tools or the Department of Labor’s Lost and Found database.

It’s possible that you contributed to one or more accounts in your earlier working years and you’ve forgotten about it or never really understood that you were saving in the first place.

Cut Your Spending and Pay Off Debt

Of course, these savings options depend on having money to save. Fidelity Investments suggests taking a hard look at your current monthly expenses and determining what you can live without to help free up some money.

Fidelity also recommends paying down high-interest credit card debt to the greatest extent possible. Those interest payments you’ve been making could earn you a return if you were instead able to deposit them to an investment or savings account.

Automate Your Savings

A great way to save regularly—even with small amounts, like $25—is to establish recurring and automatic deposits from your checking account to a savings account, preferably a high-yielding one.

This can make saving effortless and painless every time your paycheck gets direct deposited. You’ll see your account balance grow larger, month by month. Ask your bank representative how to get started.

Get Advice From a Financial Professional

It’s never too late to get comprehensive assistance that can have a positive impact on your financial future. Yet, only 27% of Gen Xers work with a financial advisor.

A financial advisor can help you clarify your saving and investing options, create a retirement plan that addresses your income, spending, debt, and saving opportunities, and work up a strategy for generating income in retirement.

They can also help you with investing basics, like explaining the various types of investments available to you and how they work to earn you a return.

Some Nontraditional Options

Fidelity Investments suggests working a few extra years during which you can keep building your savings and they can compound longer and for greater value.

Consider an employer who provides health benefits to part-time employees. JP Morgan Chase, Costco, Lowe’s, Staples, Starbucks, Home Depot, and Trader Joe’s are all reported to do so.

“401(k)s and IRAs are a strong foundation,” Rodriguez says, “but they’re not a full plan. Rising costs and sequence-of-returns risk can still throw off traditional strategies. That’s why I encourage Gen X clients to diversify into health savings accounts (HSAs) for healthcare costs as well.”

Houston also cites HSAs as a worthwhile tool. “Health savings accounts can be a game changer for retirement because they combine tax benefits with the capability to use them as retirement funds.”

The Bottom Line

For Gen Xers, retirement planning may feel overwhelming. However, regardless of the obstacles to financial security that you face, you still have options. Moreover, you still have time.

Figure out what money you can free up in your budget to put toward saving. Open a retirement account or, if you’ve got one, maximize your contributions and catch-up contributions.

Make sure you don’t have a 401(k) hiding out there somewhere that you’ve forgotten about.

And remember, you don’t have to go it alone. Sit down with a financial professional to explore some reasonable investments that line up with your income and your goals.