Gen X says they’ll need more than $1.5 million to retire comfortably—but most have less

The median 401(k) account balance for Gen Xers, defined as people born between 1965 and 1980, is $54,500 as of the first quarter of 2024, according to data shared with CNBC Make It from Fidelity Investments, America’s largest 401(k) provider.

However, that’s a long way from the generation’s retirement savings goals. On average, Gen Xers believe they will need around $1.56 million to retire comfortably, according to Northwestern Mutual’s 2024 Planning and Progress study.

A few factors have prevented members of Gen X from setting aside more money for retirement.

For one, many began saving later than younger generations. On average, Gen Xers began saving for retirement at 36, compared to millennials and Gen Zers who started at ages 27 and 20, respectively, according to Fidelity’s 2024 State of Retirement Planning study.

This may be because many Gen X workers were well into their careers by the time tax reforms such as auto enrollment, which automatically enrolls you in your employer’s 401(k) plan, took effect, says Anne Lester, a retirement expert and author of “Your Best Financial Life: Save Smart Now for the Future You Want.”

“When Gen Xers started working, they had to choose whether they wanted to enroll in their company’s 401(k) plan,” she tells CNBC Make It. “Participation rates are typically as low as 60% when people have to sign up themselves, but over 90% when they’re automatically enrolled.”

The good news is that it’s not too late for Gen Xers to get on track with their retirement savings.

Start by focusing on your retirement savings rate, which is the percentage of your income you set aside annually for retirement. Fidelity recommends a savings rate of 15%, but you may need to increase that number depending on your goals.

“Depending on how far behind you are and how old you are, you’ll need to save more,” Lester says. “If you’re in your 30s and haven’t started, you may need to be saving 15% of your own money, but if you’re in your 40s and have zero saved, you may be looking at somewhere close to a 30% savings rate.”

It can also be helpful to take a look at your expenses and see where there’s room to downsize so that you can redirect that money toward your retirement savings, Lester says.

“Ask yourself, ‘How can I start paring back on my standard of living so that I can save more and gradually get used to having less money to spend?’ because that’s what your life may be like postretirement,” she says.

Anyone 50 and older can make catch-up contributions to tax-advantaged retirement accounts such as 401(k)s and individual retirement accounts. These additional contributions allow workers to put in more than the annual limit. For 2024, workers 50 and older can contribute an extra $7,500 to their 401(k), 403(b), governmental 457(b) or SARSEP plan.

Additionally, Gen Xers may benefit from meeting with a financial advisor or planner who can help them develop an individualized retirement plan that fits their unique goals and challenges, Lester says.

“Getting a consultation can be a smart thing to do just to understand where you are, where you want to be and what your income may look like postretirement.”

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