According to a new study from Transamerica, Generation X doesn’t feel too confident about its chances in retirement. In a recent study, the financial company found that only 12 percent of those in Generation X feel comfortable about being able to retire. The average Generation X household had only $69,000 in retirement savings.1
Generation X is generally defined as those born between the mid-1960s and the early 1980s. Most Gen Xers are in their 40s or 50s now, which means that while they still have time to save, retirement is approaching soon.
If you’re a Gen Xer and are behind on saving for retirement, now is the time to take action. The good news is you still have time left to accumulate assets and implement a strategy. Below are a few good starting steps to get you back on track:
Identify your retirement savings goal.
Every plan needs an endpoint. Imagine if you started a road trip without a destination. You’d likely wander without making much forward progress. Your retirement strategy is no different. You need to know your end goal so you can track and monitor your progress.
In a retirement strategy, your end goal is the amount of money you need to save to fund your retirement. It’s based on your specific needs and goals and your expected lifestyle in retirement.
You can estimate your retirement number by developing a projected budget. List all your planned expenses and estimate their costs. Then add them up to project your total annual expenses in retirement. Assume that you’ll be retired for decades, and multiply your annual cost of living by an estimated number of years in retirement. That’s your total funding need.
During this step, it’s important to consider inflation. Your cost of living will likely increase throughout your retirement. Be sure to consider that as you estimate your savings goal. Also, you may want to consult with a financial professional to help you develop a precise funding goal.
Use a budget to cut your spending and boost your savings.
A simple budget may be the most powerful financial tool at your disposal. A budget helps you manage your spending and track your progress toward large financial goals, such as retirement. Unfortunately, nearly 60 percent of Americans don’t use a budget.2
If you’re among that group, now may be the time to make a change. List your expenses and look for areas to cut back so you can increase your retirement contributions. You may want to find ways to reduce your debt or cut spending on discretionary items like dining out or entertainment. Develop a budget and stick to it so you can maximize your savings.
Look for opportunities to boost your income.
Perhaps your most powerful strategy is to increase your income so you can save more for retirement. That may be easier said than done. However, you may have years or even decades left in your career. If you can increase your earnings and then put the extra income toward retirement, that will go a long way toward helping you overcome your savings gap.
Look for opportunities to advance and grow in your career. Perhaps you need to further your education or expand your skill set at work. Maybe you should consider freelance work opportunities to supplement your current income.
Ready to develop your retirement strategy? Let’s talk about it. Contact us today at J. Harris Financial. We can help you analyze your needs and goals and develop a plan. Let’s connect soon and start the conversation.
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