Call it middle-child syndrome, but the oft-overlooked Generation X is not financially on track for retirement, according to several recent studies. While many baby boomers are already retired or getting close, and millennials are still early in their careers, Gen Xers are caught in a squeeze with time running short to fatten up retirement savings accounts.
Just two-thirds of Gen Xers — now aged 35 to 50 — have saved for retirement, and 4 out of 10 are not confident they’ll have enough money to live comfortably in retirement,according to the Insured Retirement Institute, an insurance industry trade group.
The predicament of Generation X is largely the product of bad timing, experts say.
“Gen X has been hosed,” says Patrick Quinn, founder and CEO of Hat Tip Wealth Management LLC in Chicago.
“They came out into the workforce in the early ‘90s, and there was a mild recession in the economy at that time so many didn’t get into their careers until the mid-’90s,” Quinn says. “Then they started working and the tech bubble burst, causing a lot of disruption and losses to their personal savings accounts. We got past that and got into saving more money more frequently, and then the Great Recession happened.”
By some measures, Generation X was hit the hardest by the Great Recession of 2007-09. From 2007 to 2010, Gen Xers lost nearly half of their wealth at an average of $33,000 per person, according to Pew Charitable Trust. Current projections show that the median Gen X saver will only accumulate enough assets to replace half their pre-retirement income, compared with younger baby boomers, who should have enough to replace 60% of their pre-retirement income, according to Pew.
Part of the reason is that even though the typical Gen Xer has a higher family income than their parents did at the same age, this generation has six times more debt, according to Pew. Student loan debt is also higher: Four in 10 college-educated Gen Xers have student debt, and the median amount is $25,000.
“Gen X has been hosed.” — Patrick Quinn, founder and CEO of Hat Tip Wealth Management LLC in Chicago
The stats paint a grim portrait, but experts say Gen Xers have one major factor on their side to remedy financial bad habits: time.
“Because they have so many years ahead of them before retirement, they have a lot of time to get things turned around,” says Tony Drake, certified financial planner and owner of Drake & Associates in Waukesha, Wisconsin.
If you’re a Gen Xer, it’s not too late for you to take aggressive steps and improve your financial future. Here’s how to start:
Analyze cash flow and build a better budget
Before you can build a retirement plan, you have to start by figuring out where your money is going. “It’s important to not continue doing the same things you’ve done because it hasn’t worked,” Quinn says.
Any solid retirement plan has to start with creating a budget and finding areas to cut back, Drake says. He suggests avoiding small expenses you don’t need, such as that daily latte. Finding even an extra $25 a week to put into a retirement account adds up to an extra $1,300 a year, and compounded over time, that can make a big difference.
Saving money can be tough for anyone, and Gen Xers are sandwiched by two responsibilities: taking care of their aging parents and their children, including those who boomerang home after graduating from high school or college. Currently, 22% of Gen Xers provide financial support to a parent or an adult child, around $12,000 a year on average, according to a new study from TD Ameritrade. Half of Gen Xers say they have more financial responsibilities than their parents.
Advisers recommend making saving for retirement a high priority.
It’s almost like a bill, Drake says. “You have to put yourself first and design your life around it,” he says.
Maximize your 401(k) and try to ‘catch up’
Generation X is unique in that so few members have ever had the security of a pension. Instead, from the beginning of their careers they have been expected to set aside money in a private retirement account such as a 401(k) or IRA.
“For a lot of them it was a completely new thing and a lot weren’t prepared for it and didn’t use it properly or take advantage of it,” Quinn says.
If your retirement account isn’t on track to where you want it to be, you need to figure out why. Nicole Turosky Smith, a financial planner and founder and CEO of GreenWell Financial in Danbury, Connecticut, says she often sees Gen Xers under-contributing or not contributing at all to their retirement plans.
“Commit to increasing your savings as much as you can.” — Marcy Keckler, a financial planner and vice president of advice strategy and programs for Ameriprise Financial
“I also see them sitting on cash or the allocation isn’t what it needs to be to reach their goals,” Smith says. “A lot of people are spooked because of the  market crash and are playing it a little too safe.”
Recent China-related market volatility is also frightening, but advisers recommend that retirement savers stick with their plan, keeping in mind their long horizon and avoiding checking their account balances too often.
If you’re behind on your retirement savings, make sure you’re maximizing your contributions and take advantage of employer matches.
“Commit to increasing your savings as much as you can,” says Marcy Keckler, a financial planner and vice president of advice strategy and programs for Ameriprise Financial. “One great way to do that is if your 401(k) offers an auto-increase, it will increase year over year. If you get a raise, it can be great to save that raise before you get used to spending it. It makes the process of increasing your savings a little less painful.”
Once you hit age 50, you can also use the “catch-up” provision of your 401(k), 403(b) or IRA account, which allows you to make additional contributions beyond standard annual limits.
Eliminate debt and avoid building it up further
To avoid dealing with high debt in retirement, target what balance to start with first. While choosing the one with the highest interest rate might makes sense for you, paying off your smallest balance first can also create a “snowball” effect with other smaller debts.
As you begin chipping away at your debt, make sure you’re not adding to it, either. This is especially important if you’re in the position of caring for your parents while also taking care of your children’s college planning.
“Your kids can get a student loan for college, but you can’t get a loan for retirement,” Keckler says.
Anna Helhoski is a staff writer at NerdWallet, a personal finance website.