Are you ready for retirement? If you’re in your 50s or 60s, you’ve probably had a friend or family member ask this question, but it can be tough to answer. Similar to the feelings a skydiver has before they leap out of a plane, there can be a lot of fear and uncertainty as your retirement nears.
Many Gen Xers are starting to feel that same sense of anxiety and anticipation. The oldest Gen Xers are turning 60 years old in 2025, when many hope to retire. Unfortunately, they face the same obstacles as the baby boomers who came before them. Many lack the financial cushion of a pension plan and have not built up enough savings in their nest egg: Over half wish they would have saved more for their golden years.
Whether you think you’ve saved up enough for retirement or not, being “ready” goes far beyond the number in your bank account. Several factors can impact your financial success in retirement, and it’s important to consider each one as your golden years approach.
Questions to Ask Before Retiring
If you’re a Gen Xer hoping to retire soon, we recommend meeting with a financial advisor who can help walk you through these important questions before jumping into retirement.
What’s my investment and withdrawal strategy?
As you get closer to retirement, your investment strategy should begin to shift away from accumulation into preservation. Everyone’s risk tolerance is different, but in general, you will want to reallocate your investments to ensure you’re not taking on too much risk. You should also have a withdrawal strategy to avoid depleting your savings and investments too quickly.
Do I have a budget for retirement?
It’s hard to know exactly how much money you’ll need in retirement, but creating a general budget will help determine if you have enough money to afford your estimated lifestyle. Where will you live? What types of hobbies will you participate in? Do you have any financial goals you want to achieve? Consider how each of these could impact your retirement budget. It can be helpful to pay off any outstanding debt before you retire because this will free up more space in your budget to pursue your dreams and goals.
What’s my Social Security strategy?
Many Gen Xers do not have access to a pension plan, but they still have the benefit of Social Security. Although it’s not designed to fully fund your retirement, it can be a helpful source of income. You can claim your Social Security benefits starting at age 62, but your monthly benefit amount could be reduced by up to 30%. Waiting to claim until your full retirement age can help you get the most out of your benefits, but there are several other claiming strategies, like spousal benefits, that you may want to consider. It’s important to think proactively about your claiming strategy to help maximize your benefits.
How will I pay for my medical expenses?
Paying for medical care at any age can be a source of stress, but it’s especially worrisome for many retirees who often have more medical needs as they age. Medicare doesn’t start until age 65, which means any Gen Xers hoping to retire earlier than that need to plan for healthcare coverage. Whether one spouse continues to work to provide healthcare benefits or you look into private insurance, it’s important to make a proactive plan.
Tips for Younger Gen Xers
Retirement may be right around the corner for some, but younger Gen Xers could be 10 or more years out from their golden years. If you fall into this category, you have even more time to prepare and get your finances in order.
Start by creating a comprehensive financial plan that addresses any potential pitfalls. We provide clients with a customized financial roadmap that incorporates everything from unique 401(k) strategies to tax management and legacy planning.
Once you have a plan to guide your financial decision-making, look for ways to max out your savings. Consider increasing your 401(k) contributions or setting up a non-qualified brokerage account. This creates a second bucket of money that is taxed differently from a qualified 401(k) or IRA, which helps diversify your tax situation.
As retirement nears, remember that every person’s situation is unique. Retiring at age 60 is doable for some, but others may not be able to afford it or even want to stop working at such a young age. It’s important to evaluate your financial situation and consider your unique goals for the future.
As goal-oriented financial advisors, we begin our process by asking you to dream big and helping you create a plan to turn those dreams into reality. If you want to hear more about our planning process, reach out to schedule a call with our team.