Gen X is facing a retirement crunch. Here's how they can catch up.

The oldest members of Generation X turn 60 in 2025—a milestone that marks the home stretch to retirement.

While the goal is clear, the path there is proving more challenging. Research suggest Gen Xers may be financially unprepared for retirement: 

• A survey of individual investors found that the median Gen Xer had saved just $150,000 for retirement¹—nowhere near the amount needed to fund a retirement that could last as long as 30 years. 

• The National Institute for Retirement Security found that 40% of Gen Xers had saved nothing in a private retirement account.²

And most recently, New York Life’s Wealth Watch survey³ found Gen X pacing significantly behind Millennials on key measures of financial wellness. Gen Xers said they saved just under $7,500 in 2024, compared with over $12,000 in annual savings by Millennials. And 43% of Gen Xers said they held credit card debt, with an average balance of over $10,000 (compared with 36% of millennials, who had an average balance of slightly under $7,000).

These numbers highlight a critical truth: Many Gen Xers are entering the home stretch to retirement with high-interest debt, lower-than-expected savings, and rising financial pressure. 

“Gen Xers should be focused on protecting their life’s work, but instead, many are contending with a perfect storm: significant debt, insufficient retirement savings, and rising healthcare costs” said Jessica Ruggles, corporate vice president of Financial Wellness at New York Life. “Gen Xers have been self-reliant, but with two-thirds of them over the age of 50, they need strategies and guidance on how to play catch-up and retire on their terms." 

Stuck in the middle

Many of the challenges Gen Xers face today trace back to significant shifts in the retirement-planning landscape during their working years. 

In the 1970s, pensions—also known as defined benefit plans—began phasing out in the private sector in favor of defined contribution plans, shifting the responsibility of saving for retirement from employers to individuals. Instead of earning guaranteed lifetime income after years of service, it was incumbent upon them to manage their own savings and ensure it would last to and through retirement.

Today, 401(k)s have largely replaced the pension as a primary source of savings, along with ERISA (Employee Retirement Income Security Act) provisions imposing legal requirements of plans. But back in the mid-1990s, when the average Gen Xer was entering the workforce, only 55% of employees were participating in defined contribution plans.⁴ In other words, pensions were fading, but a reliable replacement wasn’t fully in place yet. 

The result was that the average Gen Xer didn’t begin saving for retirement until age 31; by contrast, Millennials and Gen Zers, who entered the workforce when 401(k)s were more widely available, typically began saving for retirement at ages 27 and 22, respectively.⁵ And the Gen Xers who were diligent about retirement savings had some bad luck in the market, with market crashes in 2001 and 2008 coming just as they were beginning to accumulate wealth. 

Another factor impacting Gen X’s financial insecurity is the rise of family caregiving. Generation X became the first to be referred to as the “Sandwich Generation”: a smaller generational cohort stuck in the middle of the larger Millennials and Baby Boomers, caring for both their children and aging loved ones. New York Life Wealth Watch found in 2024 that almost half of all caregivers report that caregiving responsibilities have put them in a difficult or financially precarious position. 

“Caregiving responsibilities are reshaping the workforce and impacting financial futures,” says Ruggles. “While caring for a loved one can be a significant source of purpose, it can also impact lifetime earnings due to time out of the workforce, reduced retirement savings, fewer career opportunities, and long-term financial vulnerability.” 

Retirement disconnects and financial uncertainty

Gen Xers remain hopeful about their retirement outlook, but the path ahead may be more complex than it seems. 

Many Gen Xers see a simple solution to their retirement saving shortfall: putting off traditional retirement and extending their working years. According to one recent survey, forty percent of Gen Xers expect to retire after age 70 or not at all, and 54% plan to work in retirement.⁶ 

However, people tend to overestimate their ability to work late in life: The Employee Benefit Research Institute found while workers report an expected median retirement age of 65, retirees report a median age of 62 for their actual retirement. Of the retirees who retired early, 31% said it was due to a hardship such as a health problem, and 32% lost their jobs due to layoffs or other changes at their company.⁷ 

“Most people think they’ll choose when to retire,” says Ruggles. “The reality is that retirement often chooses us, and sooner than we think.”

How Gen X can start catching up

There are a few things Gen Xers can start doing today to improve their retirement preparedness, regardless of how they envision spending their “Golden Years.”

Pay down debt

New York Life’s Wealth Watch survey found that Gen Xers with credit card debt carry an average balance of $10,141. With the average credit card interest rate at 24%, that comes to around $2,400 in annual interest payments, with the debt load doubling every three years.

So, what does a debt repayment plan look like in this situation? To start, list out your debts, including balances, minimum payments, and interest rates. From there, you’ll need to decide which one you want to prioritize to pay down first. If there’s a clear difference in interest rates—for instance, if you have a credit card with a 24% interest rate, a student loan at 5% and a home equity loan at 10%—then you’ll probably want to prioritize paying off the credit card, which will save you the most in interest over time. 

If the interest rates are fairly similar, many experts advise the “snowball method”. For this method, arrange your debt by amount owed, from lowest to highest, and attack the smallest debt first. Crossing off that first debt quickly will give you momentum; once it’s gone, you can redirect those debt payments to the next debt on the list, and so on.

Where should you get the funds for this accelerated debt payoff? Consider cash on hand but avoid the temptation to raid your emergency fund or retirement accounts to pay it off. A better option may be a temporary adjustment to your budget, allocating less to discretionary spending and redirecting the money saved toward your debt project.  

Paying off debt can feel like an uphill battle, because even as you’re trying to shrink the debt, interest is making it grow. One potential solution is a balance-transfer credit card, many of which offer introductory periods with 0% APR that can last a year or more. In other words, you can press pause on interest accumulation for a year or more while you chip away at the debt. Before making this move, make sure you have a plan in place to attack your debt during this 0% APR period. You should also be sure that you understand the terms of the card, including balance transfer fees and the interest rate that will kick in at the end of the introductory period. 

Go big on retirement savings

While paying off high-interest credit card debt should be a top priority, paying off other debts—such as lingering student loan debt—should be prioritized against another major goal: Ramping up retirement savings. 

“Balancing paying off debt while also saving for the future is an issue for many of my clients,” says Joel Magbitang, Financial Advisor and Partner of Magbitang Financial & Insurance Solutions. “Unfortunately, media messages often emphasize debt management over retirement planning, but this approach neglects the time value of money: the longer you have to save, the smaller the contributions required to achieve the same financial goal.”

Catch-up contributions, a specific tax provision for people in their 50s, can help ramp up retirement savings. In 2025, workers in their 50s can save an additional $7,500 in their 401(k)s (on top of the general contribution limit of $24,000). For those aged 60 – 63, the catch-up contribution limit goes up to $11,250. 

How you invest those savings is another opportunity to play catch-up. Typically, investment portfolios gradually become more conservative as you age; this protects you from a big market dip right before retirement but also means your balance won’t grow as much over time. If your 401(k) is invested in a target-date fund, that adjustment will happen automatically. It’s worth discussing with a financial advisor whether that level of diversification accurately reflects your retirement timeline and risk tolerance. 

Focus on generating continuous income

Retirement readiness requires a mindset shift, from focusing only on saving a large sum of money to planning how savings can generate continuous income. That’s especially important during times of high inflation and concerns about income lasting a lifetime. 

“The name of the game for my clients is: how many streams of income can we generate between now and retirement?” says Magbitang. “Social security, retirement plans, personal savings… Can we get to eight, nine, ten streams of income? Can we implement a whole life insurance policy that protects our ability to provide income to our family now but then also creates a stream of future income?”

Beyond creating multiple income streams, it’s also important to prepare and protect yourself against major costs, like health care, that could deplete your savings. People 65 or older have an almost 70% chance of needing some type of long-term care support, and the cost of a long-term care event can be upwards of $100,000. To prepare, Gen Xers should consider working with a financial professional to explore their options for preparing for long-term care costs. 

Decide how you, and your family, want to live in retirement  

Gen X has been both a driver and a resilient navigator of social change. Now, as they approach their 60s, they might reimagine the traditional retirement. 

While it’s true that people tend to retire sooner than they expect, there’s no denying that there’s also been a growth of the older workforce—almost double the share in 1987. Gen Xers who want to keep working into their late 60s and even 70s need to prioritize their health to extend their working years (and subsequently enjoy healthy “golden years”). They should also take advantage of remote, hybrid, and consulting options so they can continue earning income without the strains of long commutes and 40-hour work weeks. 

In addition to thinking about how they want to work as they grow older, Gen Xers should think about how they want to live. 

Given the choice, most Americans prefer to “age in place,” remaining in their home and maintaining independence rather than moving into assisted living or a skilled nursing facility. But there are hidden costs of aging in place, from home health aides to making accessibility upgrades to your home. Gen Xers approaching retirement should consider making a move now to minimize costs and maximize comfort—whether that means moving to live closer to their children, exploring 55+ communities, downsizing to a home without stairs, or even just moving to a walkable neighborhood with access to green spaces and healthy food options. 

Get started now

Preparing for retirement when you’ve got too much debt and not enough savings can be intimidating. But Gen Xers who make moves now to tackle their debt, ramp up their savings, and adjust their lifestyles can still have a comfortable retirement—even if it looks a little different than their parents’ retirement. 

¹ Natixis, June 2024 

² The National Institute for Retirement Security

³ The Wealth Watch poll was conducted November 23 – 24, 2024 among a sample of 2,200 Adults. The interviews were conducted online, and the data was weighted to approximate a target sample of adults based on gender, age, race, educational attainment, and region. Results from the full survey have a margin of error of plus or minus 2 percentage points.

⁴ U.S. Bureau of Labor Statistics, “Percentage of full-time employees participating in defined benefit and defined contribution plans, private establishments with 100 workers or more, 1989-1997." ERISA at 50: BLS tracks the evolution of retirement benefits : Monthly Labor Review: U.S. Bureau of Labor Statistics

⁵ Northwestern Mutual, 2024

⁶ Transamerica Center for Retirement Studies, 2024

⁷ Employee Benefits Research Institute, 2024