Generation X are those who were born between 1965 and 1980. Since they fall between the Millennials and the Baby Boomers, Stars like Jennifer Aniston and Robert Downey Jr. belong to this generation. Generation X is referred to as the neglected middle child. The 2008 financial crisis hit Gen X badly when they enjoyed owning a home and saving for life post-retirement.
Their earnings and housing values have recovered, Gen X has incurred a higher average debt than any other generation. 34% of Gen X people have zero retirement savings, while 26% have credit card debt of over $10,000. The median retirement savings of Gen X is around $69,000. Is that enough for you? Let's find out.
Pay Off Your Debt
To receive maximum benefit from your 401(k), you need to get rid of your debt in the first place. Retiring with a lot of debt is not a good idea. Moreover, your retirement fund wouldn’t be enough to sustain the debt amount. Therefore, it’s recommended that you pay off your debt before you retire. The best way you can manage debt is through a budget.
Chalk Out a Budget
You can create a budget with apps like Mint. A budget will help you keep account of where you are spending the disposable income over six months. Jot down every expenditure, like how much you spend on your clothes, concert tickets, and coffee at Starbucks every single day. The money you spend each day might surprise you.
Through your budget app, you will get an idea regarding where you need to cut down your expenses. You will soon realize that a bit of change here and there will help you pay off your debts. As soon as you relieve your budget of the debt, you can keep the money you were shelling out as your savings.
Make the Most of 401(k)
If you want to reap the benefits of 401(k), contribute as much money as you can to it. If you are not yet 50, the maximum amount you can put into 401(k) in 2019 is $19,000. Employer contributions are not part of this amount.
When you combine the contributions from the employee and the employer, the annual limit is $56,000. If you are 50 or above, you can put in an additional catch-up contribution of $6000 for a net amount of $25,000. If you want to get things back on track, the best way is to get the most of your 401(k). However, it’s not easy for most people as it requires disciplined budgeting and sacrifice.
Review the Social Security Benefits
Reviewing your Social Security benefits is of utmost importance. Log on to ssa.gov, the Social Security Administration website. After you get your statement, you can plan out your retirement age. The more you push Social Security back, the more money you will receive. That certainly would make a huge difference. If you intend to take out your money after you turn 60, the monthly income will automatically come down.
Check Out the Online Financial Tools
A majority of the large companies and financial institutions have an online retirement center. You can fill in your information there, and subsequently, you will get an estimate of how much your 401(k) will grow.
If you have 15 years left to retire, you will get an idea of how much you will save for retirement and how much you are going to receive from Social Security. Knowing that you are on target would be quite satisfying.
Create Financial Goals
As someone who has gone through the Great Recession of 2007-2009, being financially astute is quite normal. There are lots of people who fail to keep track of how and where they are spending money. If debts make you anxious and you have no idea how to deal with them, chalking out a budget and sticking to it is the best way. Having a financial goal and gradually working towards it is always wiser.
If you want to create a financial life devoid of stress, you must understand where you stand financially, create a budget, and set financial goals. You need to realize that people of your age sometimes become overly conservative about their money as the fear of insolvency haunts many. Hit the road, have some planning, and you can be well on your way to enjoying life in retirement.