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6 Financial Mistakes Gen Xers Will Regret When They’re Older
Don’t derail your future by making these blunders
Glenn Harvey
Key takeaways
- If you’ve fallen behind on saving, consider taking advantage of “catch-up” retirement account contributions.
- Tilting your portfolio toward low-risk investments in your 50s or early 60s can hurt your ability to build a long-lasting nest egg.
- Pausing or lowering your retirement account contributions while you help support an adult son or daughter can have long-term consequences.
With their ages now spanning mid 40s to early 60s, many members of Generation X are eyeing retirement. While some have built solid nest eggs, others have fallen behind.
According to a Fidelity review of nearly 25 million retirement accounts, Gen Xers — generally defined as Americans born between 1965 and 1980 — finished 2025 with an average balance of $222,100 in their 401(k) accounts. That’s far less than what most financial advisers say people need to adequately support themselves after leaving work behind.
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The good news: There’s still time to course-correct. Financial professionals say avoiding these six mistakes now can help set you up for a more secure financial future.
Not preparing for long-term care costs
While Medicare Part A and Part B cover most doctor and hospital expenses for Americans age 65 and older and Part D can offset the cost of prescription drugs, Medicare does not cover long-term care costs such as residence in a memory-care facility or in-home nursing care.
Yet for many Gen Xers, “long-term care is not on the radar,” says Sheri Conklin, owner of Conklin Financial Planning in Thornton, Colorado.
It should be top of mind, she says. Consider: The average duration of an end-of-life nursing home stay is nearly 14 months. At an average cost of nearly $10,000 per month, that kind of expense can wipe out nest eggs.
Long-term care insurance is one option to help cover those costs. It isn’t cheap — $2,080 annually for a 55-year-old couple on average, according to 2025 data from the American Association for Long-Term Care Insurance — but it’s more affordable for Gen Xers to shop for a policy now than to wait until they’re older.
There are also hybrid life insurance policies that combine life insurance and long-term care benefits. These policies have become more popular in recent years, with sales outpacing traditional long-term care insurance policies, according to a 2023 Congressional Research Service report.
Stashing all your savings in tax-deferred accounts
Traditional 401(k)s or individual retirement accounts (IRAs) incentivize you to save in two ways: Since contributions are tax-deductible, they lower your taxable income in the years you make them, and the money you invest grows tax-deferred. However, relying solely on such accounts can lead to big tax bills when you begin making withdrawals in retirement, cautions Jean Keener, principal of Keener Financial Planning in Keller, Texas.
“People will max out these plans — and it does save a lot of money in your working years — but if you do that exclusively, sometimes that ends up being a mistake,” she says, citing the IRS’s rules for required minimum distributions, or RMDs. These are mandatory withdrawals from tax-deferred retirement accounts that, for people born in 1960 or later, start at age 75. That money is taxed at regular income rates.
Diversification can help reduce the tax sting. If you’re still working, consider contributing some after-tax dollars to a Roth 401(k). According to the Plan Sponsor Council of America, more than 95 percent of 401(k) plans also offer a Roth option. Since taxes have already been paid on Roth 401(k) contributions, you can make tax-free withdrawals in retirement. You can reap the same tax gains by opening a personal Roth IRA and making regular after-tax contributions.
Not taking advantage of catch-up contributions
A 2025 survey from investment company Schroders found that only 16 percent of Gen Xers think they have enough money to retire. One way to shore up your savings is to take advantage of “catch-up” retirement account contributions, says Matteo Hoch, founder and financial adviser at Bird Spring Financial in Las Vegas.
In 2026, most workers age 50 and older can make an additional $8,000 in 401(k) contributions on top of the standard contribution limit of $24,500. (People who earned more than $150,000 in 2025 are required to make those catch-up contributions into a Roth account.) For both traditional and Roth IRAs, retirement savers age 50 and older can contribute an extra $1,100 as a catch-up contribution on top of the $7,500 IRA cap.
Investing too conservatively
In the years before you retire, putting too much of your money into low-risk investments such as certificates of deposit (CDs) or money-market accounts could hurt your ability to build a long-lasting nest egg.
“That’s one big trap — forgoing growth due to risk,” says Al Faber, founder of DIWY Financial Planning in Los Angeles. “I’ve seen people stay in government funds and cash alternatives for 20-plus years.” With such investments, your money may barely keep pace with inflation, he adds.
Don’t avoid the stock market out of fear, says Gordon Achtermann, president of Silverstone Financial in Annandale, Virginia. A financial adviser can help you craft an investment portfolio that aligns with your risk tolerance and long-term goals.
Claiming Social Security too early
According to the 2025 Schroders survey, 44 percent of non-retired people plan to start collecting Social Security before they reach full retirement age (FRA), which is 67 for people born in 1960 or later.
The earliest you can start taking Social Security retirement benefits is age 62. But if you claim before FRA, you’ll get less than the full benefit amount calculated by Social Security from your earnings history — as much as 30 percent less. And if you wait beyond FRA, they increase your eventual payment beyond the “full” amount by two-thirds of 1 percent per month, up to age 70. That could mean an extra 24 percent tacked on to your monthly payment, for the rest of your life.
Putting off saving for retirement to support adult kids
Keener says it’s understandable that middle-aged workers with families may want to put their grown children’s needs ahead of their own retirement security. But abandoning or lowering your retirement account contributions while you help support an adult son or daughter — say, by paying their rent or car insurance — can have long-term consequences, she warns.
Don’t assume you’ll be able to catch up by working longer — research from the Transamerica Center for Retirement Studies found nearly 60 percent of workers ultimately retire before they intend to due to factors such as a layoff, a health crisis or caregiving responsibilities.
Depending on your arrangement with your kids, resetting expectations may help. For example, if you’re still footing the bill for your daughter’s cellphone plan, set a date for when you’re going to stop — that way, she won’t be blindsided when you make the change, and you won’t feel guilty about tightening your purse strings.
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