9 Steps Gen Xers Should Take to Prepare for Retirement

Step 2: Get your savings on track

If, after crunching the numbers, you foresee a shortfall in savings, you’ll want to course-correct. One way to turbocharge your nest egg is by taking advantage of catch-up contributions to your retirement accounts. 

Most employees enrolled in workplace plans like a 401(k) or 403(b) can contribute up to $23,500 to those accounts in 2025, but those 50 and older can put in an additional $7,500, for a total of $31,000. Workers ages 60 through 63 have a higher catch-up limit of $11,250, for a total contribution of $34,750. The individual retirement account (IRA) contribution limit in 2025 is $7,000, plus a $1,000 catch-up contribution for adults 50 and older.

If you still feel like you won’t have enough saved for retirement, go back to the spending review from step one. “It can help identify where to pare back,” Power says. Even simple cost-cutting measures, like getting rid of some streaming subscriptions or negotiating a lower rate with your internet provider, can yield significant savings over time.

Step 3: Build a rock-solid emergency fund

Generation X is doing a slightly better job when it comes to stashing away money for emergency expenses, with a median savings of $868 compared with $600 for Americans overall, according to a 2024 survey by retirement plan provider Empower. That’s a good start, but Naffa says Gen Xers should aim to have an emergency fund that can cover at least three to six months’ worth of expenses.

Once you retire and no longer have a paycheck, an unexpected expense could force you to dip into your retirement account or rely on credit cards if you don’t have a rainy-day fund. “A solid emergency reserve acts as a safety net, keeping your retirement assets invested and working for you,” Naffa says. Setting up monthly automatic transfers to a high-yield savings account now can help you build a sufficient emergency fund for retirement.

Step 4: Wait as long as you can to claim Social Security

You can start drawing Social Security retirement benefits as early as age 62, meaning the oldest Gen Xers will become eligible in 2027. However, financial advisers typically recommend delaying your claim, especially if you’re counting on Social Security to cover a significant portion of your spending in retirement. 

That’s because “the longer you defer Social Security, the bigger the benefit,” Power says. Claiming at 62 will permanently reduce your benefit by as much as 30 percent. You get your full benefit amount if you wait until full retirement age — for Gen Xers, that’s 67 — and a further boost of two-thirds of 1 percent for each month you delay until age 70. Waiting until then will get you your full benefit plus 24 percent, for life.

Step 5: Tackle debt

Gen X has an average of $30,879 in non-mortgage debt, more than any other generation, according to a 2024 Experian analysis. Paying off debt can create space in your budget to increase your retirement contributions and prevent interest from chipping away at your nest egg.

“Prioritizing the highest-interest-rate debt first is a good rule of thumb,” Naffa says. Many financial advisers recommend taking out a lower-rate personal loan to pay off high-interest debt, or transferring credit card balances to a card with a 0 percent introductory rate and paying it off before the intro rate expires.

Keep in mind that not all debt is created equal. There may be less urgency about paying off your mortgage, especially if you locked in a low interest rate during the pandemic, when rates dropped to record lows. You’ll see a better rate of return by funneling extra cash into your retirement account.

Step 6: Prepare for medical costs

Fewer than half of Gen Xers surveyed by Northwestern Mutual said they have a plan to address health care expenses in retirement. One way to prepare while still working is to max out contributions to a health savings account (HSA), which can provide a source of tax-free cash to cover medical costs in retirement. Plus, earnings on the investments in an HSA grow tax-free. 

You can’t contribute to an HSA once you enroll in Medicare, but you can continue to withdraw funds from your account tax-free to pay for qualified medical expenses, including premiums for Medicare Part B, Part D and Medicare Advantage plans for you and your spouse.

Step 7: Plan for long-term care

One of the expenses Gen Xers are least prepared for in retirement is long-term care, which is only getting more expensive. About 80 percent of adults 65 and older will require some long-term care, and 40 percent of those adults will have high-intensity needs for more than a year, according to the Center for Retirement Research at Boston College. But just one-third of those surveyed by Northwestern Mutual said they have a plan for long-term care needs.

If you’re healthy, you can still qualify in your 50s and early 60s for long-term care insurance or hybrid life insurance that includes a long-term care benefit, Wilke says. Buying either type of policy requires a medical underwriting process, and you can be denied coverage if you have a medical condition that makes it more likely that you'll require care soon. Alternatively, there are annuities with long-term care benefits that don’t require medical underwriting. Annuities are insurance products that typically require a lump-sum payment to purchase and provide a guaranteed stream of income over a predetermined period. Because annuities can be complicated, it’s a good idea to work with a financial planner to review your options.

Step 8: Consider a side hustle

Nearly half of Gen Xers plan to continue working in retirement, according to the Northwestern Mutual study, but what’s stopping you from picking up some extra work, and extra cash, now? “If you’re getting close to retirement age but you don’t feel like you’re financially in the best of places,” Naffa says, “there’s nothing wrong with getting a part-time job.”

There are plenty of other ways to earn money on the side, from taking paid surveys to pet sitting. Consider allocating the extra income toward debt payments, retirement accounts or an HSA.

Step 9: Set boundaries on supporting adult children

Nearly three-quarters of parents provide some form of financial assistance to their adult children, to the tune of about $7,000 a year on average, a 2025 AARP survey found. That can undermine their ability to save for retirement, Naffa says. 

“It’s OK to put yourself first,” he says. If you don’t, you might have to rely on your kids for financial support when you get older.

Bankrolling adult kids can also hinder their financial independence. “Healthy boundaries actually set both sides up for success,” Naffa says. He recommends establishing a clear timeline for when you will stop offering them financial assistance.