The latchkey kids are all grown up.
The oldest members of Generation X — that generation born between 1965 and 1980 and known for its irreverence, sarcasm and indifference — are hitting 59½ and eligible to start withdrawing money from retirement accounts without penalty. But should they be touching their nest eggs so soon?
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As the first do-it-yourself generation funding retirement largely without private pension plans, many members of Gen X graduated college or high school during a recession. They got their first jobs when 401(k)s were in their infancy and predated the internet with paper statements mailed weeks after a quarter ended.
The early 401(k) plans, if they were offered by employers at all, were unsophisticated and lacked tools for education. Those early plans also lacked automatic enrollment, automatic escalation of savings allocations and target-date funds — all factors making it easier to save nowadays.
It was not an auspicious beginning to funding retirements that could stretch over decades.
“Generation X represents a pivotal transition in our evolving retirement landscape,” said Catherine Collinson, chief executive of the nonprofit Transamerica Institute and Transamerica Center for Retirement Studies, or TCRS. “Many Gen X–ers may be on a collision course. However, I believe there are options for course corrections.”
Generation X has median retirement savings of $93,000, according to a new study by the Transamerica Institute and TCRS. Only 16% of Gen X is are “very” confident of being able to fully retire with a comfortable lifestyle, the study found. Just 21% of Gen X members strongly agreed that they are building a large enough retirement nest egg.
“59½ is a milestone birthday with regards to saving and planning,” Collinson said. “It’s time for Generation X to do a lot of homework, which can positively influence their retirement outcome.”
Collinson said Gen X–ers need to focus on keeping job skills fresh and understanding what their employers need so they can work as long as they need to. Exploring ways to boost income and cut expenses is also key. Learning ahead of time the complex details of Medicare, which provides healthcare coverage starting at 65, will be crucial as well, she said.
“Getting ready for retirement takes on a real urgency during the final years of your career,” said Bryan Pinsky, president of individual retirement at Corebridge Financial. “Your financial situation is probably at its strongest, but your window for preparation is closing.”
In addition to saving for retirement, Generation X also may be juggling competing financial pressures such as helping aging parents and putting children through college. Such complications could call for a financial adviser or at least some serious at-home budgeting and planning efforts, experts said.
American adults believe they will need $1.46 million to retire comfortably, according to Northwestern Mutual’s 2024 Planning & Progress Study. That makes for a big gap between the median actual balance and the sum people think they need.
“What does it mean to be behind? How would you know if you are behind if you don’t have a plan? The numbers are emotional or are what they think or expect they will need, as opposed to doing the planning to determine your personal retirement number,” said Rob Williams, managing director of financial planning at Charles Schwab.
Less than half (44%) of Gen X is very confident in its ability to manage day-to-day financial priorities, and just 28% could pay for an unexpected expense, according to research from Corebridge Financial. Just 32% of Gen X–ers are confident that they can manage their retirement money to provide income for as long as they live, according to Corebridge, and nearly two in three are concerned both about quality of life and running out of money if they were to live to 100.
“Save more. Save as much as you can,” Williams said. “The trend over the last decades has been away from pension plans towards more responsibility of the individual to save and invest. That means Gen X needs to take ownership for the retirement they envision.”
While advisers suggest working longer or working part-time in retirement to extend any nest-egg funds, many people retire before they planned to due to health reasons, caregiving needs or job disruptions. The median age for retirement among existing U.S. retirees is 62, according to a 2024 MassMutual survey.
“That’s not far off — that’s a blink away for Gen X,” Collinson said. “The experience of current retirees should be a cautionary tale for Generation X.”
Although 62 is the earliest age at which you can collect Social Security benefits, the age at which you can claim your full benefits is 67 for Generation X or anyone born after 1960. Almost eight in 10 Generation X workers (79%) are concerned Social Security will not be there for them when they are ready to retire, while 29% are expecting Social Security to be their primary source of retirement income, according to the Transamerica Institute and TCRS report.
As far as tapping retirement funds at the age of 59½, Collinson said the ramifications for your overall retirement strategy are so complicated that it’s “surgical.” She suggested finding a financial adviser but cautioned that it’s crucial to take ownership of your financial affairs, even if you have an adviser. “No one cares more about your nest egg than you do,” she noted.
Although you can withdraw money from an IRA or 401(k) after age 59½, you’ll need to pay income taxes on the withdrawals you make. For Roth IRAs, the account must have been open for at least five years, but you can withdraw money tax- and penalty-free at 59½.
“It’s your nest egg,” Collinson said. “Handle it with great care.”
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