Retirement planning should always be something to be aware of. However, this is not the case for Gen X’ers according to a Transamerica survey. What you can sum up from the survey is that the gen x’ers are making some key retirement mistakes. First off is that they’re not saving enough. Those with 401ks are putting away 7% of their annual pay. On the eve of turning 50, these should be some of their peak saving years. Many gen x’ers are also trying to put away money for their kid’s tuitions, so they might ramp up their savings rate once the tuition bills are behind them.
Many of the gen x’ers are tapping into the 401ks for reasons other than retirement. They’re cashing out when they change jobs, making early withdrawals or taking out loans against their balances. This is something that you should really try to avoid Chances are, you’ll never replace that money in your retirement fund. An alternative is instead of tapping your 401k, pump up the size of your emergency fund at the bank.
Many are not estimating their retirement needs. Only 12% of gen x’ers have used a retirement calculator or worksheet says the Transamerica survey. This is an easy fix, take a few minutes over the weekend sit down and just do it. Having a rough goal and knowing what it will take to reach it will help you see how much you should try saving each year.
Some gen x’ers even when they do think about retirement, they’re neglecting some important factors. The survey found that more then half of gen x’ers who say they have retirement strategies aren’t including them. These are such things as health care cost, long-term care insurance, and tax planning. These things are very important you should always account health care costs as a retirement expense. Also come up with a plan to cover long-term care costs, this could be just purchasing a long-term care insurance policy. Just try not to delay if you do purchase long-term care coverage, policies become prohibitively expensive once you hit your 60’s and 70’s
Gen x’ers are also very much unaware of the catch-up contribution rule for retirement saving. The survey reports that 49% of gen x’ers said they weren’t aware of the catch-up rules, which let people 50 and older contribute more to 401ks and individual retirement accounts (IRA) than those who are younger. Once you hit 50 everyone should take advantage of this tax helper
As you can see the gen x’ers do have some problems when it comes to their retirement planning. The good thing is many of these problems the gem x’ers are facing have fairly easy solutions. This could be just taking some time out of your day to use a retirement calculator or making sure your up to date on all the available tax breaks that will help you with your 401ks and your retirement.