Gen X Average 401k Balance: A Look at Retirement Readiness

Gen Xers are facing a unique challenge when it comes to retirement savings. The average Gen X 401(k) balance is around $114,000.

Many Gen Xers started saving for retirement later than their parents' generation, which has put them behind in building wealth. This can be attributed to various factors such as student loan debt and delayed career advancement.

According to a study, Gen Xers are more likely to have a 401(k) plan than any other generation, with 85% of Gen Xers participating in a 401(k) plan.

Curious to learn more? Check out: Soc Gen

Gen Xers can still boost their retirement savings, even if they're starting later in life. Focusing on your retirement savings rate, which is the percentage of your income you set aside annually for retirement, is key. Fidelity recommends a savings rate of 15%, but you may need to increase that number depending on your goals.

To get on track, consider downsizing your expenses to redirect that money toward your retirement savings. Ask yourself, "How can I start paring back on my standard of living so that I can save more and gradually get used to having less money to spend?"

Gen Xers can also benefit from making catch-up contributions to tax-advantaged retirement accounts such as 401(k)s and individual retirement accounts. For 2024, workers 50 and older can contribute an extra $7,500 to their 401(k), 403(b), governmental 457(b) or SARSEP plan.

Here's a rough breakdown of the average retirement account balances by generation, according to Fidelity:

The average account balance for Fidelity's Gen X clients is $178,500. However, inflation may reduce the real value of Gen X's savings, even if amounts are similar to previous generations.

For more insights, see: Nyse X

Gen Xers can boost their retirement savings by focusing on their retirement savings rate, which is the percentage of income set aside annually for retirement. Fidelity recommends a savings rate of 15%, but it may need to be increased depending on individual goals.

You'll need to save more depending on how far behind you are and how old you are. If you're in your 30s and haven't started, you may need to be saving 15% of your own money, but if you're in your 40s and have zero saved, you may be looking at somewhere close to a 30% savings rate.

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Taking a close look at expenses and finding room to downsize can help redirect money toward retirement savings. Ask yourself, "How can I start paring back on my standard of living so that I can save more and gradually get used to having less money to spend?"

Anyone 50 and older can make catch-up contributions to tax-advantaged retirement accounts, allowing them to put in more than the annual limit. For 2024, workers 50 and older can contribute an extra $7,500 to their 401(k), 403(b), governmental 457(b) or SARSEP plan.

Getting a consultation with a financial advisor or planner can be a smart thing to do to understand where you are, where you want to be, and what your income may look like postretirement.

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