How Gen X Could Reinvent Retirement

A Gen X woman of Pacific Islander descent smiling directly at the camera while kayaking along the Willamette River near Portland, Oregon.

(Image credit: Getty Images)

For decades, Generation X has been underestimated — and often for good reason. Sometimes called the slacker generation, sometimes the forgotten, Gen Xers are best known for never quite hitting their stride. Their different approach to life means their retirement planning will also be distinctive.

Always overshadowed by baby boomers and millennials, the 65 million Gen Xers, the oldest of whom are turning 60 this year, have endured, adjusted and reinvented themselves through 30 years of social, economic and political calamities that always seemed to land at the worst possible times.

Xers were just entering the workforce when companies started replacing pensions with less-dependable 401(k)s. Those retirement plans took a beating when the dot-com bubble imploded in 2000, and Nasdaq stocks didn’t recover for 17 years. Next there were the 9/11 terrorist attacks and the wars in Iraq and Afghanistan. Then, just as the Xers were buying their first homes, came the financial crisis of 2008-2009. And while the economy did pick up steam for a few years, there. … Bam! Then, the pandemic hit, along with a surge in interest rates and inflation.

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Gen X could reinvent retirement and aging

Through it all, Gen Xers have persevered. And now, owing to a confluence of factors — the explosion of remote work, the rise of technology, the as-yet-not-fully-understood impact of longevity — the resilient generation now seems poised to reinvent aging itself, and how to spend their so-called retirement years.

When even boomers are “unretiring,” Gen Xers around the country say they hope to scrap the outmoded and prohibitively expensive concept of long-term, idle retirement — and build something new.

“We’ve all been watching the boomer generation as they retire,” says Jennifer McGill Walker, 52, head of product for Learner’s Digest International, a medical continuing education firm. “And their attitude has been: Make as much money as possible, retire as early as possible — and then just take it easy, right?

“But I don’t think that’s helpful for them, mentally or physically,” she says. “And I don’t think it’s really helpful for society either. I think our generation wants a different kind of future — more active and adaptable, and more engaged.”

So what would a reinvented retirement — or nonretirement — look like, á la Gen X?

A generation in numbers

Until this point, the Platonic ideal of retirement has been linear, predictable, well-funded and low risk. While some members of this cohort, which consists of those born between 1965 and 1980, will hit those benchmarks, many Gen Xers don’t seem to be on track.

First, there’s the concerning news that although 55% of Gen Xers have an employer-sponsored retirement account , 35% report having no retirement account at all, according to a report released late last year by FINRA, the investment industry’s self-regulating organization.

Then there’s the matter of how much Gen X has saved in those accounts, and how much wealth they have overall. While this can be tough to pin down, the average retirement account balance for Gen Xers is about $130,000, according to a 2023 report by the National Institute on Retirement Security, a Washington policy research group.

That said, the FINRA analysis also found that as Gen X is getting older (maybe wiser), some aspects of their financial picture are looking a little more robust. They are more likely than millennials or boomers to have a mortgage. And Gen X shows the lowest incidence of late payments on that front (15%). Notably, they are far less likely than either millennials or Generation Z to have taken out a hardship withdrawal or loan from their retirement plans.

Playing the hand you’re dealt

Taking all that into account, though, still leaves Gen X holding a mixed bag as they look at the decades to come. “I don’t see Gen X focusing on the typical question of: ‘What am I going to do once I stop working?’ ” says Galia Gichon, a financial adviser in Westport, Conn., and a managing partner with Tidal River Fund, an angel investor network.

“I think Gen X is trying to be more realistic at this stage. They recognize that they might live a long time, and they’re trying to figure out what that’s going to look like, and how to afford it.”

Like most members of her generation, McGill Walker knows this, and it’s shaped the plan she and her husband are putting into place.

McGill Walker lives in Seattle now, but grew up in Omaha, Neb., the youngest child of nine. Resources could be stretched thin at times. She put herself through college and grad school, earning a master’s in English. “I even had a car payment when I was 16,” she recalls.

In addition to that early self-sufficiency, McGill Walker also had the benefit of observing her oldest siblings, who fall into the boomer generation. “In terms of retirement planning, they’ve all made different choices,” she says. “And I’ve just watched them and paid attention.”

McGill Walker’s main takeaway, which could anchor the Gen X retirement credo, is that you can’t follow other people’s rules and expect them to work for you. “You have to work with the variables you’ve been given.”

If the classic boomer retirement was based on the “three-legged stool” of financial support from Social Security, personal investments and pensions, Gen Xers may try to leverage their health and longevity to create a flexible approach to work and leisure for a more sustainable long-term plan. (Granted, there is some uncertainty here, given that the Republican administration and Congress could pursue changes to Medicare and Social Security. But any significant policy shifts are unlikely to emerge soon.)

And while those extra years of life are putting a strain on many of today’s retirees, they could be an advantage to Gen Xers — giving them more time to save and invest and enabling them to stay healthier longer.

How to live longer and better

Figuring out the double whammy of longevity — your own and your parents’—is the first and most pressing issue for Gen X. While being caught between raising kids, caring for older parents and trying to decipher the future isn’t new, Gen X is feeling the squeeze more than most.

“The financial and life stresses that 'sandwich generations' face are arguably more acute today than they were in the past,” says Gerri M. Walsh, senior vice president for investor education at FINRA. “The parents of Gen Xers are generally in their 60s to 90s, and increasing longevity means that Gen Xers may be paying for family-based care longer than earlier generations,” Walsh notes. “Simultaneously, Gen Xers with kids in college are wrestling with very high college costs, higher than for previous generations.”

The ripple effect of helping your parents as they age has become a defining aspect of Gen X in midlife. Not only are they being called upon to help their folks as they age, with all the energy, time, and expense that entails, but that experience has also opened their eyes to the challenges that await them in the decades to come.

Marc Joseph, 53, a criminal lawyer in Tampa, Fla., displays a couple of the hallmark qualities of his generation. He married and had kids a bit later in life (two daughters, ages 10 and 11). He’s now remarried and doing well, but says he only started getting serious about retirement five or six years ago, when he met his second wife. “She’s more focused on the future,” Joseph says. “At one point, she asked me what my legacy will be. I hadn’t really ever thought about it.”

What has been on his mind, though, is the realization that he could live as long as his parents did — both of whom ended their days in long-term care facilities. Joseph says his parents were fortunate enough to have pensions that covered most of their retirement expenses. “But I’ve run my own company for the last 15 years or so, and I won’t see a pension,” he says.

Taken together, his recent life experiences have inspired what Joseph calls “a major shift in my priorities.” He and his wife decided to work with a financial adviser and double down on their retirement accounts. “I have all the material things I want—the house, the cars—now I want to think about the future and what our quality of life looks like.”

Health: the new asset class

Gichon says that many of her clients who are in their 50s are having similar moments of reckoning, sometimes fueled by what they’ve seen their parents go through. “If your parent is 82 or 83 and in a memory care unit — which can easily cost $10,000 a month or more — or if they need an aide, you have to ask, ‘Who is going to pay for this?’ ”

Also, many Gen Xers are in a position to understand not only the cost implications of long-term care, but to see its limitations. Joseph himself hasn’t recovered from watching his mother end her days in a memory care unit.

“She sat in a central room with other patients, with a big TV, and they’re all just sitting there until it’s time to go to bed,” he says. “Philosophically, if I’m going to end up living in a facility where I’m just being warehoused, I don’t see the point.”

It’s no wonder then that the specter of living longer has inspired some Gen Xers to put their own health front and center, to the point of embedding it in their overall investment strategy. In addition to minimizing health care costs, investing in being physically resilient will support their ability to work longer if necessary — and help to keep their options open.

McGill Walker’s parents also had long-term health problems. “They didn’t take care of themselves, and had exorbitantly high health costs, and a lower quality of life in their elder years,” she says.

“This is why health is such a passionate topic for me,” she adds. “It’s all intertwined." Retirement isn’t just about having the money to travel or live a rich life, however you define that — but to really enjoy your life.

Reinventing work for a longer life

In that sense, Gen X will benefit from the so-called unretirement trend that some boomer retirees have sparked — with some doing a 180-degree turnaround and going back to full- or part-time work, or not retiring at all. About 20% of U.S. workers over age 65 are still employed, according to the Pew Research Center — almost double the share of older adults who were working in 1987 (11%), and growing.

Time to sunset retirement?

Predicting the retirement plans of a population that comprises nearly 65 million people is more speculation than science. And rarely in the realm of finance is there a behavioral inflection point so clear that it accrues to one group versus another.

But the realities that Generation X faces — the Forgotten, Slacker, Latchkey, Middle-Child generation — could spur a pivotal moment in how Americans view retirement and the later phases of life. It may be, as with the case of Gen X, that a traditional retirement is a non-starter for many people, in light of today’s growing longevity. But that’s not necessarily bad news.

Gen X could successfully apply a lemons-to-lemonade strategy to the years ahead — largely by keeping time on their side. If they play this card wisely and continue working (technology and remote options will help); stay physically and mentally resilient (fitness choices abound); take on a little more investment risk (a little more growth could be wise); and seek out adventure, fulfillment and joy — a lot of ifs — they could reinvent what it means to be retired for decades to come.

Note: This item first appeared in Kiplinger Retirement Report, our popular monthly periodical that covers key concerns of affluent older Americans who are retired or preparing for retirement. Subscribe for retirement advice that’s right on the money.

MP Dunleavey is an award-winning personal finance journalist and author. She's now covering issues related to retirement, longevity and aging. Her work has appeared in The New York Times, MSN, Next Avenue and Marketwatch. She recently launched a new Substack called Squished.