Attention Gen Xer’s: Mid-Life Planning is Calling

Generation X is hitting middle age! Bummer, to be sure. However, there’s still plenty of time to boost retirement security. If you need to get going, torque up your efforts to be on top when you retire. Kiplinger’s recent article, “7 Savvy Retirement Steps for Generation X,” has some strategies to get you there.

Rein in Your Carefree Lifestyle. As you enter the middle part of your career, you may have built up some assets and may be making good money. Don’t give in to the temptation to spend it all on things like fancy vacation trips, luxury cars, or over-the-top upscale homes. Some of that is ok, because you’ve earned it. But don’t let your cost of living rise with an increased salary. Take a look at your budget and track your spending for a month or two to see where your money goes. Living below your means is not as sexy, but you’ll appreciate it if you hit a speed bump in your career.

Clear Up Outstanding Debt. It’s time to start eliminating debt you’ve accumulated and to pay it down aggressively! With less debt, you can put more toward building your assets.

Attack the Mortgage. Housing is often your biggest expense, especially if you own your own home. One way to become debt-free is to increase your principal payments. The faster you pay off the mortgage, the lower interest charges you’ll pay in the process.

Up Your Emergency Fund. This can help you stave off credit card debt when an unexpected expense pops up and can keep you from withdrawing from your retirement account. As your salary climbs, up the emergency fund and have at least three to six months’ worth of expenses in a savings or money market account.

Review Your Insurance. Now is a perfect time to review your insurance, and in some instances, you might be able to cut some costs. If your kids are grown, perhaps you can lessen your life insurance. There are policies that can help cover you if a severe event strikes, like a disability insurance policy. If you end up unemployed due to a major health crisis, this will help you cover your costs and protect your financial security. You should also look at long-term care insurance. Do this in your fifties because the premiums will be cheaper and you’ll have protection if you need care when you’re older.

Get a Roth IRA. If you don’t already have a Roth IRA account, consider adding one for tax-free income in retirement. You can make after-tax contributions to a Roth IRA or convert traditional IRA money to a Roth IRA if you make more than the limitations for direct Roth contributions. You can also see if your employer has a Roth 401(k). The money will go in after-tax, but you can contribute a higher amount to a Roth 401(k)—plus there’s no income limit to contributions.

Take Care of Your Nest Egg. Hopefully, you’ve been adding in 15% or more of your income to your nest egg for years and maxing out your 401(k) contributions. But if you haven’t, start ASAP—the earlier you can put more money into your retirement fund, the longer it’ll have to grow.

Reference: Kiplinger’s (June 2016) “7 Savvy Retirement Steps for Generation X”