1. Increase savings contributions
According to the Fidelity assessment, Generation X retirement savers tuck away 9.7% of their income on average. That’s a decent savings rate, but you’ll benefit greatly from increasing it to 15% or 20%.
Pew Research Center calculates the average annual Generation X household income at $85,800. At that income, increasing retirement contributions from 9.7% to 15% equates to an additional $4,500 of annual savings. And if you save it in a tax-advantaged account earning 7%, you’ll have an extra $65,980 on your balance sheet after 10 years. If you have 15 years before retirement, you can amass an extra $120,800.
As you increase your savings contributions, keep an eye on the contribution limits. If you have a 401(k), those limits are generous. In 2020, you can contribute up to $19,500. And those of you over the age of 49 can make an additional $6,500 in catch-up contributions. At a 15% savings rate, you won’t hit those contribution limits unless your salary is more than $130,000 if you’re younger than 50 and $173,333 if you’re 50 or older.