A wealth manager says Gen Xers should focus on a 2-part strategy to retire on time

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Many Gen Xers who expect to retire before age 75 are behind on their retirement savings.

• Many Gen Xers who expect to retire before age 75 are behind on their retirement savings, according to a recent INSIDER and Morning Consult survey.
• Gen Xers need to set financial boundaries when it comes to caring for their aging parents and launching their millennial and Gen Z children, said Megan Gorman, a managing partner at Chequers Financial Management.
• Gorman recommends Gen Xers who are falling behind in retirement preparation focus on a two-part strategy: Save in a retirement plan and contribute to a health savings account.
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About half of Gen X respondents of a recent INSIDER and Morning Consult survey said they expect to retire before age 75.

And yet, 47% of the Gen Xers - defined as ages 38 to 53 - said they had no money saved in a retirement account, almost equal to the share of those who said they do. About 48% of the savers have under $50,000, the survey found, and one-quarter have more than $100,000.

Of those expecting to retire before 75, 23% said they're aiming to leave work between ages 56 and 65, and 28% said between ages 66 and 75. Meanwhile, 10% of the Gen Xers said they don't expect to retire at all - the highest share of any generation - and 19% didn't have an opinion.

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"If we went back 10 years ago, during the great recession, Gen X was hit the hardest," Megan Gorman, a managing partner at San Francisco-based Chequers Financial Management and writer at The Wealth Intersection, told Business Insider. "Part of this was due to where they were on the wealth track and part due to the fact that their wealth was tied up in the housing market."

While the median wealth of Gen X households has risen 115% since 2010, Gorman said, citing Pew Research, they're now caught between caring for aging parents and launching their millennial and Gen Z children.

"They need to tell their boomer parents and millennial children what they can and cannot do financially for them," Gorman said. "Gen X has what I call 'latch key kid' mentality - they believe their self-reliance can drive success - and it can. But being firm with boundaries enhances that independence."

But all is certainly not lost for Gen X. "While taking the right steps in our 20s, 30s, and 40s are key, real wealth accrual doesn't always happen until the late 40s and 50s," Gorman said. For Gen Xers who are falling behind in retirement preparation, she recommends focusing on a two-part strategy. 

"First, they need to save in a retirement plan. It isn't an excuse if your employer doesn't offer one. For many, the IRA, whether traditional or Roth, is the perfect solution," she said. Funding the accounts with automatic contributions is key, Gorman added, as is increasing the deferral amounts periodically.

Target-date retirement funds are another good option for growing retirement savings, Gorman said. These investment funds dial back risk the closer you get to a specified retirement date.

"Second, Gen Xers need to address their longevity risks with the use of a health savings account, or HSA," Gorman said. Available only through high deductible health plans (HDHP), HSAs are a triple tax-free investment account in which a single person can contribute up to $3,500 and a married couple can contribute up to $7,000 annually, plus a $1,000 catch-up contribution for folks over 55. When the account reaches a balance above $1,000, the excess funds can be invested for even greater returns.

Money saved in an HSA can be used to offset the costs not covered by Medicare in retirement, like hearing, vision, and dental services, plus supplemental health insurance, copayments, and prescriptions.

"The ability to put money away with an immediate tax deduction, that grows tax deferred, and can pay out tax free in retirement for health care costs is a huge benefit to Gen X," Gorman said.

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