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What Do You Do When You Have No Retirement Savings?

Three tricks to make your financial future look less scary

Illustration of Ben Franklin's head popping out of a hole
Paul Spella

Even if it’s still years (or decades) away, you’ve probably at least imagined what retirement could look like. Will you keep your high-priced city pad with skyline views? Aim for an underrated, cool-dad suburb? Go rogue and permanently travel the U.S. in an RV?

As you mull the fantasy scenarios, there’s another thought that’s lurking just below the surface, ready to pop into your brain and ruin your fun: How the hell am I paying for this?

You don’t have to be drowning in debt or living in dire financial straits to be concerned. Exactly half of Gen Xers don’t have a retirement savings account, according to a recent survey.

Don’t despair. Here are a few suggestions to help make retirement planning feel a little less daunting.

Look beyond the traditional 401(k)

Never contribute above and beyond what an employer matches to your 401(k) or IRA, says Justin M. Biance, a financial adviser and author of Designed to Last: Renovate Your Financial House and Retire with Confidence. Why? Because they’re typically tax-deferred plans, meaning the IRS doesn’t take a bite of the pretax money until after you withdraw it. That's 401 not okay.

That may seem like it’s easier on your pocketbook today, but tax rates are actually pretty low right now and analysts predict that taxes will be rising when Gen Xers start retiring. Instead, Biance recommends a Roth IRA, which is different from a traditional individual retirement account in that contributions are taxed immediately, not down the line.

“The Baby Boomer generation avoided paying taxes on income when tax rates were higher, and now they’re retired and enjoying drawing those assets in a lower tax rate environment,” Biance says. Unless we start doing the same, this historical advantage “won't be true for Gen Xers.”

Set retirement savings on autopilot

When Biance asks his clients why they don’t funnel 10 percent of their income to a retirement plan, the typical answer is: “I can’t afford it.”

But if he asks what would happen if their salary was suddenly cut by 10 percent, they answer with, “I’d figure out how to make it work.”

“The majority of Americans, and I include myself in this, spend the dollars that come into their checking account,” says Biance. “So it’s important to send dollars elsewhere — out of your grasp.” 

It’s not just about automating your IRA or 401(k) deposits. You can also automate how much you save. Some retirement plans let you automatically increase the dollar amount you’re investing every year, so you’ll inch closer to your retirement goal without even realizing it. Out of sight, out of mind.

Challenge your preconceptions of what retirement looks like

Work and retirement don’t mean the same things they did to our fathers and grandfathers. It’s becoming less regimented and more fluid. 

This is especially true of younger Gen Xers — born between 1975 and 1979 — who don’t see 65 as the crystallized retirement age it once was. 

It has been a bigger adjustment for older Gen Xers — born in the ’60s and early ’70s — who are “more traditional but haven’t saved enough to retire in a traditional way,” Biance says. 

It’s worth considering a gradual transition to a lighter workload rather than throwing a grand goodbye party in a corner office, says Biance.

“Every year, I’m looking for ways to tweak my activities so I can take one step closer to my ideal week,” he says. “And once I get there, I am retired.” In other words, Biance confesses that his dream for the future is that “I will never have to retire.”