Smart Retirement Savings Moves for Gen Xers

If you belong to "Generation X" - generally defined as those born between 1965 and 1980 - you've got many years to go until you retire. However, that doesn't mean you should delay saving for retirement - but that's exactly what many of your peers are doing. And in the process, they may be jeopardizing the retirement lifestyle they've envisioned.

Consider the following:

• More than one in three workers ages 35 to 44 aren't saving anything for retirement, according to a survey by the Employee Benefit Research Institute.
• Nearly half of all Gen Xers are at risk of being unable to maintain their standard of living in retirement, according to the Center of Retirement Research at Boston College.

These figures are daunting - but they don't necessarily mean that you will fall short of your retirement goals. As a Gen Xer, you have, on your side, the world's most valuable asset - time. By using it wisely, and by following proven savings and investment strategies, you can make excellent progress toward your important retirement goals.

What savings and investment strategies should you pursue? Here are a few ideas:

• Take full advantage of your 401(k). If your employer offers a 401(k) or similar plan, such as a 403(b) or 457(b), put in as much as you can afford each year - and increase your contribution every time you get a raise. Your 401(k) earnings can potentially grow on a tax-deferred basis, and you generally contribute pre-tax dollars, so the more you put in, the lower your annual taxable income. At a minimum, contribute enough to earn your employer's match, if one is offered. And if you leave your job, try to avoid liquidating your 401(k) account. Instead, consider rolling over your 401(k) to an IRA or to your new employer's retirement plan, if such transfers are allowed.
• Open an IRA. Even if you have a 401(k), you can probably still contribute to an IRA, as well - and you should. You can fund an IRA with virtually any type of investment, such as stocks, bonds, government securities and Certificates of Deposit (CDs). And you'll get valuable tax benefits, too - a traditional IRA can grow tax-deferred, while a Roth IRA offers potentially tax-free earnings, as long as you've had your account at least five years and don't start taking withdrawals until you're 59-1/2.
• Don't invest too conservatively. Many people are afraid of investing in the stock market, given its ups and downs. Yet, historically, stocks have outperformed all other financial assets. And while it's true that past performance cannot guarantee future results, it's also true that if you only invest in "conservative" investments, such as Treasury bonds or CDs, you might not even keep up with inflation, much less earn enough to reach your retirement savings goals. Consequently, you'll want to include a reasonable percentage of quality stocks in your investment portfolio.
• Cut down on your debts. The more money you spend paying off debts, the less you'll have to invest for the future. Try hard to live within your means and work diligently to reduce your debt load.

It will take effort, patience and discipline, but by following these suggestions, you can boost your chances of attaining a financially secure retirement. Get started soon.