Generation X is entering their 50’s. This group, which ranges from late 30 years old to early 50’s, represents roughly a quarter of the US population. They are established in their careers, they are settled, and they aren’t prepared for retirement.

It is estimated that as many as 82% of this generation feel that they will reach retirement age, and won’t have enough saved to retire comfortably. So what can be done about it? It isn’t too late to make some financial changes in order to reach retirement age and have a comfortable nest egg. Although it may take some lifestyle changes, and some mindset changes.

Here are the 4 most expensive retirement mistakes that Generation X is making, and what can be done about it.

1. Cashing Out a 401(k) When Changing Jobs

You have worked for a company for a number of years. You have dutifully saved into the company’s retirement plan, and that account has grown to $50,000. When you transfer jobs, you decide to cash out that retirement plan, and you’re hit with taxes and penalties and you take home just $32,500. To make matters worse, that $50,000 could have grown to almost $250,000 over the next 20 years; now your retirement goals are thrown off.

What to Do Instead – It looks like a nice bonus, but you’re robbing your retirement fund to pay for a nice vacation and a new car. Instead, act as though the money doesn’t exist, and roll it into a new plan or an individual account. There’s no charge to do so, and your future self will thank you.

2. Overspending on Housing and Goods

In many areas of the country housing is incredibly expensive; sometimes there is no way to get around that. But many Generation Xers have come to believe that a huge house is necessary, as well as vehicles, toys, and other equipment to fill that house. They sacrifice their retirement goals in order to have a bigger house and more stuff.

What to Do Instead – It might take some discipline and adjustment, but you can live in a smaller house. You don’t need ATV’s and campers. There are vacations closer to home that don’t cost nearly as much. You may have to put less into the kids’ college funds so that your retirement won’t suffer. Children can take out loans for education; you can’t take out a loan for retirement.

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3. Under Saving for Retirement

The average Generation Xer saves 7% into their 401(k). If the employer matches 3%, then that means 10% of their income goes into a retirement account. Unfortunately, that won’t be enough to meet their retirement needs, and Generation X tends to not have any savings outside of their 401(k).

What to Do Instead – Increase those 401(k) contributions, and make a plan with a financial advisor on how to increase your retirement savings. Even as little as $100 per month into an IRA can have a big impact on your retirement goals. These accounts can be managed differently than a 401(k), and you can set up a Roth account. This way taxes can be mitigated during retirement; not an option if everything is in a tax deferred account.

4. Lack of Diversification

Generation Xers have been through as many as four recessions since they began their working years, the latest was one of the most severe we have seen in recent history. This has led to an aversion to risk, and ultimately resulted in investments that haven’t grown as much as they should.

What to Do Instead – Most of the time aversion to risk is because the risk is misunderstood. The result is that you either have to save much more, or you have to save for a much longer period of time. Instead of putting money in a safe place, invest aggressively; especially when there are many years until retirement. The longer investment time will allow investments to recover after corrections.

5. Generation X Can Still Catch Up for Retirement

CNN Money claims that Generation X is in worse shape for retirement than the Boomers. This generation that came before them relied heavily on pensions and Social Security. The pension is no longer a viable option, and Social Security may not pay as much as once believed. Other alternatives need to be explored.

The good news is that Generation X still time to catch up. Even those at the oldest end of the generation, those that have recently turned 50, have 15 to 20 years until retirement. A few lifestyle and savings changes and they can enjoy a comfortable retirement.

Paying off debt, saving more for retirement, and diversification are key methods to ensure that when the golden years come, they can enjoy the fruits of their labor instead of spending their early retirement years working.

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Sean Bryant

Sean Bryant

Sean Bryant is a Denver based freelance writer specializing personal finance and credit cards. His website is One Smart Dollar With nearly 10 years of writing experience his work has appeared in many of the industries top publications. He holds a Bachelor of Arts in Economics. When not working Sean enjoys spending time with his wife, daughter and dog Charlie and can frequently be found on his bike or snowboard. Follow Sean Bryant on Twitter.