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Some 69% of the members of Generation X say that retiring before age 65 is part of their personal American dream, according to Investopedia’s 2025 American Dream Study. An even higher number—86%—cite “being able to retire comfortably” as a key goal. Meanwhile, 40% of Gen Xers who report this goal say they are not financially prepared for comfortable retirement.
With Gen Xers currently ranging in age from 45 to 60, the youngest have just short of 20 years to make their dreams of a comfortable retirement before 65 a reality, while the oldest have as few as five years. If you’re a Gen Xer, here’s how to keep your plans on track, while also taking into consideration other demands you may face, such as putting kids through college or helping your own parents financially.
Key Takeaways
- A sizable majority of Gen Xers want to retire before age 65.
- Early retirement is a reasonable goal for many, but it requires some careful planning, diligent saving, and smart investing.
- Gen X has already faced some major financial obstacles, such as the fallout from the Great Recession.
- Early retirement comes with challenges of its own, such as juggling competing financial demands and arranging for affordable health coverage.
The Appeal of Retiring Early
In generations past, 65 was considered the standard age to retire. In fact, when Social Security was established in the 1930s, the government set 65 as the age for receiving “full” retirement benefits. That threshold has gradually ratcheted up as Americans’ life expectancies increased and is now 67 for anyone born in 1960 or later, which includes all Gen Xers. In other words, retiring anytime before 65 is now considered early.
Retiring early, if you can swing it financially, offers a number of advantages. You are likely to be more vigorous than you will be later in life, so any travel or strenuous leisure activities you have on your retirement wish list will be easier to pursue. You’ll also have more time to devote to your favorite hobbies, to volunteer, or even to start a new career if you want to.
Gen X is not alone in putting early retirement among its top life goals. Both millennials and Gen Z have similar but even slightly higher numbers—68% and 70% respectively, according to Investopedia’s survey.
The Challenges of Retiring Early
Retiring early can be challenging, and Gen X has already faced some setbacks that may have made it even more difficult. When the Great Recession of 2007-2009 hit, many of the youngest Gen Xers were just starting to establish careers, while the oldest were entering what should have been their peak earning years. Many were blindsided by job loss and other financial blows.
What’s more, Gen X arrived at a time of major changes on the retirement front. “Importantly, they were the first generation to mostly enter the workforce after the shift from defined benefit (DB) pensions to defined contribution (DC) plans in the private sector,” the National Institute on Retirement Security noted in a 2023 report.
That shift meant that most Gen Xers haven’t been eligible for traditional pensions funded by their employers. Instead, they have had to save for retirement through contributions to 401(k)s and similar retirement plans out of their own paychecks.
In addition, Gen X is currently at an age when other financial demands may be competing for any income they have to spare. That can include financing children’s college educations as well as assisting elderly parents with their financial needs. While this balancing act can call for some difficult prioritizing, financial planners often point out that it’s possible to borrow money for college, but unlikely that any financial institution will lend you money to retire.
A further challenge is that early retirement not only means fewer years of income from work but a longer span of time that your retirement savings will have to support you. For example, someone who retires at 60 and lives to 95 will need to draw on their retirement savings for 35 years, while someone who retires at 70 and lives to the same age will only need their savings to support them for 25 years.
Warning
Withdrawing money from retirement accounts like IRAs and 401(k)s before age 59½ will generally subject you to a 10% tax penalty on early distributions (in addition to the income tax you will owe). There are, however, some exceptions, such as emergencies.
How To Stay on Track for Early Retirement
If early retirement is among your goals, here are some ways to prepare for it from a financial perspective.
1. Know Where You Stand Today
How much money do you currently have saved for retirement compared with the amount you expect to need to fund the kind of retirement you’re hoping for? In addition to your savings, how much annual income can you reasonably expect during retirement and from what sources? Social Security’s Quick Calculator, for example, can give you a ballpark estimate of your likely benefits based on your age, current earnings, and when you plan to retire.
2. Adjust Your Retirement Saving Strategy Accordingly
If you find you’re on track to have enough money to retire when you want to, stay the course. If it looks like you’ll come up short, you have two basic options: save more or spend less. These aren’t mutually exclusive, of course; you will likely want to do both.
Put more money aside. If you have a 401(k) or similar plan at work and aren’t already maxing it out, see if you can up your contributions. (The maximum for 2025 is $23,500 for anyone under 50 and $31,000 for those 50 or older.) If you’re already maxed out, consider funding a traditional IRA or a Roth IRA. (These also have maximums that can change each year—currently $8,000 for anyone 50 and over and $7,000 for anyone younger.)
Another way to boost your retirement savings is to earmark any irregular income, such as bonuses at work, gifts of money, or inheritances, for your IRA or other retirement account.
As a general rule, the further off your retirement is, the more aggressively you can invest your retirement money in hopes of earning a higher return. You can also opt for investments that are tailored to your time horizon, such as target-date mutual funds.
Spend less so you can save more. Are there luxuries or other discretionary items you can do without—or postpone until after you’re retired? By scrimping a little now (and investing the money), you could avoid having to do so later.
Similarly, try to avoid taking on unnecessary debt, particularly the high-interest kind, such as credit cards. If you have a mortgage, consider paying it down more quickly so you will own your home free and clear once you retire. Many retirees find that getting out from under that debt burden pays dividends in peace of mind.
How Much Money Do You Need to Retire Before 65?
The answer to that question can vary widely, depending on how soon you plan to retire, the lifestyle you envision for yourself, and what sources of income (in addition to your savings) you will have during your retirement years. Some people can live on a fraction of the money they needed while they were working, while others will find themselves spending even more—especially in the early, most active years of retirement.
A 2025 Northwestern Mutual survey found that Americans 18 and older estimated they would need $1.26 million to retire comfortably, although they didn’t specify the age at which they expected to retire.
When Can You Start Collecting Social Security?
You can claim Social Security benefits as early as age 62, but the amount you receive each month will be permanently reduced. You’ll get the largest monthly benefit if you can wait until age 70, even if that means drawing on other income sources in the meantime.
How Can You Plan for Health Care Before Medicare?
Would-be early retirees should bear in mind that they won’t become eligible for Medicare coverage until age 65 (with rare exceptions). So if you give up your employer-provided health insurance before then, you’ll need to find something to replace it, such as from the Health Insurance Marketplace established by the Affordable Care Act. Going uninsured can be extremely risky—both to your health and to your finances.
The Bottom Line
Most Gen Xers aspire to retire before 65 and to retire comfortably, according to Investopedia’s 2025 American Dream Study. That can be an attainable goal for many, but it may require accelerating your savings and investing, and cutting back on spending. Would-be early retirees should also be aware of some of the complications, such as the need to find affordable health care before Medicare kicks in at age 65.
