Retirement Retirement Planning

The 401(k) Reality Boomers Faced at 60 - And Gen X Is Now Confronting

Understanding this can help you prepare for retirement.

By Catherine Collins

Edited by Kristy DeSmit

Updated March 6, 2026

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For most people, investing in their 401(k) retirement plan happens on autopilot. They go to work, get a paycheck, and a portion of that paycheck goes into their 401(k). Once people turn 60, however, things start to get real.

When people are just starting in their careers, retirement seems like a lifetime away. Employees have a long time horizon to make up for lost investment years or to fix any mistakes they make with investing.

At age 60, though, retirement is near. Baby boomers experienced this shift, and now Gen X, who are in their 40s and 50s, are facing the same reality. Here are a few tips for navigating this transition.

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Make the most of your 60s

For many people, turning 60 is significant. Retirement is closer than ever before, and you have a lifetime of your working years behind you.

Many people use this time to make catch-up contributions. From ages 60 to 63, employees can contribute an extra $11,250 per year on top of the $24,500 401(k) maximum. The more you can invest in your 401(k) and your 60s, the more comfortable you'll be able to live in retirement.

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Living on a fixed income

Learning to live on a fixed income is a harsh reality for baby boomers. As Gen X approaches retirement, they will experience a similar challenge.

When you are working to earn a salary and possibly bonuses, it's easy to spend and enjoy what life has to offer. However, when you're in retirement, it's a different feeling because you finally have to start withdrawing from the account you've been contributing to throughout your working career.

For many people, this is challenging because they worry that their retirement funds will run out. Grappling with this new way of life and the worries that come with it can be hard in those early years of retirement.

401(k) income is not enough

Another stark realization is that 401(k)s were never meant to be people's only source of retirement income. Congress created 401(k)s as a supplemental retirement vehicle.

Americans have several options for retirement planning. For example, they can invest in IRAs, HSAs, and other income-generating assets, such as real estate or small businesses. Many workers will also receive Social Security income. All of these streams of income work together to help retirees afford their lifestyle and retirement.

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Gen X has extra challenges

Although boomers had their own set of challenges when it comes to retirement, Gen X has more. That's because more baby boomers had access to pensions. Today, according to the US Bureau of Labor Statistics, only 15% of workers have a pension.

Health care costs have increased significantly, and medical advancements mean that Gen X will live much longer. Because of that, not only will Gen X need more income to live on in retirement, but they are also responsible for planning, managing, and investing in their own retirement plan.

An example of a fixed retirement income

Here is an example of what a couple can expect to live on in retirement if they have $600,000 invested in a 401(k).

Using an online calculator, the numbers show that this couple can expect to withdraw $40,000 a year in income. If they have an additional $40,000 a year from Social Security and other income streams, that means that they will have $80,000 a year to live on. If this couple earned $100,000 a year together before retiring, the drop to $80,000 a year may feel significant.

This is especially true if they want to contribute to kids' college funds, pay for family vacations, or manage an expensive medical condition. What this example shows is that retirees need to practice living on a fixed income, learn to budget, and understand that even if they have a large amount invested in their 401(k), it might not translate into a high annual income once they stop working.

Where to get 401(k) help

Whether you are a baby boomer or in Gen X, it is okay to ask for help if you're unsure whether or not you're on the right track in retirement.

Hiring a financial planner and working with an accountant can help you figure out the best withdrawal rate for you. Additionally, a financial planner can help you understand which of your retirement accounts to use, how long to wait until you tap into Social Security, and give you tips on making tax-efficient choices.

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Creating a stress-free retirement

The transition from working life to retirement is exciting for many people. However, it can also be a big change.

The best way to create a stress-free retirement, whether you are a baby boomer or Gen X, is to prepare. While a high dollar amount is always helpful, knowing how your plan works, having a strategy for your withdrawals, and creating many income sources can help bring peace of mind.

Bottom line

A stress-free retirement is within reach for Gen X and baby boomers. However, due to rising living costs, high health care expenses, and other external factors, many people worry that they are not financially prepared for their retirement years.

Taking the time to understand what your expenses will be in retirement and working to minimize them can help you feel more in control of your finances and, by extension, allow you to enjoy your retirement more.

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