The latchkey kids of Generation X are nearing retirement. But 28% of them have no retirement savings at all. 

Gen X may be working with outdated information—and not finding the advice they need to get their retirement plans on track. Here we breakdown three traditional pieces of retirement advice, and how to approach them from a new angle. 

1. Should I max out my RRSP contribution every year?

On average, Gen Xers owe $660,000 each, the highest amount of any demographic, and are carrying a debt load six times higher than their parents did at the same age.

Needless to say, many Gen Xers are facing a different retirement reality than previous generations. What is the best path forward to saving for retirement debt-free? High-interest debt compounds to create a hole that can be hard to dig out of, so in certain circumstances, you should prioritize debt repayment before maxing out your RRSPs. 

If you have low-interest debt and can achieve greater returns from investments, prioritize your RRSP overpaying debt down faster. 

2. Can I count on my home for my retirement fund?

Despite ample financial warnings against it, 43% of Canadians aged 35 to 54 say they’re counting on the sale of their home as a major source of retirement savings. 

But you’ll always need somewhere to live. Unless you are planning on downsizing into a smaller home in another area, you will likely have to pay just as high of a price for another home. 

Paying off your mortgage is the best way to get the full value out of your home. Pair that with diversified retirement investments, so you aren’t relying on your nest as your nest egg. 

3. Does the 4% rule still apply?

The 4% rule suggests you can retire on 4% of your total retirement savings each year, adjusted for inflation. For example, if you have $2.5M, you withdraw $100,000. If inflation is 2% next year, you would withdraw $102,000.  

It’s simple, right? The problem, however, with this concept is that it uses 50-year-old averages to assume a certain rate of return on an equal split of stocks and bonds. Recent market volatility and high inflation negate these assumptions. 

Gen X is also less likely to have access to the kind of pension plans on which previous generations relied. And with life expectancy getting longer, you should be prepared for to make your money last longer. 

Don’t assume the 4% rule will meet your retirement needs—use modern strategies and recent rates in any calculations.

Breaking the rules

Your retirement won’t follow traditional advice because it doesn’t apply anymore—and that’s okay. You still have time to build a modern retirement strategy tailored to your unique financial situation, risk tolerance, goals, and retirement timeline.