Gen X strikes a balance between retirement and caring for aging parents
Gen X strikes a balance between retirement and caring for aging parents
Gen X strikes a balance between retirement and caring for aging parents


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·As caregiving responsibilities grow for Gen Xers — for both their aging parents as well as their growing children — they have a unique opportunity to master the art of balance. Half of Gen Xers who care for their parents also have a child under the age of 18, and 56% financially support either their parents or their kids, or both.
Caring for parents and children can be a balance. But with a positive, proactive approach, navigating these requirements while planning for a secure retirement doesn’t have to be a high-wire act.
Maintaining balance
Retirement savings can still be a priority while being a caregiver. The average retirement balance of people in their 40s is $530,031, according to Empower data. Those in their 50s have an average of $965,107 saved for retirement.*
The earlier contributions start, or increase if they’ve already started, the greater the potential for growth is through compound interest or earnings. With the potential of compounding, not only would your investments have the potential to grow, any earnings could also produce further earnings. The good news is it’s never too late to catch up, even for those whose savings may have been impacted by caregiving expenses, which can cost up to $10,000 a month. Here are ways to get back on track:
Maximize tax-advantaged accounts: Contributing to 401(k)s, Individual Retirement Accounts (IRAs), or other retirement accounts can help increase savings. Even small, consistent increases in contributions can add up over time — which is good news for budget-conscious carers. A 1% increase in contributions can go a long way.
Catch-up contributions: People age 50 or older can take advantage of catch-up contribution allowances. In 2025, the IRS allows an additional $7,500 to 401(k) accounts and $1,000 more to IRAs, giving savers a chance to help close the gap.
Employer matches: Matching contributions to employer-sponsored retirement plans can potentially double the amount of money deposited into the account each pay period, depending on the match limit, which can boost retirement savings. It’s advised that people contribute at least as much as the match amount to reap the full benefit.
Read more: The $34 trillion shift: How women are reshaping wealth and legacy
Stay nimble for short- and long-term goals
Financial plans aren’t one-size-fits-all, especially for caregivers. Gen Xers may find themselves in a financial balancing act, managing immediate costs while also keeping an eye on long-term goals. They can start by evaluating investment strategies:
Adjust for growth: If caregiving costs have temporarily reduced the ability to contribute to retirement accounts, shifting to a more growth-oriented portfolio may help build savings faster over time. Diversifying across asset classes — stocks, bonds, real estate, and others — could help measure risk and reward.
Rebalance for stability: Caregiving can come with unexpected financial requirements. Reevaluating one’s financial strategy can help make sure their investments reflect both immediate caregiving responsibilities and long-term goals.
A well-balanced approach can provide the flexibility to manage today’s demands without sacrificing tomorrow’s security. Periodic portfolio reviews and adjustments can maintain a sense of control and stability — even when circumstances shift.
Read more: The “Silver Wave” takes form in real estate inheritance. How that could impact future finances
Take advantage of tax credits and benefits
Tax credits may be an overlooked resource that could help lighten the financial load for caregivers. The IRS offers several credits and deductions that Gen X caregivers might explore:
Dependent care credit: This credit can offset some caregiving expenses for aging parents who qualify as dependents. The credit is calculated based on income as well as a percentage of care expenses incurred.1
Medical expense deductions: Out-of-pocket medical costs for aging parents or other dependents may be tax deductible, depending on a person’s overall expenses and income.2
Long-term care insurance benefits: Although long-term care insurance premiums may add monthly costs to a budget, their potential tax advantages and peace of mind often outweigh the costs.3 Some policies even allow policyholders to convert their life insurance into long-term care coverage, offering added flexibility.4
Flexible Spending Accounts (FSAs) and Health Savings Accounts (HSAs): These accounts can help pay for eligible medical expenses for the owner or their dependents. FSAs come with tax advantages as they are funded with pre-tax dollars. HSAs are similar, but require the owner to be enrolled in a high-deductible healthcare plan. FSA balances cannot be carried over yearly, whereas HSAs can.
Flexibility is key
Medical emergencies or rising costs for additional services may arise. These make financial flexibility a must-have. Here’s how to build it:
Track spending: Categorize expenses into essential and discretionary categories. Identifying areas where optimizing spending is possible — such as dining out or unused subscriptions — can create wiggle-room for caregiving needs.
Create an emergency fund: Having a dedicated emergency fund can help prevent the need to dip into retirement savings when surprise expenses pop up. These stockpiles should have three to six months of expenses, on average, but any amount is a great place to start. High-interest savings accounts or CDs can help.
Anticipate future costs: For those providing long-term care, consider building a plan for anticipated spikes in expenses, such as home modifications, medical equipment, or additional support services. The cost of care often increases as people age; preparing ahead of time can go a long way.5
Plan for the big picture
Estate and legacy planning might not always feel urgent, but addressing these matters early can save significant stress later. For Gen Xers juggling caregiving, retirement, and everything in between, a well-considered estate plan is a must. Key steps include:
- Establishing or updating a will or trust
- Creating powers of attorney for healthcare and finances
- Organizing critical documents, like insurance policies and medical records
For caregivers, it may also mean stepping into a more active role in managing an aging parent’s estate. Consulting an estate attorney can help ensure that all plans align with both family needs and long-term goals.
Read more: Estate planning primer: Trusts and estates
Achieving balance
Balancing caregiving with retirement planning may be challenging, but it’s entirely possible with a proactive mindset. By optimizing retirement savings, utilizing tax credits, and keeping plans flexible, Gen Xers can balance the needs of their children as well as their aging parents — all while positioning their own financial future.
Every small, intentional step today builds a more secure, balanced tomorrow. With thoughtful planning, Gen Xers can achieve peace of mind for themselves and their families — proving that even in the busiest moments, it’s still possible to thrive.
Get financially happy.
Put your money to work for life and play.
* These figures include data from retirement savers who use Empower’s online financial dashboard and may include balances from both current and former employer-sponsored plans. Investors who use online financial tools tend to be particularly engaged in saving for retirement and other financial best practices and may not be representative of retirement savers as a whole.
Investing involves risk, including possible loss of principal. Diversification, asset allocation, and rebalancing do not ensure a profit or protect against loss.
1 Internal Revenue Service, “Child and Dependent Care Credit information,” Accessed January 2025
2 Internal Revenue Service, “Topic no. 502, Medical and dental expenses,” Accessed January 2025
3 Administration for Community Living, “Using Life Insurance to Pay for Long-term Care,” Accessed January 2025
4 Administration for Community Living, “Using Life Insurance to Pay for Long-term Care,” Accessed January 2025
5 Health Services Research, "The Lifetime Distribution of Health Care Costs," June 2024
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