Early Retirement or a Second Act for Gen X

If you were born between 1965 and 1980, you belong to Generation X—the next group to retire after the Baby Boomers. What makes many Gen Xers unique from previous generations is the balancing act of the costs of raising children, supporting aging parents, and catching up on their retirement savings. 

For many Gen Xers, retirement doesn’t mean stopping work completely—it means shifting into a new phase of life, including:

• Part-time consulting or freelance work 
• Starting a small business 
• Passion projects that generate income 

Rising longevity is one reason why this full- or part-time alternative will be increasingly popular with this generation. Depending on their retirement ages, Gen Xers could be retired for 30-40 years.

Retiring seven years early (as many Gen Xers aspire to do) will also require even more careful planning. A second-act career can supplement retirement savings while keeping you engaged, active mentally, and financially secure.

According to research, about half of Gen Xers are actively planning for retirement, but many worry they will need to work longer than expected.

The big question remains: Can Gen X retire early? The answer depends on your financial strategy, savings habits, lifestyle, and whether you have a solid plan in place.

Our blog will feature insights from our team of Washington, D.C. CFP® professionals as they guide higher-achieving Gen X clients toward a healthier life balance while working toward early retirement and/or a second full- or part-time career.

If early retirement is your goal, there are important financial tactics you can employ today to pursue this goal. Let’s review them in more detail.

1. Know Your Retirement Number  

One of the biggest challenges as a Gen Xer is knowing exactly how much money you will need to retire—especially if you want to retire early. The amount depends on factors like:

• Your sources of income 
• The impact of Social Security 
• Your expected lifestyle in retirement 
• Whether you plan to downsize or relocate 
• How long do you expect to live in retirement? 
• Healthcare costs and long-term care planning 
• Any additional income streams (rental properties, pensions, part-time work)

It’s not uncommon for many Gen Xers to underestimate how much they will need, especially considering their retirement years. This is where the services of a Washington D.C. financial advisor can help you calculate your “retirement number”—the amount you must accumulate before leaving the workforce.

2. Create a Financial Plan (With or Without an Advisor)  

Generation X has historically worked less with financial advisors than Baby Boomers or Millennials, shaped by economic hardships, cultural skepticism, and a fiercely independent mindset. Caught between turbulent financial times and unique life pressures, Gen Xers often manage their finances solo rather than seek professional help.

This could be a costly mistake. Even if you prefer a DIY (Do It Yourself) approach, it’s worth consulting an advisor for a second opinion. Independent financial advisory firms like Brown Miller Wealth Management specialize in developing goal-based financial plans for Gen Xers. Our team of Washington D.C. financial planners can do more than just build investment strategies and manage assets—they can assist you with the following:

• Debt management: Paying off high-interest debt before retirement
• Budgeting & cash flow: Structuring spending to optimize savings
• Investment planning: Creating a diversified, tax-efficient portfolio
• Legacy & estate planning: Preparing for the Great Wealth Transfer
• Minimize taxes 
• Avoid costly financial mistakes 

3. Take Advantage of the Great Wealth Transfer 

Over the next three decades, an estimated $84.4 trillion in assets will be passed down from the Silent Generation and Baby Boomers to their heirs. Gen X is expected to inherit $30 trillion—the largest share of this wealth transfer. 

This could be a game-changer, especially if you’re considering retiring early. If you anticipate an early inheritance, here are a few things to consider:

• How will you manage an inheritance? A CFP® professional in Washington, D.C., can help structure the assets for long-term growth.
• Will there be tax implications? Certain inheritances, like real estate or IRAs, have tax consequences that require a plan.
• Will you pass wealth to your children and grandchildren? Estate planning can ensure assets are transferred correctly and efficiently. 

Inheritance is your opportunity to create a more secure future.

4. Alternative Investments Beyond the Traditional Stock & Bond Portfolio

Traditional stock and bond portfolios might not be suitable for early retirement. Still, if you qualify as an accredited investor under SEC guidelines, you could diversify beyond these staples into alternative options like private equity, venture capital, or income producing real estate. Remember, not all investments carry the same risks or rewards.

Private Equity

• Pro: Private equity can offer high returns by directly investing in promising privately held companies, often outpacing traditional markets over the long term.
• Con: It’s illiquid and risky, with capital locked up for years, and success hinges on a few standout investments.

Private Credit 

• Pro: Private credit investments may offer higher yields than traditional bonds by providing direct loans to businesses, real estate projects, or private entities. These investments can generate steady income and diversify a portfolio by reducing exposure to stock market volatility.
• Con: Private credit is typically illiquid, with longer lock-up periods, meaning investors may not be able to access their funds quickly. Additionally, credit risk is higher, as borrowers may default, especially during economic downturns.

Real Estate 

• Pro: Real estate provides steady income through rentals and the opportunity for potential appreciation, acting as a tangible hedge against inflation.
• Con: It demands significant upfront capital and ongoing management, plus market downturns can erode property values.

Venture Capital 

• Pro: Venture capital investing offers the potential for high returns by funding innovative startups with exponential growth prospects, often unavailable in traditional markets.
• Con: It carries significant risk, as many startups fail, potentially leading to a total loss of investment with little liquidity until an exit event like an IPO or acquisition.

5. Plan for Healthcare & Long-Term Care Costs

The top four tactics Gen Xers can use today to plan for healthcare expenses in retirement. Starting these steps today leverages time and the potential for compound growth, which is critical for Gen Xers planning retirement in the next five to ten years:

1. If eligible, contribute the annual maximum to a Health Savings Account (HSA) (e.g., $4,150 for individuals, $8,300 for families in 2025, plus $1,000 catch-up if  55+), leveraging its triple tax advantage—deductible contributions, tax-free growth, and tax-free withdrawals for medical costs.
2. Set aside a dedicated emergency fund (e.g., $50,000+) in high-yield savings or taxable investment accounts to cover unexpected healthcare expenses, accounting for inflation’s 4–5% annual impact on medical costs.
3. Work with a financial advisor in Washington, D.C., who can help you forecast retirement healthcare expenses and integrate them into your broader financial plan to ensure rising costs or underfunded accounts don’t blindside you.

Watch our video on Receiving Inheritance.

6. Minimize Taxes to Keep More of Your Wealth  

Taxes can take a significant bite out of your retirement savings. Understanding how taxes impact your wealth is crucial—especially if you plan to retire early. Here are three strategies that, when done correctly, can assist in mitigating your tax situation, especially post-retirement:

1. Roth conversions let you shift traditional retirement accounts into Roth IRAs now, paying taxes upfront at today’s rates—potentially lower than future ones—for tax free withdrawals later, dodging hefty RMDs (Required Minimum Distributions). 
2. Tax-efficient withdrawal strategies mean taking distributions from accounts in the right order (e.g., taxable first, then tax-deferred, then tax-free) to keep your tax bracket low and preserve more of your wealth.
3. Capital gains tax planning involves selling investments thoughtfully—think timing gains in lower-income years or offsetting them with losses—to reduce Uncle  Sam’s take.

7. Legacy Planning: What Will You Leave Behind?  

If you’re thinking about how to balance supporting your children while ensuring your retirement security, ask yourself these questions:

• How long will I financially support my adult children?
• Do I need a trust or estate plan to protect my assets?
• How do I want my wealth to impact future generations?

This is where a comprehensive estate plan can address these types of questions. Remember that estate planning isn’t just for the ultra-wealthy—it’s a critical step in securing your financial legacy, especially if you will also receive some form of  inheritance from your parents.

If you’re ready to learn more about retirement planning, contact our team at Brown|Miller.

Disclaimer: This article is intended for informational purposes only, and not to be a client  specific suitability analysis or recommendation, an offer to participate in any investment, or  a recommendation to buy, hold or sell securities. Do not use this report as the sole basis  for investment decisions. Do not select an asset class or investment product based on  performance alone. Consider all relevant information, including your existing portfolio, investment  objectives, risk tolerance, liquidity needs, and investment time horizon. This report is for general  informational purposes only and is not intended to predict or guarantee the future performance of  any individual security, market sector, or the markets generally. 

The information provided in this article represents the opinions of Brown Miller  Wealth Management (“BMWM”) and is expressed as of the date hereof and is subject to change.  BMWM assumes no obligation to update or otherwise revise our opinions or this article. The  observations and views expressed herein may be changed by BMWM at any time without notice.  The information may be based on third-party information, which is deemed reliable, but its  accuracy and completeness cannot be guaranteed. 

BMWM provides links for your convenience to websites produced by other providers or  industry related material. Accessing websites through links directs you away from our website.  BMWM is not responsible for errors or omissions in the material on third party websites and does  not necessarily approve of or endorse the information provided. Users who gain access to third  party websites may be subject to the copyright and other restrictions on use imposed by those  providers and assume responsibility and risk from the use of those websites. BMWM will act solely  in its capacity as a registered investment advisor and does not provide any legal, accounting or  tax advice. Client should seek the counsel of a qualified accountant and/or attorney when  necessary. BMWM may assist clients with tax harvesting and we will work with a client’s tax  specialist to answer any questions related to the client’s portfolio account. Any tax advice  contained herein is not intended or written to be used, and cannot be used, by a taxpayer for the  purpose of avoiding tax penalties that may be imposed on the taxpayer.