How Gen X can manage competing financial goals

Your 40s and 50s often brings a perfect storm of financial pressures – from paying off your mortgage and supporting older children, to planning for retirement. For Generation X, it’s about juggling priorities, making trade-offs and staying realistic about what’s achievable. 

Financial planning in your 40s and 50s is a real juggling act. You’re trying to balance clearing debt, putting money away for your future, and often supporting children – sometimes even elderly parents.

On top of that, you’ll want to enjoy the money you’ve worked hard for. Managing these competing goals isn’t easy, but with the right steps, it’s absolutely possible to get on track.

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Start with the end in mind

The prospect of retirement might feel closer than ever, but the goalposts are shifting. The state pension age is rising from 66 to 67 in 2028, and private pensions won’t be accessible until age 57, rather than 55. Gen X is also largely missing out on defined benefit (DB) pensions – the gold-plated schemes that offer guaranteed, inflation-proofed income for life.

Instead, they must rely on their own contributions and investment performance. That’s a tougher task to undertake, particularly when markets are volatile – but for many, it’s a call to action rather than a setback.

The key is to start planning early. Figure out what kind of retirement you want, then calculate the income you’ll need to support it. If you’re hoping to retire before the state pension kicks in, make sure you have additional savings in something like a self-invested personal pension (SIPP) or individual savings account (ISA) to bridge the gap. And if you’re playing catch-up, don’t forget about pension carry forward rules, which allow you to use unused annual pension allowances from the past three years and get tax relief.

Investing in the next generation – and managing your own

Many Gen X parents are also supporting children through private school or university – a rewarding investment, but one that comes with financial considerations.

With private school fees now subject to VAT, and university tuition creeping upwards for the first time in eight years, early planning makes all the difference. 

Saving early – even small amounts – can really add up thanks to compounding. Grandparents who want to reduce their inheritance tax bills are helping with fees, and there’s more focus on planning as a family unit rather than individuals.

Navigating the mortgage maze

Soaring house prices have been a feature of the UK economy for more than two decades. Wages have not kept pace with the speed of growth, causing many Gen Xers to borrow more, which was manageable when interest rates were at record lows. Now, with rates well above where they were a few years ago, repayments are taking up more of the monthly budget.

Mortgage payments are often the single biggest outgoing, and as they rise, they crowd out savings and other spending.

So, what can be done? Some are choosing to overpay their mortgage to reduce debt faster, while others are extending their term to make payments more affordable in the short term – although this means paying more interest overall and potentially carrying mortgage debt into retirement.

There’s also a growing conversation about whether it’s more effective, for higher earners at least, to divert surplus income or capital into pensions rather than their mortgage. Pension contributions attract tax relief – potentially at 40% or 45% and effectively 60% in some cases – making them a highly efficient way to build wealth fast.

Choosing between overpaying your mortgage or topping up your pension is not always a straightforward decision and depends on several factors, such as the interest rate attached to your loan, any early repayment charges, future investment performance (which is, of course, unknown), and, as noted above, the rate of tax you pay.

An alternative is to split any surplus between your mortgage and your pension, which might be a sensible halfway house for some people. That way, you’re reducing debt and building long-term security at the same time.

The long and short is that either paying down a mortgage or beefing up your retirement savings will put you on firmer financial footing down the line.

A delicate balancing act

Ultimately, Gen X faces a complex financial landscape, from supporting grown-up children to preparing for longer retirements, all under the shadow of rising costs and economic uncertainty. But despite the pressures, this is also a generation with options. 

This generation is often characterised as being squeezed from all sides. But it’s also a group with strong earning potential, family support networks and increasing financial literacy. With a clear plan, the right advice, and prioritising goals, Gen X can set themselves up for a more secure future.