Could Your Retirement Be Secure Without a Side Hustle? Generation X’s Reality Check

Generation X represents those born between 1965 and 1980. The oldest members of Gen X are nearing their retirement years, but according to a report by Western & Southern Financial Group, more than half of Gen Xers in the United States aren’t confident in their ability to retire comfortably.

Overall, members of Gen X predict that they will need more than $1 million in savings to retire comfortably, but only 36% of them are confident they will reach that point.

As a result, members of Gen X expect that they’ll need alternate sources of income. In fact, many plan to build their own side hustle in retirement.

Key Takeaways

The Social Security trust fund is projected to pay only 81% of benefits after 2034, meaning Gen Xers may need to rely on other sources of income in retirement.
More than half of Gen Xers aren't confident in their retirement savings, and 42% expect a side hustle to be their main source of income in retirement.
Other strategies to boost retirement savings include maximizing retirement plan contributions, especially after age 50; building a side hustle early to save more before retirement; and using an HSA to plan for healthcare expenses.

Can Gen X Expect Social Security in Retirement?

According to AARP, 40% or more of Americans currently depend on Social Security benefits for most or all of their retirement income. However, the future of Social Security is unstable, making it unlikely that Gen Xers will be able to do the same.

According to current projections, the trust fund that supports Social Security retirement benefits will be able to pay all scheduled benefits until 2034; after that, the fund will be able to pay only 81% of benefits.

And, while Social Security benefits receive cost-of-living adjustments most years, these increases don't always keep pace with inflation. This may make it more difficult for Gen X to depend on Social Security benefits to fund retirement.

To make up the difference, according to the Western & Southern report, many members of Gen X expect to keep working even after they are technically retired, with 42% saying that a side hustle will be their top source of retirement income.

Pros and Cons of Working in Retirement

The data on Gen X's retirement prospects, however, isn't unique to them, or even to younger generations. The same report found that 38% of Baby Boomers plan to depend on a side hustle for some or most of their retirement income.

When asked about common types of retirement income, Jamie Kertis, CPFA, a financial advisor with Everthrive Financial Group, immediately mentioned part-time or freelance work as an option many people in retirement already pursue.

Pros

There are definitely some pros to working at this stage of life. According to Kertis, retirees often find satisfaction and purpose in continuing to work in some capacity, along with benefiting from the additional income.

This is especially true if they pursue work related to a previous interest or passion, such as a sport they enjoy, working with children or pets, or creating handicrafts.

Many retirees also leverage skills that they developed during their careers by consulting for businesses in their former industries.

Part-Time Work vs. Side Hustle

Part-time work is generally done as an employee of a business, for which you receive a regular paycheck and a W-2 form at tax time. If you start a side hustle, you will be self-employed and trade more control over your hours for a less regular income.

Cons

However, some retirees find continuing to work physically difficult, even if they need the income. This is especially true for retirees who have health challenges, worked in physically demanding industries, or have developed a disability.

Others simply may not want to keep working, which is supposed to be the definition of retirement.

For members of Gen X who don’t want to keep working but aren’t sure they can depend on Social Security benefits for income, it’s important to plan ahead in the years leading up to retirement.

Other Ways to Boost Retirement Savings

As Gen Xers approach their retirement years, there are many strategies they can use to boost their savings, limit expenses, and create additional income streams.

Maximize Contributions

Kertis recommends that anyone saving for retirement make use of tax-advantaged retirement accounts, such as a 401(k) or 403(b) offered through an employer or an individual retirement account (IRA), which you can open without an employer.

Even better, open both and put away as much as allowed every year.

“If your employer offers a 401(k) match, try to contribute enough to take advantage of it,” Kertis advises. “If self-employed, there are other options to consider, like a Solo 401(k) or a SEP IRA.”

Even if you've never had a retirement savings account, it's still worth opening one in the lead-up to retirement. These accounts provide tax advantages that normal savings accounts don't, such as deductible contributions and tax-deferred investing.

So, they can help you set aside money for retirement as they reduce your taxable income, and their value compounds undiminished by taxes.

Catch-Up Contributions

Members of Gen X who are age 50 or older can also take advantage of catch-up contributions to increase their retirement savings.

In 2025, individuals can contribute $23,500 to a 401(k) and $7,000 to an IRA. But anyone over age 50 can put an additional $1,000 into an IRA and $7,500 into a 401(k) or 403(b).

Tip

If you don’t work but you have a spouse who does, you have the option to open a spousal IRA in your name. This can be funded at the maximum contribution level each year, even if the working spouse is already making the maximum level of contributions to their own IRA.

Audit Your Lifestyle

As you approach retirement, take a look at your current lifestyle and financial situation. Ask yourself:

Which costs will decrease once you're not working?
Which will remain the same or increase?
Can you find areas to cut expenses now so you have more to put into retirement savings?
Does it make sense to carry your current lifestyle into retirement, or do you need to make major changes?

Kertis points out that where you live is a huge contributor to your fixed expenses. "Might it make sense to downsize from your current home, or might it make more sense to remain in your current home because your mortgage is paid off?"

The correct choice will depend on your individual situation. Talking with a financial advisor can help you decide.

Kertis also recommends creating a realistic budget to examine your current expenses compared to income, as well as making a plan to minimize debt before you transition to a fixed income. “Carrying a large amount of debt into retirement can be a real drain on your resources.”

Fast Fact

The Western & Southern report found that 34% of retirees would consider moving abroad for a lower cost of living in retirement. You may also decide to move domestically to an area with a lower cost of living or better access to services, such as hospitals or airports, that you expect to use more frequently in retirement.

Use an HSA

"Healthcare can be a significant drain on any fixed-income living situation," notes Kertis. So planning for healthcare expenses can be the difference between a comfortable retirement and one mired in medical debt.

If you are relatively healthy now and have a high deductible health plan (HDHP) available to you, it might make sense to choose that for your health insurance and use the years before retirement to put money into a health savings account (HSA).

A tax-advantaged HSA allows you to set aside pre-tax money for healthcare expenses. You can keep this money available to use now, or you can invest the money in the account to allow it to grow before retirement.

Both the contributions and any gains don't expire; you can take your full HSA into retirement with you once you are off your HDHP. If you use withdrawals to pay for qualified health, dental, or vision care, you never have to pay taxes on them.

Side Hustle Before Retirement

If you appreciate the benefits of a side hustle but don’t want to work during your retirement, use the years before you retire to build a side hustle alongside your current career.

Even if you only take on a few hours of extra work per week, you can still earn a significant chunk of extra income. This money can be exclusively earmarked for retirement, allowing you to boost your savings now and create a more reliable income stream once you stop working.

To come up with a side hustle, consider the skill sets, connections, and hobbies you already have, as well as how much time you have to devote to work, finding clients to hire you, and general business management. Side hustle ideas include:

Babysitting, petsitting, or housesitting
Lawn care or gardening
Home organization, decluttering, or cleaning services
Handicrafts, such as scrapbooking or quilting
Digital services, such as copyediting or graphic design
Tutoring or individual coaching

Important

If your side hustle earns enough that you expect to owe at least $1,000 in taxes when you file your income tax return, you must make quarterly estimated tax payments throughout the year.

The Bottom Line

More than half of Gen Xers are unsure about their retirement savings. Many expect to supplement their savings and/or Social Security income by continuing to work part-time or developing a side hustle in retirement.

For those who don't want to continue working, or are physically unable to, it's still possible to boost your retirement savings.

Members of Gen X can benefit from strategies like building a side hustle before retirement, maximizing contributions, opening an HSA, and doing a thorough lifestyle audit. These steps will help you cut expenses and maximize your savings in the years leading up to retirement.