Healthcare Open Enrollment Tips for 2026 and a Catch-Up Plan for Retirement

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1:48Sean Pyles:Open enrollment is here. Do you know what your plans are for health insurance in 2026? Sean, my plans are always to save money. But seriously, I haven't had any major health changes this year. So my plan is just to review the offering, see if there are any places that I can cut costs. And if not, just continue with what I'm doing now because it's working for me. There you go. Well, going into next year, it seems like saving money is going to be a real challenge for all of us. So this episode, we're kicking off a two-part series to help folks navigate all of the decisions that they have to make around open enrollment.

2:25Sean Pyles:Welcome to NerdWallet's Smart Money Podcast, where you send us your money questions and we answer them with the help of our genius nerds. I'm Sean Piles. And I'm Elizabeth Ayola. As Sean said at the top, this episode, we're going deep into your health insurance and all the decisions you need to make around open enrollment. But first, it's time for the latest installment of our Nerdy Book Club series. And NerdWallet writer Kim Palmer is back to lead the conversation. Hey, Kim, who are you talking with today? Our guests today are Carrie Hannon and Jana Heron. They're the authors of Retirement Bites, a Gen X guide to securing your financial future.

3:00They investigate how Gen X can handle retirement when most people do not have enough save.

3:05Sean Pyles:That is a really tough topic. Okay. Well, we also want to remind listeners that you can enter for a chance to win our book giveaway sweepstakes at nerdwallet.com slash book club for our next book club pick. And with that, Kim, I'll let you take things from here. Thank you. Carrie and Jana, welcome to our show. Hi, nice to be here. Yeah, super to be here, Kim. Thank you. Let's start with the numbers. The oldest members of Gen X are turning 60, which is hard to believe, and they're approaching retirement with, on average, not enough savings. In fact, you say the typical Gen X household has just$40 ,000 in retirement savings.

3:41How did we get here, and why isn't Gen X more prepared? There's been a couple of things that happened that put Gen X on this track. The big one is the 401k. And what I mean by that is the 401k came out when Gen X was really just getting into the workplace. But the 401k wasn't really seen as a pillar of the retirement savings plan. So for a long time, and because of also congressional legislation and stuff, it just wasn't pushed. And so people who, especially older Gen Xers, didn't think, oh, I need to really save money in this 401k. It was kind of just like a supplement to pensions. And then at the very same time, you have these pensions that were disappearing.

4:31So you have a lot of workers who didn't get a pension or their pension got frozen. And then you have this 401k and they're like, what is this? And they didn't realize until later on that this is something they should have been saving into for a really long time. I think in addition, this generation has gone through several economic upheavals during their working careers. And so they've lost even what they had invested in markets that, you know, in their retirement accounts often fluctuated. They lost momentum there. They're also squeezed right now by children's educations they're paying for. They have aging parents.

5:12And Jenna and I have found that the levels of debt that this generation is carrying, you know, credit card debt and student loan debt is significant. As retirement, whatever age it may be for you starts to come into view in your late 50s and early 60s. You go, oh, my goodness, you know, what can I do to take control? And then you add to that the uncertainty with Social Security, which is very much weighs on this generation's mind. Is it going to be there? Is it fully going to be there? What kind of benefits am I going to get? And we're at a point where lawmakers have not addressed the shortfalls in the Social Security Reserve Fund.

5:50So that's another big question mark hanging over Gen X when they're approaching retirement. Given all of those factors, does that mean that this problem is really unique to Gen X? Or do you think their experience is just sort of foreshadowing what's to come for younger generations? I think it is a bit of a foreshadowing. I definitely think that Gen X hit these obstacles pretty hard, but we definitely see coming behind them that some of these issues will persist. I mean, the social security question is still up in the air. We've got credit cards are still, and you know a lot about this, are still a huge issue for many people, regardless of their age.

6:33And if they can't tackle that credit card debt, saving for retirement becomes super hard. And also, the younger generations have done much more job jumping. They tend to be contract workers. These are situations where your retirement accounts can get drained during that time, or you may not have an employer that offers a plan that helps you save for retirement starting at earlier ages. And that's a real key to retirement security is starting early. And if you're a contract worker and have to do this by yourself, it can be pretty daunting. So that's an issue. I will add to that, though, that those who are enrolled in employer-provided retirement plans, the younger generations have a much better playing field ahead of them because of auto-enrollment and auto-escalation, things that Gen X didn't benefit from at younger ages.

7:24And to add to that, I think some good news, too, is that the younger generations, millennials and Gen Z, got the savings message earlier. And so you have seen on average that they're saving earlier in their lives than Gen X and also putting away more of their income towards retirement. So they at least are seeing what could happen and have been making behavioral changes to put them in a better spot going forward. And Kim, one other thing I wanted to add to this is when Jenna was talking about the 401ks were just babies, you know, they were just getting started for Gen X. Nobody understood them.

8:04And truthfully, many of us, and I did this myself, cashed out of my 401k after five years in a plan at the age of 30. Now, I'm not telling you it was a huge amount of money, but there was no financial education. Nobody informed me of what making that move, what the repercussions were. And when I look back at what that money might be worth in today's dollars, even if I hadn't added another cent to it, it's shocking to me. And I think Gen Xers in those early years, nobody explained to them how these things worked. And so, hey, you change jobs, why not cash out and pay down some credit card or go on a trip?

8:40It sounds like almost what you're saying is that Gen X is like the guinea pig generation and they got the worst of both sides of things. I think so. I think in many ways, but younger boomers definitely got hit by this as well. It was, you know, there was the boomers started, the shift began then, but the Gen X square in the face and it was up to the do-it-yourself retirement became the law of the land, so to speak. So retirement when you're younger is often something you, it's so unrealistic and so far down the road that you just kick this whole idea down, down, down until with the oldest Gen Xer now hitting 60, they go, oh my goodness, where am I?

9:19And what do I actually have to deal with? And what Jana and I have done in this book is say, it's cool. You can do this. We're going to give you some tips and advice on taking control at that age and moving back to those in their 40s, the younger Gen Xers. Well, let's dig into that side of things a little bit more and talk about what Gen X can do. So if you know you don't have enough saved for retirement, but it is just around the corner, what can you do? Is it ever too late? Don't freak out. That would be my first thing because I think for a lot of us, if we're thinking about something that is so negative, you might just put your head in the sand and kind of try to move forward.

10:03But the best thing is to just not freak out and to really take an inventory of where your financial life is. Going back to the basics of understanding your cash flow, what's coming in, what's going out, how much do you have saved, what obligations do you still have left that you need to deal with? Some of the financial planners that I spoke to really said that people, especially when they get in their 40s and their 50s and they're making a lot more money, they kind of lose touch with exactly how much money is going out the door and where it's going. I know that happens with me. You have some lifestyle creep, you get a raise, you're like, oh, we can go on a nicer vacation this year.

10:38And you start to forget all those lessons of, okay, we should penny pinch here. But so it's really good to go back over, look at your budget, figure out where you're spending your money and maybe where you might be wasting your money. You know, maybe there's a better way for that money to be used. And so I think that's the first thing to do is to reacquaint yourself with your cash flow. It's definitely doing that, what I call the inner MRI. Like, what are your priorities? What really matters to you? If you start to cast a look down to the next chapters of your life, I mean, retirement isn't what it used to be.

11:15It's not stepping back out of the workforce necessarily. There's longevity. When you think of three decades potentially to live in retirement, it's fairly daunting. And it really is something that this generation, taking a closer eye at, how can continued income in some fashion, add to my financial security and retirement. If I can stretch out my working years a bit, and I'm not saying pedal to the metal, you know, you don't deserve to have a balanced life. But these are issues that are going to be front of mind. But if you focus on what's going to matter to me, where might I live it during those years where the cost of living might be less?

11:52What kinds of things would I want to do? Is it traveling? Is it hobbies? Is it family? But how much am I going to need for that? And it's crystal balling. We know that that's pretty hard to do. But once you understand your values, and as Jenna talked about the nuts and bolts of what you actually have to work with, these two can pair together to create a really successful financial future for those who are willing to do the work. Do you see a future where Gen X, in a sense, keeps working forever, maybe not in that full-time grind like you alluded to, but doing some form of work just to continue bringing in income throughout their so-called retirement?

12:29I think it's a safety net. I think everyone should consider work is not a four-letter word. If there's a way that you can continue to earn in some fashion, I think that's fantastic. Not everybody's going to be able to do this, right? There's health issues, caring for aging partners, family members. So it can be a little unrealistic for some people. But with the ability to work remotely, this is a huge boost for many people to have some form of continued income through consulting, whatever it may be. starting your own little side gig business. It doesn't have to be forever, but I say stretching out the working years as long as possible can't hurt you.

13:05I'm not saying do something you're miserable at. And we don't say that in the book. We say, you know, try to find things where your skills can have an impact on the world and you can make a difference and earn some money at the same time. I've been talking with a few of my friends who are also Gen X and they're probably about eight, nine years older than me. And one of the things they're thinking about is definitely doing a step back from maybe not the position they have, but one that is a little bit less stressful, but still brings in money. And that is like their first step in retirement is to do that step down, but not step out.

13:41And so I definitely am hearing that's what people want to do because they know that they want to keep making money. They still have children who maybe are finishing up college. So there are those expenses. Definitely there's like a ramp down mentality among some of the Gen Xers I know. You write in the book that Gen X is reinventing retirement. Can you explain what that looks like, what you mean by that? I think it's a little bit, Kim, how we were talking about it's reimagining what's possible. So many Gen Xers are kind of, It's a generation of self-starters kind of, you know, do it their selves.

14:18I mean, Gen X has been pretty scrappy, right? So this is a generation that sees retirement not as their parents may have retired, but truly as something that they can remake in their own way. And that includes, you know, a balanced lifestyle. Taking that look at the different facets of their life and how earning and financial security really matters and how to focus on that. And I must say, the older generations of boomers did this as well, but working with a financial advisor can be super helpful here in helping reimagine retirement. So it's really thinking about what would you regret if you couldn't do it in your lifetime and starting from there and say, okay, let's go backwards and how can I make that happen?

15:00How can I do it? Not how can't I do it? So if Gen X listeners were going to do three things today as a result of your book and your advice, what should those three things be? Definitely revisit your cash flow to see where your money is going and where you can maybe redeploy it to help you get closer to your goals. It's a great exercise anyway, because it helps you realize I prioritize going out to eat or I prioritize nice vacations. And so that's going to help you figure out what your retirement also is going to look like. I would start tackling your debt. If debt is an issue in front of you, get serious about this.

15:37What is it that you need to do to pare that down? Because debt is a dream killer. It's the biggest obstacle people are going to face in their future for financial security. So take a hard look at it now. Most of us don't want to think about that. But if you can start to pare down debt and get financially fit, starting with what Jana said, you know, looking at those numbers, get financially fit. And also let yourself, number three would be dream a little. I think it's great to have dreams, to have vision boards, because that's what gets you thinking about the possibilities and also gives you the incentive to take actions with your finances, not just saving for retirement.

16:14I call it saving for life. And I think that is how you need to focus on the things that you want to use this money for. And that really helps people start lighting a fire, undertaking control of their retirement lifestyle and finances. Any final thoughts to share with our listeners? There's one thing that reporting on this book that really hit home for me. I'm a Gen X for myself. I'm on the younger end. And when I was looking into the health care costs in retirement, of course, they can be really huge. But the person I spoke to who is both a financial planner and a physician said, when you're in your 40s and your 50s, this is the time for you to actually be able to get a handle on your health so that you can reduce those costs in the future.

17:03That means things like if you start to have high blood pressure, which by the way, I just started having, deal with those kinds of issues. If you get those under control, then they don't get worse. And so your health outcomes are much better. And so I just thought that was such a wonderful thing because when I talked to my genetics friends, health comes up a lot. Like all of a sudden, oh, my back hurts. You know, my joints are hurting. I'm getting high blood pressure. All of a sudden I have high cholesterol. And so if you address those health issues now, it'll help your finances. It'll help your retirement life.

17:37It's something that I took away and took to heart. I love that. It's financial fitness and physical fitness. It really is. Yeah. Carrie Hannon and Jana Heron, thank you so much for joining us on Smart Money. Thanks.

17:51Sean Pyles:Thank you so much. And thank you, Kim. Thank you. Now we're about to get into this episode segment all about open enrollment. But first of all, listener, let us know what's on your mind. We want to know. Maybe you need help deciding between an HSA and an FSA. Or you still haven't booked your holiday travel and you need help figuring out the most affordable way to get to your family gathering. Or maybe you're looking ahead to your financial goals for the new year and want to help crafting goals that you'll actually keep. Whatever your money question, we nerds are here to help. Text us or leave us a voicemail on the nerd hotline at 901-730-6373.

18:27Sean Pyles:That's 901-730-NERD. Or email us at podcast at nerdwallet.com. In a moment, all you've ever wanted to know about open enrollment. That's coming up next. Stay with us.

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21:21Sean Pyles:That's q-u-i-n-c-e dot com slash smart money for free shipping and 365 day returns. Quince.com slash smart money. We're back and answering your money questions to help you make smarter financial decisions. This episode, we've got part one of a two-parter about open enrollment, that time of year that we all look forward to. Sean, I don't know who's looking forward to open enrollment, but it's not me. Yeah, honestly, me either. No one really looks forward to this, but I think it's safe to say that most people have a lot of questions when it comes to open enrollment. So we're going to do a two-part explainer of everything from how to choose a health plan and the difference between an FSA and HSA to whether you need life insurance or dental coverage.

22:03So many decisions. It's head spinning, to be honest.