Gen Xers are making 10 tax mistakes that can cost them thousands in peak earning years — and they have no idea. How to fix them fast before retirement

The tax risks are especially significant for higher earners, defined as those making $150,000 individually or $300,000 as a couple.

Here are the top 10 mistakes you may be making with your savings and tax planning, and why these errors can have the greatest impact during your peak earning years.

1. Delaying Roth conversions until retirement

Many Gen Xers may think that they can wait until retirement to make Roth conversions, but delaying can result in a large tax bill that may be difficult to pay.

Instead, consider doing Roth conversions during lower-income years before retirement, when you have more control over taxable income and can avoid moving into higher tax brackets.

Remember that once required minimum distributions (RMDs) begin at age 73, these mandatory withdrawals can increase your tax bracket, the taxes you owe, and your expected Medicare premiums.

To minimize this tax burden, consult a financial advisor or tax professional to determine how much you can convert now to reduce taxes later (1).

2. Missing catch-up contribution opportunities

According to a 2025 survey from Schroder's, only 16% of Gen X Americans feel they have enough saved for retirement. In fact, most expect a shortfall of about $404,976 (2).

If this sounds familiar, it's important to maximize catch-up contributions whenever possible.

For 2026, the 401(k) contribution limit is $24,500, and workers aged 50 and older can add an additional $8,000 to this limit. However, if you earn $150,000 or more, be aware that under new tax rules, catch-up contributions may need to go into the Roth (after-tax) portion of your 401(k) rather than the traditional pre-tax portion, which may not reduce your taxable income (3).

3. Overlooking Alternative Minimum Tax (AMT) exposure

This tax is designed to ensure high earners pay a minimum level of tax. For couples earning around $300,000 or more, especially in high-tax states, it may be triggered if you exercise incentive stock options, claim large state and local tax (SALT) deductions, or use certain investment strategies. Consult your financial advisor before taking any of these actions.

4. Overlooking caregiving tax credits

The "sandwich generation" — those supporting both children and aging parents — now represents about 30% of Gen X women, according to Fortune (4). If you're providing care to an elderly loved one or a child with a disability, you may qualify for tax credits.

You can claim a parent as a dependent if you provide more than half of their financial support, and they meet income requirements. The Credit for Other Dependents is worth up to $500, providing a modest reduction in your tax bill (5).

5. Double dipping (accidentally) on college tax credits

Tax credits like the American Opportunity Credit and the Lifetime Learning Credit can be valuable for Gen Xers paying for their children's college education.

However, Finance Buzz warns that parents often claim credits for expenses already covered by tax-free scholarships or 529 plan withdrawals, or claim credits in the wrong year. Making this mistake could trigger an audit, or mean that you miss out on thousands of dollars in tax savings.

6. Mismanaging capital gains tax

If you sell major assets to fund caregiving expenses or your child's college tuition, you could trigger a large capital gains tax bill that disrupts your budget. If your income is high due to real estate or other investments, consult a tax professional to understand the risks of selling.

Gen Xers earning significantly more than they did in earlier decades should also review their tax withholding strategies to ensure they are covering their tax liabilities. The IRS offers a withholding estimator, which is useful if you've received a big raise, bonus, or stock-based compensation (6).

7. Borrowing against your future

Schroders reports that 24% of Gen Xers with a 401(k) or similar retirement plan have taken a loan from it, more than any other generation. This is a risky strategy, as you not only lose the potential growth on the money you borrow, but also pay interest to yourself while repaying it (7).

A 401(k) loan can pause your employer match contributions, and if you leave your job, you must repay the loan quickly. Failure to do so can result in taxes and penalties.

8. Not working with a financial advisor

Schroders also found that only 26% of Gen Xers work with a financial advisor, fewer than millennials or boomers. A surprising 53% admitted they have done no retirement planning, despite being close to their peak earning and retirement years.