Gen X and millennials are facing challenges in building generational wealth, according to the Vanguard Retirement Outlook report. Rising education and healthcare costs, longer life expectancies, and economic uncertainties are hindering their ability to pass on assets to their children.

A LegalShield study found that 78% of Gen Xers are concerned about the economy and protecting their assets. Tips for building generational wealth include having an emergency fund, avoiding retirement account withdrawals, and investing in high-yield savings accounts or money market funds.

Having a small emergency fund of $2,000 can lead to increased retirement contributions and decreased likelihood of taking hardship withdrawals. Attorney Lisa A. Cummings advises having six to 12 months of living expenses saved in a high-yield account to avoid eroding wealth intended for heirs.

Life insurance policies like whole life can provide tax-free death benefits and loan access, helping to preserve wealth for generational transfer. Roth IRA and Roth 401(k) contributions made with after-tax income allow for tax-free withdrawals, preserving inheritance income, according to Cummings.

Health savings accounts (HSAs) can be used as investment vehicles, growing funds tax-free and protecting assets from being used for medical expenses. Avoiding cheap health insurance can prevent depleting savings in case of a health issue, preserving generational wealth.

Paying off high-interest debt like credit card balances can provide a guaranteed rate of return that is as good as many investments. By eliminating a $20,000 balance with a 15% interest rate, individuals can save $3,000 a year in interest, which can be put toward earning interest instead.

Real estate has been a staple of generational wealth transfer, with property values appreciating significantly over the years. Buying rental properties can provide rental income and an appreciating asset, while real estate investment trusts offer an alternative for those unable to afford purchasing properties.

Consider renting out extra spaces in your home to generate extra income, which can be saved or reinvested in retirement accounts. Consulting a tax specialist or wealth advisor before making major real estate decisions can benefit the next generation and help build generational wealth.

Read more at Yahoo Finance: 8 Ways They Can Build Generational Wealth Now