Generation X seems to be a forgotten generation, rarely making headlines in the news. While the Baby Boomers and Millennials have cultural markers, Generation X is often left in the middle. With a population of 65.2 million, they are sandwiched between the 71.6 million Baby Boomers and the robust 72.1 million Millennials.
As the retirement discussions of the Baby Boomer generation stir up attention, what about Generation X? They are also entering their golden years. But are Gen Xers financially prepared to bid farewell to the workforce? Do they have enough savings or investments to sustain their retirement lifestyle?
Born between 1965 and 1980, Generation X is often referred to as the “MTV generation.” They grew up in dual-income or single-parent households, often as latchkey kids. Coming of age during the AIDS epidemic of the 1980s, they also witnessed the fall of the Berlin Wall.
They endured challenging economic times during the recessions of the 1970s, 1980s, and 1990s, with this economic turbulence persisting into their adulthood. Surging college tuition fees and heavy student loan burdens added to their financial woes.
With 58% of Generation X planning to rely on Social Security benefits as their main income source, concerns arise. Unfortunately, the Medicare reserves are projected to be depleted by 2033, potentially leaving retirees vulnerable even if Congress allocates funds to enhance benefits.
A significant 67% of Generation X lacks a retirement plan, leading to about 80% of them believing they won’t retire fully. This could result in Gen X not only working during retirement but also becoming the first generation to break the tradition of leaving substantial inheritances to their children, with 84% not planning to pass on wealth.
Various factors contribute to Generation X’s predicament. They are caught between caring for aging parents and supporting their own children, sometimes juggling responsibilities on both ends.
As the Baby Boomer generation ages, many are turning to their children for assistance, while numerous Gen Xers still have adult children living at home or have seen adult children moving back in during the COVID lockdowns, leading to a rise in multigenerational households.
A significant portion of Generation X’s income is directed towards supporting family members, reducing the funds available for retirement savings. Moreover, they have missed out on the safety net of pensions that the previous generation enjoyed, as private sector employers have largely shifted away from traditional pensions to voluntary savings plans like 401(k)s.
When it comes to student loan debt, while Millennials and Gen Z are often discussed, it is Generation X that shoulders a substantial portion of it in the United States. As of the fourth quarter of 2022, Gen Xers aged 35-49 held student loan debts exceeding $500 billion, affecting 14.6 million individuals and accounting for about 35% of the total student loan balance.
Furthermore, the average student loan balance for Generation X upon graduation is often higher, ranging from $40,000 to $60,000, compared to $20,000 to $40,000 for Millennials and $10,000 to $20,000 for Gen Z.
Various reasons contribute to the ballooning student loan debt of Generation X, including individuals going back to college to complete degrees or pursue postgraduate studies and catering to educational expenses for family members.
Credit card debt poses a significant stressor for Generation X compared to other generations, with an average debt load of $7,600, exceeding the national average of $5,733, and over 77% having personal debt, higher than other age groups.
The interest rates on this debt are on the rise, with the average credit card rate jumping from 16% in May 2023 to 20% currently. Extending working years can bolster financial reserves for those falling behind in their plans, while exploring opportunities to save through work can be another avenue to plan for the future.
If you haven’t enrolled in your company’s 401(k) plan, now is the time. Even if funds are tight, making at least the minimum required contribution to receive the employer match is crucial. Prioritize paying off debts, particularly high-interest ones like personal loans and credit card bills, to free up more funds for retirement savings in the long run.
Start planning now; it’s not too late. This article only reflects the author’s perspectives for general informational purposes only and is not intended as advice or solicitation. The Epoch Times does not provide investment, tax, legal, financial planning, estate planning, or other personalized financial advice. The Epoch Times does not guarantee the accuracy or timeliness of the content.