Key Takeaways
- Generation X, also known as Gen X, refers to individuals born between the mid-1960s and early 1980s.
- Positioned between baby boomers and millennials, Gen X includes around 65 million people.
- This cohort is in its mid-career phase, with older members approaching retirement.
- Gen X faces unprecedented challenges in retirement preparedness compared to their parents.
Discovering Generation X
Generation X derives its name from Douglas Coupland’s 1991 novel, “Generation X: Tales for an Accelerated Culture”. While the term is more prevalent in marketing, the idea of a generation defined by shared traits and experiences has gained significant acceptance.
Major Generations in Perspective:
- Greatest Generation (circa 1922 to 1927)
- Silent Generation (circa 1928 to 1945)
- Baby Boomers (circa 1946 to 1964)
- Generation X (circa 1965 to 1980)
- Millennial Generation (circa 1981 to 1996)
- Generation Z (circa 1997 to 2012)
- Generation Alpha (circa 2013 to 2022)
Despite facing economic turbulence like the dotcom bust and the financial crisis of 2008, Gen X has distinctive qualities. Often labeled the “latchkey generation”, many grew up unsupervised, building a sense of independence and resilience.
Comparing Gen X, Baby Boomers & Millennials
- A significant number of baby boomers (24%) have taken early withdrawals from retirement savings, compared to 33% of Gen X and 46% of millennials.
- Median household retirement savings: $162,000 for baby boomers, $87,000 for Gen X, and $50,000 for millennials.
- Among those offered 401(k) plans, 93% of baby boomers have saved for retirement, compared to 91% of Gen X and 89% of millennials.
- For those without 401(k) access, 63% of baby boomers still save for retirement, against 50% of Gen X and 42% of millennials.
Gen X’s Financial Landscape
The transfer of wealth from baby boomers to Gen X and younger generations is anticipated to reach $84 trillion. Despite this influx, Gen X currently controls just 25.7% of the nation’s wealth, contrasting sharply with the baby boomers’ 51.3%.
Prominent Generation X Members: Jeff Bezos, Tiger Woods, and Kurt Cobain.
Retirement Savings Perspective
- Around 30% of Gen X members report at least $250,000 in retirement savings.
- Only 22% of Gen X workers feel highly confident about retiring comfortably, showing a significant level of financial insecurity.
- Concerns about Social Security are prevalent, with 78% expecting it to be insufficient by their retirement age.
Market Timing Effects on Gen X
Gen X has encountered lower investment returns during their formative working years, heavily influenced by events like the technology bubble and the financial crisis. This has influenced their portfolios and led to risk-averse financial behaviors.
Other Gen X Challenges
Beyond wealth disparities, rising costs of healthcare, education, and the pressures of being a “sandwich generation”—supporting both children and aging parents—compound their financial challenges. Gen X holds the highest average debt across generations, influenced by various loans including mortgages and student debt.
Reinventing Gen X Retirement Strategies
Defined-benefit pension plans have given way to defined-contribution plans like 401(k)s, leading to a significant shift in retirement planning for Gen X.
Financial Planning Recommendations for Gen X
1. Make an Estate Plan
Secure the future by establishing wills, living trusts, and medical directives to protect dependents and manage assets efficiently.
2. Create a Comprehensive Financial Plan
Consult with financial advisors to understand the impact of current financial habits on future stability and tailor investment strategies intricately.
3. Debt Management
Investigate reputable debt-management services to alleviate financial stress and regain fiscal control.
4. Get a Head Start on College Planning
Open education savings accounts and utilize this time to manage college funds efficiently, avoiding drawing from retirement savings.
5. Financial Discussions with Parents
Engage in open, necessary discussions with aging parents regarding their finances and health, making informed decisions on future care and estate planning.
6. Engage Returning Children in Household Contributions
Teach grown children valuable lessons by involving them in managing household expenses, thereby lessening financial strain.
The Lapki Generation and the ‘Lost’ Monik
Known as the “latchkey” and “lost” generation, Gen X faces unique societal challenges and a dynamic set of circumstances bridging two powerful generations.
Generation Age Comparison: Gen X vs Gen Z
Generation X precedes Generation Z by a few decades, with the millennial generation situated between them.
Unraveling the ‘X’ Factor in Gen X
The ‘X’ symbolized an undefined or yet-to-be-determined characteristic, representing a generational quest for identity beyond societal norms.
The Takeaway for Generation X
Standing 65 million strong, Generation X is defined by independent, resilient individuals born amidst shifting societal norms and economic volatility. Preparing for their future means tackling financial planning diligently, leveraging current trends for stabilized living and eventual retirement despite odds.
Related Terms: baby boomers, millennials, Generation Y, Generation Z, Silent Generation, Greatest Generation, Generation Alpha.
References
- Gallup. “Wellbeing by Generation: Where Some Thrive, Others Struggle”.
- William Strauss and Neil Howe. “Generations: The History of America’s Future, 1584 to 2069”. Page 317. Harper Perennial, 1992.
- Douglas Coupland. “Generation X: Tales for an Accelerated Culture”. St. Martins Press, 1991.
- William Strauss and Neil Howe. “Generations: The History of America’s Future, 1584 to 2069”. Harper Perennial, 1992.
- Statista. “Resident Population in the United States in 2022, by Generation”.
- Beresford Research. “Age Range by Generation”.
- Clemson University. “From G.I. to Z: A Generational Guide to Technology: Generation X”.
- Transamerica Center for Retirement Studies. “22nd Annual Transamerica Retirement Survey of Workers”. Pages 105, 108, and 122.
- Cerulli Associates. “Cerulli Anticipates $84 Trillion in Wealth Transfers Through 2045”.
- Board of Governors of the Federal Reserve System. “Distribution of Household Wealth in the U.S. Since 1989”.
- Transamerica Center for Retirement Studies. “22rd Annual Transamerica Retirement Survey”. Page 108.
- Transamerica Center for Retirement Studies. “22rd Annual Transamerica Retirement Survey”. Page 91, 96, 100.
- Experian. “Experian Study: U.S. Consumer Debt Reaches $16.84 Trillion in Q2 2023”.
- Transamerica Center for Retirement Studies. “22rd Annual Transamerica Retirement Survey”. Page 99-100.
- NPR. “From GIs To Gen Z (Or Is It iGen?): How Generations Get Nicknames”.
