Forgotten Generation Not Ready for Retirement

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Generation X is the forgotten generation that rarely is in the news. While baby boomers and millennials had cultural identifiers, Gen X just hung out there. Sandwiched between the 71.6 million baby boomers and the strong 72.1 million millennials, Gen X comes in at 65.2 million.

With all the talk of baby boomers retiring, what about Gen X? They’re reaching the golden years too. But is Gen X financially ready to call work quits? Will they have enough savings or investments to maintain their retirement?

Generation X: The Neglected Middle Child

Born between 1965 and 1980, Gen X was often referred to as the MTV generation. They grew up during dual-income or single-parent homes and were often latchkey kids. They came of age during the AIDS epidemic in the 1980s and lived through the fall of the Berlin Wall.

They endured hard economic times during the recessions in the 1970s, 1980s, and 1990s. This economic turmoil would continue throughout their adulthood.

College tuition rates soared, and student loans were hefty. Saddled with this debt, they endured the Great Recession of 2007–09, which gave them a significant setback in their retirement funds.

46 Percent of Gen X Don’t Have Enough Retirement Funds

In the past, Americans could count on Social Security covering 40 percent of their retirement and their savings covering the rest. But 58 percent of Gen X plan to rely on their Social Security benefit as a primary source of income.

Unfortunately, Medicare reserves are set to be depleted by 2033. This means that even if Congress funds it, benefit increases to cover retirement may not be available.

Sixty-seven percent of Gen Xers don’t have a retirement plan. To make up for that, roughly 80 percent of Gen X don’t think they’ll fully retire. The result is that not only will Gen X be working through retirement to make ends meet but they will also probably be the first generation to break down the “great wealth transfer.” Eighty-four percent of Gen X don’t plan to leave an inheritance to their children.

Gen X Cares for Two Generations

There are several reasons that Gen X is in this predicament. They are pinched in between their parents and their children. In some cases, they are taking care of both.

Aging baby boomers are turning to their children for help. And many Gen X still have children living at home or adult children returning home. Fifty-two percent of millennials were forced to return home due to the COVID shutdown layoffs. This contributed to the rise of multigenerational living.

A lot of Gen X income is going toward caring for family members. That leaves fewer funds for retirement savings.

Traditional Pensions Disappear

They also lost the past generation’s pension parachute. Private-sector employers stopped offering traditional pensions. In 1975, there were 27.2 million active pension participants. These provided retirees with a guaranteed monthly income for life. But by 2019, it had declined to 12.6 million participants. And instead, volunteer savings plans like 401(k)s became commonplace.

Crippling Student Loan Debt Holds Gen X Back Financially

When most people think of student loan debt, they assume the millennials and Gen Zers are drowning in it. And they do have a lot. But Gen Xers are the generation supporting most of America’s student debt.

As of the fourth quarter of 2022, the student debt of Gen Xers aged 35–49 equaled over $500 billion. That included 14.6 million people. They contributed roughly 35 percent of student loan debt. And these borrowers had the highest reported delinquent student loan payments across all generations.

Gen X also tends to have higher balances upon graduation. The average Gen X owes $40,000–60,000. Compare that to millennials, whose debt is $20,000–40,000, or Gen Z, who owe $10,000–20,000.

There are many reasons for the inflated Gen X student loan debt. Many Gen Xers returned to college to finish up degrees or do post-doctorate work. But others are paying for family members’ education.

Credit Card Debt Weighs on Gen X

Credit card debt weighs heavier on Gen X than the other generations. The average amount owed by Gen X is $7,600. The national average is $5,733. And more than 77 percent of Gex X have personal debt compared to other generations.

And interest rates for this debt have increased. In May 2023, the average credit card interest was 16 percent. That has gone up to 20 percent.

Gen X Must Focus on Future

If you’ve fallen behind, working longer can increase your funds. But there are other ways to start planning. Working gives access to saving.

If you have yet to participate in your company’s 401(k) plan, now is the time. Even if you’re strapped for cash, at least contribute the minimum your employer matches.

If you have debt, prioritize repayment. Focus on paying off high-interest debt like personal loans and credit cards. In the long run, you'll have more funds for retirement.

It’s not too late to start planning.

The Epoch Times Copyright © 2023. The views and opinions expressed are those of the authors. They are meant for general informational purposes only and should not be construed or interpreted as a recommendation or solicitation. The Epoch Times does not provide investment, tax, legal, financial planning, estate planning, or any other personal finance advice. The Epoch Times holds no liability for the accuracy or timeliness of the information provided.