What is Generation X (Gen X)?
Gen X refers to the American generation born between the mid-1960s and early 1980s.
The years of Gen X differ. Researchers like William Strauss and Neil Howe place the birth years between 1961 and 1981, whereas Gallup placed them between 1965 and 1979. All concur that Gen X follows the baby boomers and predates Generation Y (millennials).
Knowing Gen X
“Generation X” originates from Douglas Coupland’s 1991 novel Tales for an Accelerated Culture. Although more effective for marketing than sociology, generational theory and the concept of a generation gap have achieved widespread acceptance in the U.S.
The hypothesis covers these American generations:
- The Greatest Generation (1901–1924)
- Silent Generation (1925–1945)
- Boomer generation (circa 1946–1964)
- Generation X (1965–1980)
- Millennial Generation (1981-1996)
- Post-Millennial Gen Z (roughly 1997–2012)
Baby boomers and millennials have 72 million members, while Gen X has 65 million. Gen X was called the “latchkey generation” because they were typically left unaccompanied at home after school until their parents got home from work.
Generation X, like the silent generation, is “in-between.” The dot-com crash, the 2008 financial crisis, and the Great Recession harmed the group’s earnings and savings. Generation X sits between baby boomers from the Vietnam and Reagan decades and millennials from the Obama era regarding social and political dominance.
Gen X shares characteristics with the sandwich generation. This term refers to middle-aged adults who support elderly parents and increase children due to longer lifespans and later childbearing.
Gen X vs. Boomers/Millennials
The 2022 Transamerican Retirement Survey of Workers contrasts Gen X, boomers, and millennials. In its findings:
24% of baby boomers have borrowed or early withdrawn from a retirement account, compared to 33% of Gen X and 46% of millennials.
Baby boomers had $162,000 in median retirement savings per family in 2021, compared to $87,000 for Gen X and $50,000 for millennials.
For those provided a 401(k), 93% of baby boomers, 91% of Gen X, and 89% of millennials saved for retirement.
Despite not having a 401(k), 63% of baby boomers saved for retirement, compared to 50% of Gen X and 42% of millennials.
Financial Situation of Gen X
During the next two decades, baby boomers will transfer $84 trillion in wealth to younger generations, especially their Gen X offspring. They’ll need it.
According to the latest Federal Reserve figures, Gen X owns 28% of the nation’s wealth, and baby boomers own 52%. At 35, Gen Xers possessed 7.4% of the nation’s wealth in 2008, less than half of baby boomers’ 35.7 percent.
Jeff Bezos, Tiger Woods, and Kurt Cobain are Generation Xers.
Savings for retirement
About 60% of Gen X respondents in the Transamerica study intensely or somewhat believe they are building a sufficient nest egg. Average Gen X retirement savings are $64,000. Baby boomers had the highest income at $144,000, while millennials had the lowest at $23,000. Nine percent of Gen Xers have no retirement savings.
This is significantly less than what each generation expects to retire with. Gen X and baby boomers say they need $500,000 and millennials $300,000 to feel safe.
Market Timing Impacts Gen X
Generation X families started working, saving, and investing, while investment returns were lower than for baby boomers. Many Gen X households started saving during high market values, such as the late-1990s technology and dotcom bubbles and the 2008 global financial crisis. The impact of the imperfect markets remains on their portfolios.
According to Transamerica, only 44% of Gen X workers thought they had fully recovered from the Great Recession, compared to 50% of baby boomers.
In addition, Gen Xers have struggled to raise the value of their financial holdings due to the low-interest rate environment. After experiencing significant market falls, Gen X investors appear to be more risk-averse.
Gen X’s Other Challenges
Gen Xers’ lesser wealth will make it hard to sustain their parents’ purchasing patterns, raising education, healthcare, and property expenditures. Another issue is the sandwich syndrome, which occurs when this generation supports and educates children while caring for aging parents.
Experian found that Gen Xers had the most debt. Between 2019 and 2020, their average debt rose 3.5%, or $4,802, to $140,643. After mortgage debt, HELOC loans, school loans, vehicle loans, personal loans, and credit card debt followed.
Gen X Retirement Reinvention
Gen Xers retire differently than their parents. Once prevalent, private sector pension programs are now rare and supplanted by defined-contribution plans like 401(k). Gen Xers are not relying on Social Security for retirement.
According to a Transamerica poll, 37% of baby boomers expect Social Security to be their principal retirement income, compared to 26% of Gen X. 41% of Gen X “strongly agree” that Social Security may not exist when they retire, compared to 26% of baby boomers.
Overall, Transamerica found that workers across the three generations work past 65 for financial and health reasons. Baby boomers are more inclined than previous generations to do so for the money. Generation X will work because they haven’t saved enough to retire.
Financial Planning for Gen X
Unplanned life occurrences can cause financial hardship, but stress, budgeting, and planning can lessen the risk. Consider these financial tips for Gen X to manage their finances and address the needs of their children, parents, and themselves.
Make an Estate Plan
This is crucial if you have dependent children and lack a will or other relevant paperwork. You do not want a probate judge to decide the destiny of your dependents or belongings. Schedule an appointment with an estate planning attorney to create your will, living will, medical and durable powers of attorney, and possibly a living trust for a smooth transfer of assets and responsibilities to your heirs.
While estate settlement might be emotional, addressing it now will help you and your family approach it calmly and analytically.
A Comprehensive Financial Plan
Developing healthy financial habits like saving and budgeting was accessible in your 20s. Your finances are likely more sophisticated now, and one single element, such as your 401(k) contribution, might affect numerous other areas in ways that are difficult to quantify or forecast.
Consider hiring a professional financial planner or adviser to integrate your cash flow, balance sheet, risk tolerance, investment objectives, time horizon, and tax bracket into a comprehensive financial planning program. This might help you understand your financial situation and determine the steps needed to reach your retirement goals. Expect to see negative figures that may delay your retirement.
Manage Debt
Contact a qualified debt-management company if your debt is unmanageable.
Start College Planning Early
While experts advise against investing retirement money in college funds, now is the time to start a Coverdell Educational Money Account or 529 plan without existing funds. You, your kids, and your heirs can contribute to these accounts for education. Another option is opening an individual retirement account for them if you’re sure they won’t drain the funds.
Financial Picture from Parents
Money talks between parents and children may be difficult. However, you should start if you have not discussed your parents’ health and money. If your parents are aging and lack an estate plan, consider paying for it yourself if they approve.
For assistance with managed-care difficulties, consult an elder law attorney and appoint a designated sibling as the point of contact. A typical error for children of elderly parents is overestimating Medicare, Medicaid, and Medicaid coverage. Understanding out-of-pocket expenses can help determine if long-term care insurance and supplementary coverage are necessary.
Get Returning Kids to Help
The cost of supporting grown children can add to the stress of caring for elderly parents. Offspring who return home after college can help with household expenditures like rent, groceries, and elder care, reducing the stress of sustaining several generations. Additionally, it helps teach youngsters about money and fiscal responsibility.
Why is Gen X called the Lost Generation?
Gen X is regarded as the “lost generation,” “forgotten generation,” or “invisible generation” due to the growth in divorces, single-parent families, and loneliness throughout their development. Due to its position between Baby Boomers and Millennials, GenX is again “lost.”
Gen Z or X older?
Gen X is decades older than Gen Z.
The “X” in Generation X means what?
The letter “X” represents a mathematical variable or the generation’s wish to remain undefined.
Conclusion
- Generation X, or Gen X, is the American generation born between the mid-1960s and early-1980s.
- Gen Xers—65 million—are between baby boomers and millennials.
- This cohort is reaching mid-career and peak earnings.
- This generation may be the first to be less retirement-ready than their parents.
