Press Release

Pew Finds Generation X Facing an Insecure Financial Future

Gen Xers have less wealth and six times more debt than their parents did at the same age

About

Washington—The Pew Charitable Trusts released a report today finding that members of Generation X lag behind their parents in wealth accumulation, a key indicator of financial security and especially retirement preparedness. Although three-quarters of Gen Xers, defined as Americans born between 1965 and 1980 and who are in their 30s and 40s today, have higher incomes than their parents did at the same ages, just 36 percent have more wealth. This lack of wealth mobility is driven in part by high debt: The median Gen Xer owes nearly six times more than their parents did at the same age.

“The findings show that Gen X has bigger hurdles to overcome than previous generations did to achieve financial security,” said Diana Elliott, research officer for financial security and mobility at Pew. “This is a troubling sign for the well-being of families now and into the future. Gen Xers need opportunities to build wealth and strengthen their safety nets.”

The report, A New Financial Reality: The Balance Sheets and Economic Mobility of Generation X, analyzes inflation-adjusted family balance sheets—income, wealth, and debt—and demographic characteristics to understand how Gen Xers’ financial realities compare with those of their parents at the same ages. The study shows that although Gen Xers have higher incomes and rates of college completion than their parents did, debt burdens and inadequate savings threaten their economic foothold.

Among the findings:

  • Most Gen Xers have higher family incomes than their parents did at the same age, but only one-third have greater family wealth. Three-quarters of Gen Xers have higher family incomes than their parents did, earning a median of $43,000 annually, after adjusting for family size. However, just 36 percent of Gen Xers have exceeded their parents’ family wealth, and the typical Gen Xer has $5,000 less wealth than their parents did at the same age.
  • Gen Xers’ lower wealth is due in part to their debt totals, which are nearly six times higher than their parents’ were at the same age. Nearly all Gen Xers report holding student loan, medical, credit card, or other debt, with a median of more than $7,000. In contrast, their parents held just over $1,000 in debt at the same point in their lives.
  • Generation X has experienced exceptional stickiness at the top and bottom of the income ladder. Among Gen Xers raised at the bottom of the income ladder, half remain stuck there and nearly three-quarters never reach the middle. There is similar stickiness at the top: Nearly 7 in 10 Gen Xers who are in the top income rung in their 30s were raised by parents who were also above the middle in their 30s.
  • The persistent stickiness at both ends of the income ladder for Gen Xers is linked to sharp demographic differences. Among Gen Xers stuck at the bottom of the income ladder, median wealth, excluding home equity, is less than $800, more than half are single, and only 2 percent have a college education. In contrast, of Gen Xers who were born in and remain at the top, 83 percent are part of a couple, 71 percent have a college education, and all have more than $69,000 in non-home-equity wealth. 
  • Gen Xers whose family wealth exceeds that of their parents also far surpass their peers in wealth holdings. Gen Xers who are upwardly wealth-mobile—that is, they have more wealth than their parents did at the same age—have nearly nine times the non-home-equity wealth of their peers who have less wealth than their parents and more than three times that of the typical Gen Xer.
  • Among Gen Xers who have exceeded their parents’ income, those with college degrees are less likely to surpass their parents’ wealth, mostly due to student loan debt. Nearly 4 in 10 Gen Xers who have college degrees and have more income than their parents did hold student loan debt, with a median amount owed of $25,000.

The report notes that without adequate wealth among Gen Xers, the mobility of not just the current generation, but also the next, could be at risk. Future Pew research will continue to focus on the health of family balance sheets across diverse American families and age groups to better understand how short-term finances affect opportunity and mobility over the long-term.

To conduct the research for this report, Pew used data from the Panel Study of Income Dynamics for all available years (1968 through 2011). Gen Xers, as well as their parents, were included for all study years during which they were aged 26 to 39. All data have been inflation-adjusted to 2011 dollars.

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The Pew Charitable Trusts is driven by the power of knowledge to solve today’s most challenging problems. Learn more at www.pewtrusts.org.

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