Not a big surprise, given the generation’s reputation. Despite a recent PNC Financial Services Group study to the contrary, Gen X is high on financial concerns and low on optimism and action.
The Planning and Progress Study 2015 from Northwestern Mutual found that of the four generations surveyed, Gen X (Americans aged 35-49) has the poorest financial habits. In addition to comprising the majority of “informal” planners, Gen X has more spenders than savers compared to other generations and is the least likely to have more savings than debt.
Not surprisingly, the lags in planning are taking a toll on Gen X’s financial health and future outlook:
- Nearly 4 in 10 (37%) Gen Xers say they do not “at all feel financially secure.” This is more than any other generation, even Millennials.
- Almost a quarter (23%) are “not at all confident” that they will achieve their financial goals.
- Two thirds (66%) expect to have to work past traditional retirement age due to necessity, with 2 in 10 (18%) believing they will never retire. The vast majority (82%) of Gen Xers who anticipate needing to work past the age of 65 feel they will need to do so because they will have insufficient retirement savings.
While the lack of discipline is clearly a substantial factor, the financial pressures impacting Gen X may also be a function of life stage. A significant portion of this segment is squarely in the “sandwich generation”—more than 4 in 10 (44%) live with children under 18 and over a quarter have a parent or other relative in the household. Balancing personal financial priorities with the added demands of dependent care is likely to have implications on decision-making.
Self-Awareness Not Translating into Action
Notably, Gen X is not blind to the realities of its financial condition.
- Two thirds (66%) of Gen X respondents acknowledge that their financial planning needs improvement.
- Less than 1 in 10 (9%) consider their generation “very financially responsible.”
- When asked how they would allocate a $10,000 windfall, Gen X, more than other generations, opted for debt repayment—suggesting an interest in tackling financial challenges.
However, while this group may have the right intentions, it seems to be falling short on action:
- Despite citing “insufficient savings to retire comfortably” as a leading financial fear, one third of Gen Xers (34%) do not know how much income they need to retire and nearly half (47%) have not discussed retirement planning with anyone.
- Gen X is also less likely than any other generation—even Millennials—to have sought guidance from an advisor
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
