Why are GEN X’ers Especially Good with Their Money?
When you look up “Gen X” (born between 1965 & 1980) on the internet, it describes this generation as the “middle child”. This middle is a smaller group than the other two, with only about 65 million compared to 75 million baby boomers and 83 million millennials. Gen X may be known as the “forgotten generation”, but they aren’t anywhere near forgetting what they’ve lived through. Born between 1965 (the literal middle of the Vietnam War) and 1980 (the year CNN launched) they came of age at a time when both divorce and double income households were becoming more and more common. These two things would undoubtedly shape this generation, leading to more latchkey kids and less available adults around for supervision. Gen X learned how to be self-reliant, quiet and highly adaptable. They had parents who were busy and they became undeniably independent, having a hands-on approach to problem solving and doing things themselves. Even their beauty trends were comparatively pared down with flannels and oversized sweaters taking over from the bright blue eyeshadows and clothes of yesteryear. They easily remember what life was like before technology, having a different relationship with it than the completely smitten boomers and the plagued Gen Z. This group knows how to use technology with ease, but also knows how to unplug. They became responsible and hard-working on their own.
And even though this generation seems to be drowned out by the two mega-groups on either side of it, they are no less important.
My office, Oakview Wealth Solutions, has plenty of Gen X clients who prove to be all of the above and have set themselves up for a really great retirement while also enjoying their lives now. These clients have knowledge about their retirement accounts inside & out and have made brilliant decisions about their money and lifestyles that impresses even us. It made me notice that Generation X is darn good with their money, and here’s why:
Gen X’ers like to do things themselves. They are more likely to manage their finances on their own and learn a lot while doing it. Many of our Gen X clients utilized their 401(k) plans and had to rely on themselves for knowledge of personal finance. Approximately 80% of Gen X say they have an intermediate to advanced understanding in areas such as insurance, money and paying taxes.
Wariness can also be a trait when describing Gen X. This could be because, as kids, they were raised in a society that was changing socially, culturally, technologically and economically. They learned to question what they were being told and look for evidence to support it. This extends into Generation X’s finances, being research driven when making choices about their money.
Seeing their parents work long hours and missing things like important family events made Gen X prioritize their work-life balance. While making money is important to them, living a happy & full life is as well, so they figured out other ways to earn more income. Many Gen X’ers balance their portfolios with diversification that may include pension funds, 401(k), cryptocurrency and “side hustle” incomes like rentals.
Growing up with a newfound exposure to different cultures and customs have made this generation much more open-minded and adaptable than generations before. If something is working better for another, Gen X will be open to trying it out, something that has greatly benefitted them from trying online brokerage accounts to investing in a broader range of assets. Trying something new after learning all about it is right up Gen X’s alley.
The youngest of this generation was old enough to know about the dot-com bubble that began around 1995. Experiencing the tech boom first hand, they were the first generation to use personal computers at home and in school. As a result, they are comfortable using technology and adapt easily to change. Gen X’ers often turn to the internet for financial advice by reading online articles and watching videos.
Now that the oldest Gen X’ers are turning 58 years old, they are facing a very different set of financial circumstances than the Boomers were at this stage. As they near retirement age, many Gen Xers are still raising their children and simultaneously caring for their aging parents. The Silent Generation (1925-1945) and the Baby Boomers (1946-1964) both entered retirement confident that they would have enough money for them to live out their lives comfortably. Unfortunately, unaccounted for longevity of life expectancy and skyrocketing healthcare costs, on top of misunderstandings of credit and a lack of access to good financial retirement planning, means these generations' children are having to take on significantly more financial responsibilities than the ones before them. So, even though Gen X’s mean gross income in 2020 hit $113,455, far above the Millennials ($84,975) and Boomers ($78,508), in the peak of Gen X’s working years they’re still struggling to stay afloat. And with Social Security dwindling and pension plans being almost non-existent in today's workforce, about 80% of Gen X is relying on their 401(k) or similar retirement funds to support themselves as they age.
So, despite being the generation who has the internet to teach them, has witnessed the dot-com bubble of the 90s, the 2008 financial crisis and the pandemic, and done a darn good job through it all, one in five Gen Xers says they’ll never be able to retire.
Oakview Wealth Solutions CFP®, Stanton Burns says this about Gen X, “almost all of this generation should be maximizing where they can now, to make their retirement better later. This is a crucial time in their retirement planning, things like starting to think about what their taxes will look like after they retire, because if they wait until retirement begins, it will be too late. Hiring a professional to handle these sorts of things will make Gen X’s time much better spent earning right now than researching what they should be doing with their investments.”
So, even though Generation X is self-reliant, capable and willing to do the work, hiring a financial advisor is going to be key in their retirement planning and success. You’ve done a good job, Gen X, now don’t let it fall apart at the end!
- Sylvia McCormick Burns (co-founder Oakview Wealth Solutions)