Generation X (Gen X): Between Baby Boomers and Millennials

What Is Generation X (Gen X)?

Generation X, which is sometimes shortened to Gen X, is the name given to the generation of people born between the mid-1960s and the early 1980s.

The exact years that comprise Gen X vary. Some researchers—demographers William Strauss and Neil Howe, for example—place the exact birth years from 1961 to 1981, whereas Gallup places the birth years between 1965 and 1979. But all agree that Gen X follows the baby boomer generation and precedes Generation Y or the millennial generation.

Understanding Generation X

The name "Generation X" comes from a novel by Douglas Coupland, "Generation X: Tales for an Accelerated Culture", published in 1991. Though it's more useful for marketing than sociology, generational theory—the assumption that people born within the same time frame can be considered a group with similar views, values, tastes, and habits—and the idea of a generation gap have gained broad acceptance in the U.S.

The generations covered in the theory are:

• Greatest Generation (born circa 1922 to 1927)
• Silent Generation (circa 1928 to 1945)
• Baby Boomers (circa 1946 to 1964)
• Generation X (circa 1965 to 1980)
• Millennial Generation (circa 1981 to 1996)
• Generation Z (circa 1997 to 2012)
• Generation Alpha (circa 2013 to 2022)

Gen X numbers around 65 million, while the baby boomers have around 69 million members and millennials number around 72 million, as of 2022. Gen X is also sometimes referred to as the “latchkey generation” as they were often left unsupervised at home after school until their parents came home from work.

Like the silent generation, Generation X has been defined as an "in-between" generation. The group's earning power and savings were compromised first by the dotcom bust, and second by the financial crisis of 2008 and the Great Recession. In terms of social and political power, Generation X is sandwiched between the baby boomers, who came of age during the Vietnam and Reagan eras, and the millennials of the Obama era.

Gen X vs. Baby Boomers and Millennials

The 22rd Annual Transamerica Retirement Survey of Workers, published in 2022, compares Gen X, baby boomers, and millennials. Among its findings:

• 24% of baby boomers have taken a loan or early withdrawal from a retirement account, compared with 33% of Gen X savers and 46% of millennials.
• As of 2021, baby boomers had an estimated median retirement savings per household of $162,000, compared with $87,000 for Gen X and $50,000 for millennials.
• Among those offered a 401(k) or similar plan, 93% of baby boomers saved for retirement, while 91% of Gen X and 89% of millennials did.
• However, among those not offered a 401(k), 63% of baby boomers still saved for retirement, compared with 50% for Gen X and only 42% of millennials.

Gen X's Financial Situation

Over the next two decades, there will be a major transfer of wealth—collectively, around $84 trillion—from baby boomers to younger generations including their Gen X children. And they're going to need it.

Gen X accounts for just 25.7% of the nation’s wealth, while baby boomers hold just over half (51.3%), according to the latest data from the Federal Reserve. In 2008, at a median age of 35, Gen Xers owned just 8.7% of the nation’s wealth, less than half of what baby boomers had when they were 35.

Retirement Savings

Thirty percent of Gen X members have at least $250,000 in household retirement savings, while 26% have between $50,000 and $250,000. By comparison, 42% of baby boomers have $250,000 or more saved for retirement. Eight percent of Gen X members have no money saved for retirement at all.

Just 22% of Gen X workers feel "very" confident that they will be able to fully retire with a comfortable lifestyle, and 78% are concerned Social Security will not be there for them at retirement age. Thirty-eight percent plan to retire at age 70 or above, or do not expect to retire at all.

Effects of Market Timing on Gen X

On average, Gen X households began working, saving, and investing during a period of lower investment returns than the baby boomers. Many Gen X households began building their savings in periods of high market valuations, such as the technology bubble and dotcom bubble of the late 1990s and in the run-up to the global financial crisis of 2008. The effects of the ensuing bear markets still weigh heavily on their portfolios.

Additionally, Gen X-ers have experienced an especially low-interest-rate environment which has had an adverse impact on their ability to increase the value of their financial assets. Meanwhile, the early experiences of Gen X investors with major market declines seem to have made them more risk-averse.

Other Challenges Faced by Gen X

Gen X-ers' relatively lower levels of wealth, and the rising costs of education, healthcare, and property, will make it difficult for them to maintain their parents' consumption patterns. And then there's the sandwich syndrome—the fact that this generation has reached the age when they are supporting and educating children while also providing care for aging parents.

Gen X-ers now have the highest average debt of any generation, according to research by Experian. They increased their average debt by about 6%, or $1,814, between 2022 and 2023, reaching $309,343. Mortgage debt, HELOC loans, student loans, car loans, personal loans, and credit card debt all factored into average Gen X debt.

Reinventing Retirement for Gen X

The retirement landscape is different for Gen X than for their parents. Once common, pension plans in the private sector are rare and have been replaced by defined-contribution plans, such as a 401(k). And Gen Xers aren’t counting on Social Security to fund their retirement either.

Baby boomers (40%) are much more likely to expect Social Security to be their primary source of retirement income, compared with just 25% of Gen X, according to the Transamerica survey. In fact, 39% of Gen X "strongly agree" that Social Security might not be around when they retire, while 23% of baby boomers feel the same.”

Financial Planning for Gen X

The potential for financial duress can be substantial, but steps can be taken to reduce stress, balance budgets, and mitigate the effects of unplanned life events. Here are some recommendations for Gen X to get their financial lives in order and deal with all layers of that generational sandwich: Children, parents, and themselves.

Make an Estate Plan

This is vitally important if you have dependent children and do not yet have a will or other necessary documents. You do not want the fate of your dependents or your belongings to be decided by a judge in probate court. So, now is the time to make an appointment with an estate planning attorney to get your will, living will, medical, and durable powers of attorney—and perhaps a living trust—created to ensure the smooth and quick transference of all of your dependents, possessions, and responsibilities to your heirs.

And because estate settlement can be an emotionally delicate process, doing this now can allow you and your family to think through how this should be done from a calm, logical perspective.

Get a Comprehensive Financial Plan

When you were in your 20s, managing your finances was a fairly simple matter of getting into good financial habits, such as saving and budgeting. Now you are at the point where your finances are probably a bit more complicated and one financial variable, such as the amount that you contribute to your company’s 401(k) plan, can affect several other areas in ways that are becoming difficult to compute or predict with any accuracy.

This variable impact probably means that it is time to enlist a professional financial planner or financial advisor who can plug your cash flow, balance sheet, risk tolerance, investment objectives, time horizon, and tax bracket into a sophisticated financial planning program.

This can give you at least some idea of where you really are financially and what you need to do going forward to get where you want to be by retirement age. Just be prepared to see some unpleasant numbers at the end, numbers that may indicate that you will not be able to retire as soon as you hoped.

Manage Your Debt

If your debt load has become unmanageable, find a legitimate debt-management firm to help you get it under control.

Get a Head Start on College Planning

Although most experts warn parents about diverting retirement savings into their kids’ college funds, this is the time to open a Coverdell Education Savings Account or a 529 plan fund if none exists.

Your kids can contribute to these funds as well as you. The money you inherit from deceased parents or other relatives can also be college-funding sources. Opening an individual retirement account for them can be another good choice, as long as you’re confident that they will not withdraw the contributions for other purposes.

Get a Financial Picture From Parents

Granted, conversations about money between parents and their children can be awkward. But if you have not spoken with your parents about the state of their health and finances, then it’s probably time to get the ball rolling in this area. If your parents' health is failing and they have no estate plan in place, then it may be wise to fork over the cash yourself to pay to have this done if they consent.

Consult an elder law attorney for advice if you need help dealing with managed-care issues and choose a designated sibling to be the point person for dealing with these matters.

A common mistake the children of aging parents make is the overestimation of Medicare, Medigap, and Medicaid coverage. Having an understanding of what needs to be paid for out-of-pocket can determine if purchasing long-term care insurance (if that's still feasible) and supplemental insurance policies may be beneficial.

Have Returning Children Contribute

The pressure of caring for aging parents can be multiplied by the expense of supporting grown children. Requiring offspring who return home after college to help with household expenses— including paying rent, buying groceries, or assisting with the elders' care—can relieve some of the pressure associated with supporting multiple generations. It can also provide children with some life lessons in financial and fiscal responsibility.

The Bottom Line

Numbering about 65 million, Generation X includes individuals born between the mid-1960s and the early 1980s. Known as the "latchkey" or the "lost" generation, Gen X-ers grew up at a time when societal values shifted, with many children home alone after school and an increase in divorce rates.

Their early years in the workforce included many economic hurdles such as the dotcom bubble and the Great Recession. Today, Gen X members are in their prime earning years, but many still feel unprepared for retirement.