Smart SpendingSmart Spending

Gen Xers become . . . their parents (sort of)

A new study says the former slackers are now 'affluent, stable and saddled with responsibility.' But they may not be able to retire comfortably.

By Donna_Freedman Jul 2, 2013 10:17AM
Logo: Family (Rubber Ball/Getty Images)Grungy, underachieving, reluctant-to-launch, unfocused slackers: In terms of popular perception, Generation X certainly did take it on the chin the 1980s and 1990s.

Smells like old stereotypes. The 50 million members, born between 1965 and 1976, are now "as affluent, stable and saddled with responsibility as their parents were at the same age," according to a new study from the MetLife Mature Market Institute.

"Mature"? The group that didn't seem to want to grow up? Yep: The cohort is now aged 37 to 48, and Gen X is now part of the "sandwich generation," i.e., raising kids and helping their aging parents.

They're not dilettantes when it comes to labor: Forty-three percent have been in the same career throughout their working lives and just over 40% have been in the same job for at least 10 years. Almost three in 10 earn more than $100,000 a year and only 19% earn less than $35,000.

Yet the former slackers are looking at a gloomy retirement picture, according to a report from the Pew Charitable Trusts.  

"Retirement security across generations: Are Americans prepared for their golden years?" (a .pdf document) says the group is the least-prepared for retirement of the five generations profiled (Depression through Gen X). It's based on data collected by the Federal Reserve Board and the University of Michigan.

The recession hit the group harder than anyone else: Members lost almost half their overall net worth -- an average of about $33,000 -- between 2007 and 2010, compared with the early and late baby boomers (28% and 25%, respectively). They have more debt than the other groups studied, and aren't saving quite enough for retirement.

"Based on the analysis, Gen-Xers will only have enough at retirement to replace about half of their pre-retirement income, if they retire at age 65," notes Ann Carrns of The New York Times.

Financial planners generally suggest that retirement income from all sources should be at least 70% of the salary you make during your last year or two of earning. Thus the Gen Xers are looking at a 20% deficit.

'Financial security over the long term'

The MetLife study, which was based on interviews with 1,000 Gen-Xers, notes that this group is "arguably better educated than any generation before them." Most are married or at least coupled-up and have an average of 2.5 children. More than eight in 10 are homeowners.

Three-fourths of the group are employed at least part-time, and 40% are working in their chosen careers. Most are in dual-earner households.

But they're running late on retirement planning. Half say they’re "behind" on saving, 11% don't have savings goals and 7% haven't started at all. Even so, the generation believes overall that half their retirement income will come from "pensions, 401k's and other retirement plans."
As of 2010, the asset levels of "war babies" (the group before the early boomers) were 27 times higher than their debts. Gen-Xer assets were only about twice as high.

In some cases that might be due to rampant consumerism. But it could also be the result of the rise in basic costs (without a corresponding rise in salary) plus the expenses involved with raising children while helping aging parents. Elderly Americans tend not to have mortgages, either, whereas people in their 30s and 40s generally do. (In fact, 17% of Gen Xers interviewed by MetLife were underwater on their homes.)

"As policymakers focus attention on Americans' retirement security, particular consideration should be paid to helping the youngest cohorts change course and prepare for financial security over the long term," the Pew study says.

It's been widely reported that U.S. seniors risk outliving their money. Certainly that's serious. People who are elderly right now need help. But the rest of us are getting older, too. Will those who feel -- rightly or wrongly -- that they don't make enough to save be able to get the financial planning assistance they need?

More on MSN Money:

2Comments
Jul 2, 2013 11:34AM
avatar
That is because they paid their own way through school, and now have to spend their own retirement supporting their parents, who managed to outlive their pensions, and sat by the last 30 years when medical costs increased exponentially, and most of domestic production was outsourced to make Communists rich.
Jul 25, 2013 10:43PM
avatar

..still paying our way through college.  My parents saved 0 for retirement.  I'm in that 30% clearing 6 figures, but we're supporting parents, kids, and siblings neglected by my parents who now have medical issues.  On the upside, by retirement my modest house mortgage will be paid off, my 3 degree choices led to interesting work, and I'll be able to live off of my 50% in retirement, because my parents' expenses will be out of my budget by then, and my kids are being taught about budgeting, how to cook, how to study for your interests/hobbies in your spare time, and why beans, cornbread and veggies are just as cheap but far, far healthier than Ramen.    Seriously, we're going to be fine.

Report
Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
Categories
100 character limit
Are you sure you want to delete this comment?

DATA PROVIDERS

Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.

ABOUT SMART SPENDING

Smart Spending brings you the best money-saving tips from MSN Money and the rest of the Web. Join the conversation on Facebook and follow us on Twitter.

VIDEO ON MSN MONEY

TOOLS

More