Gen X: Higher income, higher debt, says Pew report

October 2, 2014

PHILADELPHIA (10/3/14)--Generation X is bookended by the larger populations of baby boomers and millennials. As such, it faces an environment that challenges its economic mobility, according to a recent study from The Pew Charitable Trusts.

Born between 1965 and 1980, Gen Xers now should be well established in their education, career and home lives. However, they were hit hard by the Great Recession, losing nearly half of their wealth between 2007 and 2010, a larger decline than experienced by any other generation.

Pew compared income, wealth and debt status between Gen Xers and their parents, finding that the younger generation may have a higher income but also have a lower amount of wealth.

"If the members of Generation X are unable to translate their higher incomes into wealth holdings, they will remain more financially fragile than the previous generation, especially as they move toward retirement, and at a disadvantage in terms of their own and their children's mobility prospects," Pew noted.

The report's key findings include:

  • Most Gen Xers have higher family incomes than their parents did at the same age--earning a median of $43,000 annually--but only one-third have greater family wealth. Only 36% have exceeded their parents' wealth, while the typical Gen Xer has $5,000 less wealth;
  • Lower wealth levels are due in part to debt totals, which are nearly six times higher than their parents' were at the same age. Nearly all reported student loan, medical, credit card or other debt with the median resting at more than $7,000. Their parents, in contrast, had more than $1,000 in debt at the same point in their lives;
  • Economic mobility in Generation X has been closely tied to where they begin. 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 on the top-income rung in their 30s were raised by parents who were also above the middle in their 30s, Pew noted; and
  • College graduates are less likely to surpass their parents' wealth, even as they exceed their income, because of student loan debt. 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 graduated from college hold a median amount of $25,000 in education debt.

A New Financial Reality

GreenPath Debt Solutions/CUNA Strategic Services

PowerOverDebt--Break the Debt Cycle online course for members