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The good news for Generation X, those Americans born between 1965 and 1980, is that they have higher incomes now than their parents had at the same age. The bad news is they Gen Xers have accumulated far less wealth.
According to a new report from researchers at The Pew Charitable Trusts, the younger generation’s household income averages a bit more than $43,000 a year compared with $31,000 a year earned by their parents. And 75% of Gen Xers also make more than their parents did at the same age.
The bad news on the Gen Xers wealth begins with debt. They have accumulated nearly six times as much debt as their parents at the same age. Student loans, credit card debt, and medical and other debt averages more than $7,000 for Gen X compared with a little over $1,000 for their Baby Boomer parents. And, Pew reports, among Gen Xers who have exceeded their parents income, those with college degrees are less likely to surpass their parents wealth, mostly as a result of student loan debt.
A startling finding is that half of Gen Xers who started out in the bottom 20% based on their parents’ income distribution remain on the bottom rung of the ladder.
Conversely, those who started out with parents in the top 20% of the income distribution have a 40% chance of staying on the top rung.
According to Pew, those Gen Xers who were raised at the bottom rung of the latter and who remain there still are more likely than their peers to be single (only 44% are in a couple) and to lack a college degree (just 2% are college graduates). Median non-home-equity based wealth in this group is just $778.
Conversely, those Gen Xers raised on the top rung are more likely to be in a couple (83% are) and 71% are college graduates. Median non-home-equity based wealth in this group is more than $69,000.
Pew sums up its findings this way: “Generation X is discussed significantly less in the media than are baby boomers or millennials, the much larger generational cohorts that bookend it. Despite its small size, however, Gen X provides critical insights for researchers and policymakers into changing family balance sheets. Gen X may also be a harbinger of declining opportunity for many American families now and in the future. … Without adequate wealth among Gen Xers, the mobility of not just the current generation, but also the next, could be at risk. Exactly how all of this will affect equality of opportunity in the future is unclear, but it indicates a strong need for policies that create wealth-building opportunities for Gen Xers and the younger cohorts who are following them into financial maturity.”
That is a sobering view of what’s in store for both Generation X and the Millennials that followed them.