Gen X’s average net worth—and the obstacles they face in building wealth

Each generation faces its own unique obstacles when it comes to building wealth and growing net value—Generation X is no exception. Dubbed the “lost generation,” this population is sandwiched between two of the largest and most notable generations—the millennial generation and the baby boomer generation.

Average net worth of Generation X

Generation X, or Gen X, includes individuals born between 1965 and 1980. The older members of this generation are in their late 50s and nearing the end of their careers, while those who are older. The youngest is in his early 40s and at the peak of his performance. earn many years.

Follow The Federal Reserve’s 2019 Consumer Finance SurveyAmericans between the ages of 42 and 57 have an average net worth between $436,200 and $1.1 million.

What makes this generation unique is that their average age makes them both old enough to be financially responsible for aging parents and young enough to still have to support young children. For many Gen Xers, this has presented a unique set of challenges as it relates to building and maintaining their net worth.

How does Gen X’s net worth compare to other generations?

Compared to other generations, Gen Xer’s average net worth is on the higher end. More time in the workforce younger generation which means they were able to achieve a higher level of income, while at the same time spending time with them in investment game. Median net worth also tends to decline among retirees who are older than Gen X and have started living off their retirement savings and investment income.

This generation is short on retirement savings, partly due to inflation and rising costs of living.

According to recent research by State Street Global Advisors, this generation is more concerned with the effects that inflation, the stock market and the economy can have on their personal finances. One research of the Transamerica Center for Retirement Research found that only 22% of Generation X workers are “very” confident that they will be able to fully retire with a comfortable lifestyle, and only 28% “strongly agree” that they are build a large enough retirement fund. Nearly 80% are concerned that Social Security will not be available to them when they reach retirement age.

Average annual income of Gen X

On average, Gen Xers between the ages of 45 and 54 earn the highest median income in 2021 of $97,089. Younger Gen Xers under 45 have an average income of $90,312, while members of the oldest generation (those 54 to 57 years old) have a median income of $75,842 . Nearly six-figure income is much higher for some younger generations, but Gen X is the most indebted of any generation — severely damaging their ability to increase their net worth.

What has shaped Gen X’s net worth and financial future?

Gen X’s long-term finances and wealth have been affected by a number of events over the past few decades. A few of the most notable include:

dotcom bubble

In the late 1990s, when Gen Xers made up a large portion of the workforce, the overvaluation of early tech companies fueled by speculation about their success led to the bursting of the bubble. Many fledgling technology companies begin bankruptcy after over-promising and under-performing. This resulted in a slew of losses for investors and job losses for those in the tech startup space.

Great Depression

From 2007 to 2010, Gen Xers felt the effects of a weakening economy in many ways. The median net worth of Gen X households fell 38% from $63,400 to $39,200, According to Pew Research. Generation X home owners also had the biggest drop home equity during this time as well as losses in financial holdings due to the sharp drop in stock prices.

COVID-19 pandemic

As the COVID-19 pandemic turns the world and the labor market upside down, many Gen Xers find themselves switching careers, leaving the workforce to care for parents or guide their children in distance learning. One research via careful found that 26% of respondents experienced income disruptions (including vacations and reduced pay or hours worked), and nearly a fifth of respondents reported a halving of household income or more during the first few months of the pandemic. Among Gen Xers, 22% reported a decrease in their household income of 50% or more.

3 ways Gen Xers can build their net worth

It’s never too late to start making sound financial choices that can help you prepare for a more stable future in your later years. For Gen Xers who are hoping to correct their mistakes and boost their wealth building, they can use a few tips to do so:

  1. Avoid the creep lifestyle. During your higher income years, you may want to spend more on your lifestyle than when you first started your career. Practicing some restraint in this area can help you save and invest more for later. “As incomes rise, some people in their 40s try to ‘keep up with the elite’ by moving to a bigger house, joining a country club, driving,” says Paul Deer, CFP. luxury cars or expensive vacations. Personal capital. “You can enjoy the fruits of your labor, but keeping your expenses under control like this goes a long way in building net worth during this stage of life.”
  2. Pay off outstanding debt. Debt, especially high-interest debt, can make it difficult to save and invest. Make a plan for how you plan to deal with any debt that is weighing you down monthly budget. Choose a strategy that you can follow that takes into account the type of debt you have, your interest rates, and your money goals.
  3. Protect your future egg. You cannot predict when you may experience some medical emergencies and healthcare treatments can be expensive. “Although old age seems a long way off, now is the time to establish your long-term care plan,” said Molly Ward, financial advisor with Equitable Advisors, based in Texas. “It is likely that 70% of people trigger a long-term care event. Make sure you have the right coverage before it’s too late to qualify [this] insurance…it might be cheaper to get this coverage at this point.”

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