Born between the years of 1965 and 1980 (around 65 million people nationwide), the members of Generation X are often seen as the overlooked middle child or lost generation of America. This is because they are book-ended by two huge generations: Baby Boomers and Millennials.
According to the Economic Policy Institute, real wages haven’t improved for most employees since before the Great Recession (factoring in inflation). And 23% of Gen-Xers didn’t get a raise in the last year, while another 26% only got a 1-2% bump.
If only that was the biggest concern for Gen-Xers in the workplace.
The Financial Burdens on Generation X
Unfortunately, many Gen-Xers are simply happy to continue collecting a wage at all! As we already mentioned, Generation X has been squeezed by the generations on either side of it. In the workplace, that means these workers are competing with Millennials for positions, which is problematic considering our society and the corporate world especially tend to have a bias towards aging workers… especially as technology interrupts more and more positions.
On top of that, Gen-Xers are often taking care of their Millennial children (perhaps paying for college or weddings or both, and perhaps continuing to house them after college too) and sometimes taking care of aging Baby Boomer parents. (For related reading, see: 4 Financial Tips for the Sandwich Generation.)
There are also other costs to consider, especially when it comes to housing. For many Gen-Xers, buying a home was the north star that represented both adulthood and financial success. This was especially true because there was so much incentive for lower-income folks to buy a home when interest rates were high—and folks were eager to do so because they equated homeownership with wealth and thought it was okay to spend 30% of their earnings on a mortgage.
Not even considering the plummet in home values that took place during the Great Recession, the tough reality is that far too many people purchased homes without enough equity, the difference between the market value of a house and the mortgage amount you still owe. Purchasing a house with the minimum down payment and a 30-year mortgage can easily land you in financial trouble. If you only have 3% equity in your home, and the value drops by 6%, you suddenly find yourself owing more on a house than it is actually worth.
The other extreme isn’t any better either. Some people save for a long time and put 20% down on their home. However, in the process, they fail to save for retirement and forgo contributing to an emergency fund, which can lead to more financial trouble.
Where and When to Retire With Enough
It’s almost no wonder then that members of Generation X are actually less likely to feel financially independent than Millennials and more likely to feel their debt is a major problem, according to a survey by the American Savings Education Council and AARP. On top of that, they are also “measurably more pessimistic” that they’ll have enough money to retire when compared to generations in either direction, Pew says.
In fact, nearly three-quarters of folks in Generation X say they are stressed out by unemployment—more than 10 percentage points higher than the Millennial generation. With that in mind, Gen-Xers must realize that they might have to retire on time, even if they don’t want to.
I worked with a client who was 59 years old and got laid off because they outsourced his job to someone in South America; a quality control job that paid $80,000 a year. At 59, he realized it would be difficult to replace that job at that income level. His thought process was as follows: "All this effort for a job that pays half as much? Will I even find one?" For the time being he’s working at Home Depot for a low wage just to keep busy and keep options open.
Depending on your type of job, this becomes more of a risk as you age. It’s definitely something that Gen-Xers need to be thinking about, because technology is so disruptive and you don’t know what will happen to the job you have in the next 10-20 years. For example, think of what happened to taxi drivers.
The takeaway is that you need to have enough savings for retirement and also to create a provision for tomorrow. This particular client saw the warning sign when his boss asked him to create a manual for everything he did. (For more from this author, see: How Millennials Can Avoid a 401(k) Crisis.)
This article is adapted from Ash Toumayants’s eBook “Retirement Readiness For Every Generation." You can download the full version here.