Generation X (Gen X): Between Baby Boomers and Millennials

Generation X

Sydney Burns / Investopedia

What Is Generation X (Gen X)?

Generation X, which is sometimes shortened to Gen X, is the name given to the generation of Americans born between the mid-1960s and the early-1980s.

The exact years that comprise Gen X vary. Some researchers—demographers William Strauss and Neil Howe, for example—place the exact birth years from 1961 to 1981, whereas Gallup places the birth years between 1965 and 1979. But all agree that Gen X follows the baby boom generation and precedes Generation Y or the millennial generation.

Key Takeaways

  • Generation X, or Gen X, refers to the generation of Americans born between the mid-1960s and the early-1980s.
  • Gen Xers, which fall between baby boomers and millennials, number around 65 million.
  • Members of this group are approaching the middle of their working careers and potential peak-earning years.
  • The generation is on track to become the first generation to be worse off in terms of being prepared for retirement than their parents.

Understanding Generation X

The name "Generation X" comes from a novel by Douglas Coupland, Generation X: Tales for an Accelerated Culture, published in 1991. Though it's more useful for marketing than sociology, generational theory—the assumption that people born within the same time frame can be considered a group with similar views, values, tastes, and habits—and the idea of a generation gap has gained broad acceptance in the U.S.

The American generations covered in the theory are:

  • Greatest Generation (born circa 1901 to 1924)
  • Silent Generation (circa 1925 to 1945)
  • Baby Boomers (circa 1946 to 1964)
  • Generation X (circa 1965 to 1980)
  • Millennial Generation (circa 1981 to 1996)
  • Gen Z (post-Millennial) (circa 1997 to 2012)

Gen X numbers around 65 million, while the baby boomers and the millennials each have around 72 million members. Gen X is also sometimes referred to as the “latchkey generation” as they were often left unsupervised at home after school until their parents came home from work.

Like the silent generation, Generation X has been defined as an "in-between" generation. The group's earning power and savings were compromised first by the dotcom bust, and second by the financial crisis of 2008 and the Great Recession. In terms of social and political power, Generation X is sandwiched between the baby boomers, who came of age during the Vietnam and Reagan eras and the millennials of the Obama era.

Gen X overlaps with another group called the sandwich generation. Each modern generation has gotten its time in this slot, which is used to characterize middle-aged individuals who—due to longer life spans and having children later in life—find themselves supporting both aging parents and growing children simultaneously.

Gen X vs. Baby Boomers and Millennials

The 20th Annual Transamerica Retirement Survey of Workers, published in 2020, compares Gen X, baby boomers, and millennials. Among its findings:

  • Gen Xers believe that they will have a much harder time achieving financial security than their parents (80%), compared to millennials (77%) and baby boomers (73%).
  • Across the three generations, Generation X is significantly more likely to be carrying credit card debt (52%), millennials are more likely to have student loans (26%), and boomers are more likely to be debt free (25%).
  • Gen X is the least likely to use a financial advisor (37%), compared to millennials (42%) and baby boomers (45%).

Gen X's Financial Situation

Over the next few decades there will be a major transfer of wealth—collectively, around $48 trillion—from baby boomers to younger generations including their Gen X children. And they're going to need it.

Gen X accounts for just 29% of the nation’s wealth, while baby boomers hold just over half (51%), according to the latest data from the Federal Reserve. In 2008, at a median age of 35, Gen Xers owned just 7.4% of the nation’s wealth, less than half of what baby boomers had when they were 35.

Notable members of Generation X include Jeff Bezos, Tiger Woods, and the late Kurt Cobain.

Retirement Savings

Almost 60% of Gen X respondents to the Transamerica survey “strongly agree” or “somewhat agree” that they are creating a sizable enough nest egg. Gen X has an average of $64,000 in retirement savings. Not surprisingly baby boomers have the most, $144,000, and millennials the least, $23,000. Nine percent of Gen Xers have no retirement savings at all.

This falls far short of what the generations each expect they will need to retire. Gen X and baby boomers estimate that to feel financially secure they will need $500,000, and millennials $300,000.

Effects of Market Timing on Gen X

On average, Gen X households began working, saving, and investing during a period of lower investment returns than the baby boomers. Many Gen X households began building their savings in periods of high market valuations, such as the technology bubble and dotcom bubble of the late-1990s and in the run-up to the global financial crisis of 2008. The effects of the ensuing bear markets still weigh heavily on their portfolios.

Only 44% of Gen X workers said they have fully recovered or were not impacted by the Great Recession, compared to 50% of baby boomers, according to the Transamerica survey.

Additionally, Gen Xer's have experienced an especially low-interest-rate environment which has had an adverse impact on their ability to increase the value of their financial assets. Meanwhile, the early experiences of Gen X investors with major market declines seem to have made them more risk averse.

Other Challenges Faced by Gen X

Gen Xers' relatively lower levels of wealth will make it difficult for them to maintain their parents' consumption patterns, rising costs of education, healthcare, and property. And then there's the sandwich syndrome—the fact that this generation has reached the age when they are supporting and educating children while also providing care for aging parents.

Gen Xers now have the highest average debt of any generation, according to research by Experian. They increased their average debt by about 3.5%, or $4,802, between 2019 and 2020 reaching $140,643. Mortgage debt accounted for the highest proportion, followed by HELOC loans, student loans, car loans, personal loans, and credit card debt.

Reinventing Retirement for Gen X

The retirement landscape is different for Gen X than for their parents. Once common, pension plans in the private sector are rare and have been replaced by defined-contribution plans, such as a 401(k). And Gen Xers aren’t counting on Social Security to fund their retirement either.

Baby boomers (37%) are much more likely to expect Social Security to be their primary source of retirement income, compared with just 26% of Gen X, according to the Transamerica survey. In fact, 41% of Gen X "strongly agree" that Social Security might not be around when they retire, while 26% of baby boomers feel the same.”

Transamerica found that, overall, workers across the three generations share financial and healthy aging-related reasons for working past age 65. But baby boomers are more likely than the other generations to do so because they want the income. Generation X will continue working as they can’t afford to retire because they haven’t saved enough.

Financial Planning for Gen X

The potential for financial duress can be substantial, but steps can be taken to reduce stress, balance budgets, and mitigate the effects of unplanned life events. Here are some recommendations for Gen X to get their financial lives in order and deal with all layers of that generational sandwich: Children, parents, and themselves.

Make an Estate Plan

This is vitally important if you have dependent children and do not yet have a will or other necessary documents. You do not want the fate of your dependents or your belongings to be decided by a judge in probate court. So, now is the time to make an appointment with an estate planning attorney to get your will, living will, medical, and durable powers of attorney—and perhaps a living trust—created to ensure the smooth and quick transference of all of your dependents, possessions, and responsibilities to your heirs.

And because estate settlement can be an emotionally delicate process, doing this now can allow you and your family to think through how this should be done from a calm, logical perspective.

Get a Comprehensive Financial Plan

When you were in your 20s, managing your finances was a fairly simple matter of getting into good financial habits, such as saving and budgeting. Now you are at the point where your finances are probably a bit more complicated and one financial variable, such as the amount that you contribute to your company’s 401(k) plan, can affect several other areas in ways that are becoming difficult to compute or predict with any accuracy.

This variable impact probably means that it is time to enlist a professional financial planner or financial advisor who can plug your cash flow, balance sheet, risk tolerance, investment objectives, time horizon, and tax bracket into a sophisticated financial-planning program. This can give you at least some idea of where you really are financially and what you need to do going forward to get where you want to be by retirement age. Just be prepared to see some unpleasant numbers at the end, numbers that may indicate that you will not be able to retire as soon as you hoped.

Manage Your Debt

If you are thinking about buying a house, it will probably be wise to look first at a 15-year fixed-rate mortgage. Interest rates may never be this low again, at least in a Gen Xer's lifetime, and a 15-year loan only charges a third as much interest as a 30-year mortgage. If your debt load has become unmanageable, find one of the legitimate debt-management firms that will help you get it under control.

Get a Head Start on College Planning

Although most experts warn parents about diverting retirement savings into their kids’ college funds, this is the time to open a Coverdell Educational Savings Account or a 529 plan fund if none exists. Your kids can contribute to these funds as well as you, and money that you inherit from deceased parents or other relatives can also be college-funding sources. Opening an individual retirement account for them can be another good choice, as long as you’re confident that they will not withdraw the contributions for other purposes.

Get a Financial Picture From Parents

Granted, conversations about money between parents and their children can be awkward. But if you have not spoken with your parents about the state of their health and finances, then it’s probably time to get the ball rolling in this area. If your parents’ health is failing and they have no estate plan in place, then it may be wise to fork over the cash yourself to pay to have this done if they consent.

Consult an elder law attorney for advice if you need help dealing with managed-care issues and choose a designated sibling to be the point person for dealing with these matters. A common mistake the children of aging parents make is the overestimation of Medicare, Medigap, and Medicaid coverage. Having an understanding of what needs to be paid for out-of-pocket can determine if purchasing long-term care insurance (if that's still feasible) and supplemental insurance policies may be beneficial.

Have Returning Children Contribute

The pressure of caring for aging parents can be multiplied by the expense of supporting grown children. Requiring offspring who return home after college to help with household expenses— including paying rent, buying groceries, or assisting with the elders' care—can relieve some of the pressure associated with supporting multiple generations. It can also provide children with some life lessons in financial and fiscal responsibility.

Why Is Gen X Sometimes Called the Lost Generation?

Also known as the "lost generation," "forgotten generation," or "invisible generation," Gen X has been labeled these monikers because of the shifting societal values that occurred during their rise that witnessed a rise in divorces, single-parent households, and loneliness. Today, GenX is again considered “lost” because it is stuck between the Baby Boomers and the Millennials.

Is Gen Z or X older?

Gen X is older than Gen Z by several decades.

What Does the "X" Stand for in Generation X?

The letter "X" refers to an unknown variable (as in mathematics), or to the generation's desire not to be defined.

Article Sources
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  1. Gallup. “Wellbeing by Generation: Where Some Thrive, Others Struggle.”

  2. William Strauss and Neil Howe. "Generations: The History of America's Future, 1584 to 2069.” Harper Perennial, 1992.

  3. Douglas Coupland. “Generation X: Tales for an Accelerated Culture.” St. Martins Press, 1994.

  4. Pew Research Center. “Millennials Overtake Baby Boomers as America’s Largest Generation.”

  5. Transamerica Center for Retirement Studies. “20th Annual Transamerica Retirement Survey of Workers,” Pages 14, 15, and 24.

  6. Cerulli Associates. "The Great Wealth Transfer."

  7. Federal Reserve. "Distribution of Household Wealth in the U.S. since 1989."

  8. Transamerica Center for Retirement Studies. “20th Annual Transamerica Retirement Survey of Workers,” Pages 21-24.

  9. Experian. “Average U.S. Consumer Debt Reaches New Record in 2020.”

  10. Transamerica Center for Retirement Studies. “20th Annual Transamerica Retirement Survey of Workers,” Page 20.

  11. NPR. "From GIs To Gen Z (Or Is It iGen?): How Generations Get Nicknames."