Each generation faces its own set of obstacles when it comes to building wealth and growing net value—The formation of X makes no difference. Dubbed the “lost generation,” this population group falls between two of the largest and most notable generations — millennials and baby boomers.
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 the youngest are in their late 50s. 40 and is entering its peak. money year.
Follow The Federal Reserve’s 2019 Survey of Consumer FinancesAmericans 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 old enough to be financially responsible for aging parents and young enough to raise 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 real value 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 can achieve a higher level of income, and at the same time have time to spend with them investment game. Median net worth also tends to decline among retirees who are older than Generation X and have begun living off retirement savings and investment income.
Where this generation falls short is in 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 building a large enough retirement nest. Nearly 80% are concerned that Social Security will not be available to them when they reach retirement age.
Average annual income of Generation 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 a median income of $90,312, while the oldest members of the generation (those 54 to 57) have a median income of $75,842. Nearly six-figure income is much higher than some younger generations, but Generation X carries the most debt of any generation — severely impacting their ability to increase their net worth.
What shapes Gen X’s net worth and financial future?
Gen X’s long-term finances and wealth have been impacted by a number of events over the past few decades. A few of the most notable include:
In the late 1990s, when Gen Xers made up a large portion of the workforce, an overestimation of tech companies initially fueled by speculation about their success led to a bubble burst. Many fledgling tech companies started operating after over-promotion and under-distribution. This leads to a slew of losses for investors and job losses for those in the tech startup space.
From 2007 to 2010, Gen Xers felt the effects of a weak economy in many ways. The median net worth of Generation X households fell 38% from $63,400 to $39,200, according to Pew Research. Gen X hosts also have the strongest drop rate home equity during this time as well as losses in financial holdings due to a sharp drop in stock prices.
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 remote learning. One research via Prudential found that 26% of respondents experienced income disruptions (including wage increases and reductions in wages or hours worked), and nearly a fifth of household incomes halved or more in the first few months of the pandemic. . Among Gen Xers, 22% said their household income fell by 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 have a more stable future in the years to come. For Gen Xers who are hoping to tune in and boost their wealth building, they can use a few tips to do so:
Stay away from the lifestyle. During your higher income years, you may be tempted to spend more on your lifestyle than you did when you started your career. Practicing some restraint in this area can help you save and invest more for later. Paul Deer, CFP at Personal capital. “You can enjoy the fruits of your labor, but controlling expenses like this will go a long way in building your net worth over this lifetime.”
Payment of unpaid 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 balances that are weighing you down monthly budget. Choose a strategy that you can use, taking into account the type of debt you have, your interest rates, and your money goals.
Protect your future nest egg. You can’t predict when you might have certain types of medical emergencies, and health care treatments can be expensive. “While old age may seem a long way off, now is the time to establish your long-term care plan,” said Molly Ward, financial advisor at Equitable Advisors, based in Texas. “Strangely 70% of people trigger a long-term care event. Make sure you’re properly insured before it’s too late to qualify [this] insurance… could be cheaper if it was available at this time. “
This story was originally featured on Fortune.com
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