A New Financial Reality

The balance sheets and economic mobility of generation X

Report September 18, 2014 Read time:

Projects: Financial Security and Mobility

QUICK SUMMARY

This report finds that three-quarters of Gen Xers—Americans born between 1965 and 1980—have higher family incomes than their parents did at the same ages, but only a third have higher wealth. In part, this is because the typical Gen Xer has six times more debt than their parents did. Gen Xers were hit particularly hard by the Great Recession, which brought falling housing values and rising unemployment rates. As a result, they lost nearly half their wealth between 2007 and 2010.

The Pew Charitable Trusts analyzed individual family data across generations, including income, wealth, debt, educational attainment, race, demographic characteristics, and earner status to learn what separates the most financially stable Gen Xers from those who’ve fallen behind their parents. Gen Xers who are unable to translate their higher incomes into wealth holdings may remain more financially fragile and disadvantaged than the previous generation as they move closer to retirement.

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Key Findings

GENERATION X INCOME

75% of Gen Xers have higher family incomes than their own parents did.

Overall, three-quarters of Gen Xers have exceeded their own parents’ family income at the same ages. This is especially true for those raised at the middle and lower rungs of the income ladder, where majorities have higher incomes than did the last generation.

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GENERATION X WEALTH

36% of Gen Xers have exceeded their own parents' family wealth.

Just over one-third of Gen Xers have more wealth, including home equity, than their parents did, but when looking at where on the wealth ladder Gen Xers were raised, the wealth outcomes differ significantly. Among those raised at the bottom, two-thirds exceed the wealth and home equity of their own parents, but fewer than 3 in 10 of those raised at the middle and higher rungs have more assets than their parents held at the same age.

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college graduates

17% of those stuck at the bottom of the wealth ladder are college graduates.

Not being a college graduate was overwhelmingly a characteristic of those stuck at the bottom of the income ladder, but a considerable proportion of Gen Xers stuck at the bottom of the wealth ladder have a college degree (17 percent), as did their parents (22 percent). In fact, among these Gen Xers, those with a college degree have higher median debt than do their peers without a college degree.

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student debt

4 in 10 upwardly mobile, college-educated Gen Xers have student debt.

Four in 10 upwardly income mobile Gen Xers with college degrees hold student loan debt, typically around $25,000, which is a much higher amount and rate of debt than is reported by their nondegree-holding peers.

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