With Baby Boomers embracing a new frugality and Millennials making a strong start in their preparations for retirement, members of Generation X continue to struggle with debt and the effect it’s having on their long-term planning. This is according to the Generations Ahead Study from Allianz Life Insurance Company of North America.

Total nonmortgage (credit card and student loan) debt has increased 15% for Gen X since 2014 (from average $20k in 2014 to $23k in 2017) and more Gen Xers admit to paying off only a partial amount of their credit card debt each month (up from 46% in 2014 to 49% in 2017). More than four in 10 (42%) Gen Xers also believe that going into debt to handle day-to-day purchases is “just a fact of life.”

In addition to the financial impact, the study of 3,000 Americans, including 1,000 baby boomers (ages 52-70), 1,000 Gen Xers (ages 37-51) and 1,000 Millennials (ages 20-36), found the repercussions of carrying this debt create an emotional burden for Gen X. Half of Gen Xers believe they can’t start saving for retirement until they pay off their credit card debt and also say they are more likely to feel embarrassed to tell a financial professional about their debt.

As a result, Gen X reported the least confidence in their ability to manage their money well (34% versus 41% for millennials and 44% for boomers) and also the highest level of feeling unprepared for retirement (37% versus 26% for millennials and 28% for boomers).

“While our study revealed some positives in how boomers and millennials are preparing for retirement, Generation X’s saving and spending habits were concerning, especially since retirement is not far off for many in this group,” said Paul Kelash, vice president of Consumer Insights for Allianz Life. “More worrisome than their debt, however, is their lack of planning. Gen Xers are becoming more careless with credit, yet at the same time less committed to proactively addressing their retirement security. This is a significant issue that needs immediate attention.”

Head-in-the-sand planning

Despite growing debt and poor money management skills, Gen Xers don’t seem too worried about the effect these negatives will have on their future. In fact, compared to three years ago, significantly more Gen Xers believe “everything will just work out” when it comes to retirement (increasing from 53% in 2014 to 63% in 2017) and they’ll just “figure it out” when they get there (increasing from 46% in 2014 to 53% in 2017).

Yet, even with this misplaced confidence, Generation X continues to worry about many specific aspects of their financial future. Approximately six in 10 Gen X respondents worry about maintaining their lifestyle in the future (59%), are unsure where their income will come from as they get older (55%), and find the thought of providing for themselves and their family in the long term “overwhelming” (61%). Perhaps that is why Gen X had the highest percentage of respondents who said “saving for retirement/the future is a luxury I just can’t afford” (13% versus 7% for millennials and 10% for boomers).

“Gen Xers’ feelings of anxiety about their financial future and just hoping everything will work out is keeping them from making any real progress in addressing retirement planning and their most urgent financial issues. The antidote to their anxiety is action. Either working on a plan on their own or getting help from a financial professional who understands their unique situation and point of view would be a positive first step to help them get back on track,” noted Kelash.

Open to getting some help, but self-reliance is key

Currently, only 39% of Gen Xers are working with a financial professional, but the same percentage of those without an advisor are open to receiving professional advice. Among the top issues Gen Xers want help with are planning and achieving a secure retirement, making sure they have enough money to last as long as they live and understanding the big picture of their money (spending, saving, and retirement).

However, one aspect of financial planning is key for Gen Xers--they want to call the shots. A full 70% of Gen X respondents said they are more inclined to making their own decisions and plans when working with a financial professional, up from only 33% in 2014.

For more insights on Gen X saving and spending habits from the Generations Ahead Study – including steps financial professionals can take to make stronger connections with their Gen X clients – visit AllianzLife.com/GenerationsAhead.

The Allianz Generations Ahead Study was conducted by Larson Research + Strategy via online survey in May, 2017 with 3,006 U.S. adults ages 20-70 with a minimum household income of $30K+ and was commissioned by Allianz Life.

Ayo Mseka
Editor-in-Chief