Gen Xers struggle more than prior generations to save money, and a new study finds that those with subprime credit often have no savings at all.
Now that Gen Xers are nearing their forties or fifties, you’d think this generation would be getting set to ease into retirement in another decade or two.
Yet research from Elevate’s Center for the New Middle Class reports that Gen Xers, those born between 1965 and 1980, belong to the “least likely” generation to save money at a time in their lives when prior generations were well on their way to getting finances in order.
Instead, Gen X has plenty of “non-prime” members who can’t afford to pay for an unexpected emergency, much less buy a new house.
The Center for the New Middle Class is a research organization studying the “credit-constrained” new middle class, comprised of non-prime or sub-prime consumers with credit scores below 700 and little or no savings.
According to Elevate, around 160 million Americans fall into the non-prime category, which generally limits them to “expensive forms of credit or no credit at all.” Those restrictions on credit place non-primers behind their peers and prior generations when it comes to saving money or planning for retirement.
“According to social norms, Generation X should be at a stable point in their lives, buying homes, sending kids off to school, becoming empty nesters, says Jonathan Walker, executive director for The Center for the New Middle Class. “This time should mark a shift when the generation starts to refocus financially on their foundation and the future. Instead, these individuals are wavering.”
When compared Gen Xers with better credit and more stable lives, non-prime Gen Xers have a tougher time holding down jobs, paying monthly bills or squirreling away enough money for financial emergencies.
According to Elevate’s survey, when non-prime Gen Xers are compared to their prime counterparts, the non-primers are:
- Four times more likely to be living from paycheck to paycheck.
- Twice as likely to live in households with three or more adults contributing income.
Twice as likely to be laid off in the prior year and nearly three times as likely to be laid off in the prior five years.
- More prone (1 in 5) to running out of money every month.
- Not as likely to plan for big or unexpected expenses like medical bills and car repairs. Of those surveyed by Elevate,” only 13 percent feel confident they could come up with $1,200″ for an emergency.
- More likely (1 in 8) to end up in bankruptcy and foreclosure, a status that blackens their credit record and further impedes their ability to make financial progress.
- Often unable to find reliable credit options when they need credit to “smooth over the rough patches” of their finances and more likely to be “credit omnivores,” even turning to overdraft as a short-term borrowing option.
“These findings offer an alarming peek at America’s middle class and middle generation,” says Walker. Not all Gen Xers are living on the edge, though.
When it comes to staying afloat, prime Gen Xers are more confident than their non-prime counterparts, mainly due to having more solid options available like good credit, savings, or the ability to turn to family and friends. Only 44 percent of the non-prime people in Elevate’s survey have a solution with coming up with funds for an unexpected expense.
Non-prime Gen Xers struggle to support themselves, yet members of Gen X are now at an age where there’s a good chance they’ll also be asked to support someone else.
“With aging parents and school-age children, Generation X is the most likely generation to support others,” says Walker. “They’re also entrepreneurial, which is exciting but can also lead to financial difficulty. Gen Xers struggle more financially than other generations.” Gen Xers’ financial pain points are magnified “multiple-fold” for non-prime individuals who aren’t able to plan for the future to try to get back on track, he says.
It looks like the financial futures of non-prime Gen Xers are not likely to gain footing soon, according to the survey: “When we look at non-prime Gen Xers, we see a group in the throes of economic challenges that perpetually keep them off balance.”
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Article last modified on November 16, 2017. Published by Debt.com, LLC . Mobile users may also access the AMP Version: Has Generation X Lost its Way Financially? - AMP.