For members of Generation X, living with debt has
become a fact of life. But this comfort with buying on credit is negatively
impacting their ability to save for retirement and meet other financial
obligations, according to a new report. Allianz Life unveils this finding in a
summary of results from its new "Generations Apart" study. The
survey of 2,000 Americans, including 1,000 baby boomers (ages 49-67) and 1,000
Gen Xers (ages 35-48), examines financial attitudes and current finances
for each generation, including total household debt.
The study finds that Gen Xers are carrying 38 percent more
in mortgage debt (average of $144,000 versus $90,000 for boomers) and 45
percent more in non-mortgage debt, comprised of student loan debt (average of
$12,000 versus $5,000 for boomers) and credit card debt (average of $8,000
versus $6,000 for boomers).
The report adds that nearly half (48 percent) of both
generations agree that credit cards now function as a survival tool. And 43
percent agree that “lots of smart, hardworking people who are careful with
spending also have a lot of credit card debt.”
Being younger and healthier is just the beginning, a Goldman
Sachs study finds. The growing comfort
with debt, the report suggests, may be having a greater effect on the
retirement plans of Gen X. Twice as many Gen Xers (27 percent versus 11 percent
of boomers) say they are unsure about when they plan to retire or don’t plan to
retire.
The report expresses concern about how Gen Xers are using
credit to finance their lifestyles. Nearly half (46 percent) of Gen Xers say
they revolve their credit card balances (only paying a portion each month)
compared with only 32 percent of boomers.
Upshot: Gen Xers are less able to save for the future as
more of them (23 percent versus 19 percent of boomers) say they believe “you can’t
save for retirement until you pay off credit cards.”
Among the report’s additional findings:
- 36 percent of Gen Xers say they currently have
more than $5,000 in credit card debt and a quarter admitted to carrying more
than $10,000.
- 15 percent of Gen Xers say they also owe money
to their parents.
- 41 percent of Gen Xers say they are not
comfortable with the amount of debt they have, while just a quarter of boomers
reported feeling uneasy with their debt.
- One in five Gen Xers believe that going into
debt to handle day-to-day purchases is “just a fact of life” versus only 14
percent of boomers. Half of Gen Xers say they “enjoy and live for today”
versus only 39 percent of baby boomers, with the majority of boomers (61
percent) choosing “save and plan for tomorrow.”
- 73 percent of boomers said they are clear about
how much money they will need in retirement versus only 52 percent of Gen
Xers.
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