Four things Gen X gets right about retirement
Gen X, despite the financial stress they often face as the "sandwich generation," and despite an overwhelming tendency not to discuss money, has developed some significant financial strengths and savvy habits, largely as a result of the unique economic environments they've had to navigate.
Here are some areas where Generation X often gets finances right:
1. The 401(k) Pioneer and Investor
Gen X was the first generation to rely heavily on self-managed retirement plans, like the 401(k), as traditional pensions phased out. This necessity forced them to:
- Take Ownership: They realized early that retirement was their responsibility, not their employer's or the government's, leading to a strong focus on personal retirement savings.
- Invest More: Studies show that Gen X is now in their peak earning years and, in many cases, they are investing more per household from their after-tax earnings compared to the overall population, attempting to make up for lost time and combat the challenges they faced earlier.
- Resilience: They lived through the dot-com bubble and the 2008 Great Recession, experiencing significant market losses, yet they generally stayed invested and rebounded better than other generations from the housing crash.
2. High Financial Literacy & Self-Reliance
Gen X's "latchkey kid" upbringing instilled a do-it-yourself (DIY) mentality that extends to their money management.
- Savvy Adaptability: They are comfortable bridging the gap between traditional finance (paper checks, cash) and digital finance (online banking, payment apps). They leverage technology for convenience but often use cash or debit for budgeting control.
- Multiple Accounts: Many Gen Xers are comfortable using multiple financial institutions (a national bank, a credit union, an online brokerage) to get the best interest rates, products, and services, demonstrating a proactive, not passive, approach to their wealth.
- Value of Experience: They are the first generation to enter peak earning years while managing the complexities of modern debt (mortgages, student loans for themselves and their kids), giving them a higher degree of financial management experience under pressure.
3. Focus on Value Over Flash
Gen X is often highly motivated by value and quality in their purchases, not just by brand hype or the lowest price.
- Loyalty for Quality: They are often loyal to brands that consistently deliver quality and service, showing they prioritize long-term performance and reliability over short-term savings.
- Practicality: Their spending, though high due to the sandwich-generation effect, tends to be focused on necessities (housing, bills, insurance, caregiving) and things that provide long-term utility.
4. Wisdom to Share
Due to their significant financial ups and downs, Gen X has a clear message for younger generations: Start saving for retirement early.
- Their biggest financial regret is often not saving enough or starting too late, which gives them a powerful, hard-won piece of advice to pass on to Millennials and Gen Z about the power of compound interest.
Gen X is a generation that has been forced to become highly adaptable, resourceful, and personally responsible for their financial future, leading to a disciplined focus on long-term investing and prudent spending habits.
