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Gen Xers' Rising Debt Jeopardizes Their Retirement

December 5, 2017

Generation X is increasingly in debt, hurting the group's chances of saving enough for retirement, according to a recent study by Allianz Life Insurance Company of America. But what’s making the problem even worse is the generation’s head-in-the-sand approach to financial planning, according to the report.

Credit card and student loan debt among Gen Xers has gone from an average of $20,000 in 2015 to $23,000 in 2017, a 15% jump, according to Allianz, which surveyed 1,000 baby boomers (ages 52 to 70), 1,000 Gen Xers (ages 37 to 51) and 1,000 millennials (ages 20 to 36). And 49% of Gen Xers admit to only partially paying off their credit cards every month, up from 46% in 2014, according to the survey. At the same time, Gen Xers feel resigned: 42% believe taking on debt for everyday purchases is a fact of life, Allianz found.

Gen Xers are also less confident than other generations in their ability to handle their finances: 34% say they can manage their money well, compared to 41% of millennials and 44% of baby boomers, according to the survey.

Debt plays a big role in how Gen Xers feel about their retirement planning: half of them don’t think they can start saving for retirement until they pay off their credit cards, and 37% believe they’re unprepared for retirement, compared to 26% of millennials and 28% of baby boomers, Allianz says.

Nonetheless, an even bigger issue could be the generation’s devil-may-care attitude about financial planning, according to Paul Kelash, vice president of consumer insights for Allianz Life. Sixty-three percent of Gen Xers believe everything will work out as far as their retirement, compared to 53% who thought so in 2014, the survey found.

Financial advisors may be able to help. Currently, only 39% of Gen Xers are working with a financial professional, according to Allianz. Advisors should understand the Generation X mindset, however. Seventy percent of them say they’d prefer to make their own plans and decisions even when working with a pro, compared to 33% who said so in 2014, the survey found.

By Alex Padalka