Dear Gen X: It's Not Your Fault You Suck at Saving
But I'm here to tell you: Buck up, Generation X. Considering the wringer we've been put through these past few decades, we're actually doing all right.
According to survey data just published on financial website GoBankingRates.com:
- 41 percent of Gen Xers have saved less than $100,000 for retirement.
- 15 percent have begun borrowing from Peter to pay Paul, siphoning funds out of their 401(k) plans ahead of retirement.
- 23 percent have stopped contributing to their retirement accounts altogether.
Here on DailyFinance, we've seen warnings of how all this has sent Gen Xers' average net worth down 45 percent since 2004 (worse than any other age group). Our debt levels continue to ride higher than those of our predecessors as well. And if we don't get our act together soon (is the implication), we're destined to spend our retirement years eating ramen.
Smells like Teen Spirit
In contrast, the pundits practically shower those young whipper-snappers of "Generation Z" -- the millennials -- with as-yet unearned praise. Though most of the generation hasn't yet entered the workforce, GBR effuses: "Gen Z has a high understanding of today's financial and economical realities ... they have witnessed firsthand not only the recession, but also their own parents struggling to save for and pay for retirement."
If Gen Z can learn some lessons from Gen X's difficulties, without having to endure the pain firsthand -- great! Because Gen X has certainly had its difficulties, lo these past 40 years. Difficulties like...
Gen X is said to have entered upon the world stage in 1967 -- and our timing couldn't have been worse. Annual inflation from 1967 through 2013 averaged 4.3 percent, running more than 34 percent ahead of average rates over the past century.
The early 1990s, when the Gen X vanguard emerged from college and into the workforce, was not a particularly happy period to be looking for a job. And Gen Xers scared off by that first exposure to the real world, who headed to grad school to wait for better days, emerged in the mid-1990s to find things not much better.
Then came the Great Bubble Burst of 2000. And the Great Recession of 2007 and its ugly aftermath. For much of Gen X, it seemed that no sooner had one "economic crisis" gone dormant, and they began earning some bucks, than another slump arrived to either dry up the job market or wipe out their 401(k)s or raze their home equity. Or all of the above.
Considering how badly things have gone for Gen X, it's worth asking: When, exactly, were we supposed to have begun saving for retirement? It's hard to build up significant net worth -- or even pay off your student loans -- when every time you start to get set up, the economy knocks you back down again.
Speaking of student loans, Gen X came of age in a time of spiking costs for everything from health care to education. Gen X has been called the first generation to graduate from college with "significant" student loan debt. According to the Federal Reserve, about 20 percent of Gen Xers are still paying off student loans in their 30s. As for health care, freshman Sen. Elizabeth Warren (D-Mass.) notes that from 1970 through 2008, the cost of health insurance soared 74 percent -- after inflation.
Other People's Bills
If that weren't bad enough, Gen X somehow got saddled with paying for a lot of stuff of very little use to us. Wars in Afghanistan and Iraq come to mind. But a more long-standing issue is the rising cost of government entitlement programs.
Social Security is the most obvious example. We were supposed to be able to count on that one to help pay for our retirements ... but Social Security ran into a deficit three years ago when it began paying out more than it took in. It's looking a bit better now, but the writing's on the wall.
Medicare's another sore spot: In 1965, the Medicare system was set up to alleviate crushing health care costs in old age. Sounded like a good deal at the time, and with Gen X beginning to arrive in delivery rooms a couple years later, this might even have proved helpful to us, eventually.
Problem was, in 1967, a Congressional report estimated that the program would cost the U.S. taxpayers $12 billion annually by 1990. The actual cost that year was $110 billion.
Today, Medicare costs nearly $600 billion annually. At the rate these rates are rising, it's starting to look questionable whether either Social Security or Medicare will still be around by the time Gen X gets to thinking about retirement.
(But don't worry, boomers. We'll still pick up the tab for your Medicare, and your prescription drugs, too. You're welcome.)
Oh Well, Whatever, Never Mind
So when all's said and done, what lessons can the millennials draw from the trials and tribulations of Gen X?
"Don't get your hopes up" is probably the first lesson. Here in Gen X, we've been waiting for things to turn around for 20 years or so, but have finally come to the realization that life isn't always fair.
But also, remember that things could have been worse.
If you recall the single theme woven throughout Douglas Coupland's "Generation X: Tales for an Accelerated Culture" -- the book that gave our generation its name -- it was an abiding, omnipresent fear that we would all die in a Soviet nuclear attack. And, well, at least we dodged that bullet.
So no matter how bad things get with the economy, really, it's all downhill from here.
Motley Fool contributor and Gen X member Rich Smith isn't too worried about retirement. Anyway, he likes ramen.