Money

New essay explains why Generation X feels 'bone-deep, almost hallucinatory panic about money'

Ben Stiller attends the "Reality Bites" screening and Q&A during the 2012 Sundance Film Festival held at Egyptian Theatre on January 22, 2012 in Park City, Utah.
Ben Stiller attends the "Reality Bites" screening and Q&A during the 2012 Sundance Film Festival held at Egyptian Theatre on January 22, 2012 in Park City, Utah.

In a lucid, bracing and much-discussed essay for Oprah.com called "The New Midlife Crisis," author Ada Calhoun sums up the reason why so many members of Generation X — especially women — feel stressed out and stretched thin: money.

"By some estimates, we carry more debt than any other age group (about $37,000 more than the national consumer debt average). We're some of the best-educated women in history, and yet we're downwardly mobile; about two-thirds of us have less wealth than our parents did at the same age," she writes.

And individuals aren't to blame. "This isn't because we spent too much on Pearl Jam CDs," writes Calhoun. Prices have gone up for everything that matters, while wages haven't followed suit.

"The cost of a home has increased by more than 80 percent from 1970 to 2000, the last year for which data is available. (Between 2000 and 2005 and since 2013, home prices have outpaced salary growth.) In the late '70s annual tuition for a four-year college was less than $11,000 in today's dollars, now it's three times that."

In consequence, she points out, "40-somethings haven't saved nearly enough for retirement. More than half of unmarried Gen Xers have less than $50,000 saved."

She's not wrong. The typical American spends 61.3 percent of their annual income on housing, transportation and food, and student loans weigh far more heavily on members of Gen X because getting a B.A. cost them a lot more than it did their parents.

As a result, savings have suffered. Although experts recommend that, by age 45, you have four times your salary saved, not many Americans are on track. Of so-called "older millennials," a group that overlaps somewhat with Calhoun's definition of Gen X (those born between 1965 and 1984), 61 percent have less than $1,000 put away. That includes 41 percent who have zero.

And 38 percent of younger Gen Xers, defined as those age 35 to 44, are sitting on nothing at all.

Meanwhile, the median income for a middle-aged man is about $55,000 a year. In many places, it's easy to make twice or several times that much and still feel strapped. The median income for a middle-aged woman is lower, about $44,000 a year. And, while men can expect to keep earning more until their mid-50s, women's salaries peak about 10 years earlier.

Squeezed on one side by eager millennials and, on the other, by boomers who came of age in a more affordable and forgiving economy, many members of Gen X, especially women, feel like they can't catch a break.

"In their 40s, our parents' generation could expect to own a house and to have money saved. In our 40s, we are often still scrambling like we did at age 25," writes Calhoun. "Fifty-six percent of women still live paycheck to paycheck, and, according to a 2014 study on women and their money by Prudential, Gen X women are less confident in their ability to achieve their most important financial goals than either millennials or boomers."

Panic is not your only alternative, though. If you're just starting out, there are smart money moves you can make now that can help set you up for success and security later.

And even if you're one of the many members of Gen X relating strongly to Calhoun's essay, it's not too late to try to turn things around. Even some small, simple changes can help you feel more in control of your finances.

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