The notion of retirement as a life of full-time leisure and lollygagging has gone by the wayside for most of today's workers. Perhaps no group feels it more acutely than Generation X, that beleaguered group of 35- to 50-year olds, who are lodged in the difficult middle years of life and simultaneously find themselves stuck between the society-changing boomers and the up-and-coming millennials.
Generation Xers are burdened by greater debt loads than baby boomers, but also have become more comfortable with debt as a way of life. It's a potent one-two punch that darkens their financial future, concludes research from Golden Valley-based Allianz Life in a study of 2,000 boomers and Xers. Katie Libbe, vice president of consumer insights for Allianz Life and a boomer herself, wants Gen Xers to wake up and smell the coffee.
Q: Generation X, generally those born between 1965 and 1980, were hit harder by the recession than any other age group. How has that shaped their view of retirement planning?
A: If you compare the three generations, the Gen Xers feel like they got the short straw. Baby boomers had pensions; they'll get Social Security. And millennials have time on their side. Gen Xers racked up college debt, and they maybe bought their house at the top of bubble before the bubble burst. Our research had a lot of data on the "post-crash" mindset. Generation Xers were very skeptical that things could really turn out for them. A big theme was about debt and what to do about it: I can't save because I've got all this debt.
Q: How big of a factor is college debt in preventing Generation X from seeing beyond the next few years?
A: It's a big factor. A lot of Gen Xers were encouraged to get that degree no matter how much it cost. It's unfortunate, because it has become almost impossible to pay for college without taking out student loans. And then you're strapped when you get out of college. You need a level of work that's going to allow you to pay for a $1,000-a-month student loan, which can be a tall order. Generation X is the first generation that's had to deal with that.
Q: Your report says Gen Xers have their head in the sand when it comes to retirement. What does that mean?
A: They're taking a pragmatic and realistic look at a traditional retirement — where one day you stop working completely and it's all leisure — and they're saying: That's not going to happen. They know they need to build some financial security. And yet two-thirds of them, about 64 percent, look at the uncertainty and the difficulty of trying to estimate what they're going to need that far out and don't take any action at all. This "head in the sand" notion is about recognizing that they should be building financial security but on the other hand not doing anything about it. The Gen Xers think: I've always landed on my feet. I'll figure it out when I'm closer to retirement.
