Young Families Taking on More Debt: Generation X Families 68% Less Wealthy than Baby Boomer Families 17 years ago

 

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New families need to make smarter financial decisions because they are becoming much poorer as time goes on. Yesterday, I wrote about average family debt for an American and wondered if young families carried more debt than the median family debt of $75,600. I found the answer today and it is yes.

 

According to a report released by the New York Fed in 2007, families with parents under the age of 35 had a median debt level of $100,700. The age demographic with the highest median debt was those between the ages of 45 and 54 with a median debt of $148,500. Only those 75 or older carried a median debt level under the median for all families.

However, I was more alarmed by a report by the Pew research center showing that Generation X families are 68% poorer then Baby Boomers were at their age 17 years ago. According to Pew:

Pew’s data summarizes all wealth, which means total assets minus debt. The numbers hold up when looking at raw dollar amounts, Pew found. The average family headed by a senior citizen now has $170,494 in net wealth, compared to $120,457 among families of similar ages in 1984.

Younger families are headed in the opposite direction. The average family headed by adults under age 35 had $11,521 in assets in 1984. Today that has dwindled to $3,662.

Pew cites a number of factors challenging the wealth prospects of Generation X including:

  • Waiting to be married,
  • Taking longer to start careers,
  • Inflated housing market,
  • More college debt
  • And rising student loans.

Hopefully this is a wakeup call for the millennial generation that is facing even more college debt, higher rates of unemployment and lower wages. Currently, they have roughly 33% less debt than Gen X families. It will take a lot of financial discipline to overcome the trend of poorer families that Generation X families have set.

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