Surprising Ways Gen X and Boomers Are Worlds Apart Financially

While older Americans proved especially vulnerable to the coronavirus’ worst ravages, no age group was immune from the pandemic’s economic fallout. All demographics were forced to change their money habits, adjust their strategies and, in many cases, do whatever they had to do to make it through. It wasn’t the first time.

Generation X (born between 1965-1980) experienced the rise of the tech bubble, the dot-com bust, and the Great Recession. Baby boomers (1946-1964) remember the energy crisis and runaway inflation of the 1970s.

The two groups came into working age during radically different eras and, naturally, don’t see eye to eye on everything when it comes to money. To find out what separates baby boomers from Gen Xers in terms of finance, GOBankingRates talked to experts who work directly with both groups.

Gen Xers know the Great Depression and the Dust Bowl from “The Grapes of Wrath” and “The Wizard of Oz.” To baby boomers, those events were living memories that helped define the identities of their parents, aunts and uncles. That living memory often makes them more gun shy when it comes to investing, according to Michael Shea, certified financial planner (CFP) with Applied Capital in Nashville, Tennessee.

“A big difference between baby boomers and Gen X when investing their money is their risk tolerance and expectations of the stock market,” Shea said. “Boomers can be much more reluctant when investing in the market. This results in them leaving large amounts of cash on the sidelines that is not working for them. This is partly due to their stages of life, but also that boomers grew up with their parents experiencing the Depression, which created a lot of fear and anxiety that trickled down to them.”

Carol Tompkins is a personal finance expert who currently serves as the business development consultant for online accounting software service AccountsPortal. She’s one of the many professionals who report that Gen Xers are more likely than their baby boomer parents to dispose of their disposable income.

“Gen Xers tend to spend more of their annual income than baby boomers,” she said. “It is also important to point out that the Gen Xers earn slightly more than baby boomers annually. These higher incomes could account for Gen Xers’ willingness to spend more.”

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In the showdown between Gen Xers and boomers, “neither generation is known for being great savers,” according to Zachary A. Bachner, a CFP with Rivendell Capital Management. But even though they tend to spend more of their incomes, the middle-aged Gen X demographic might actually be the better savers of the two.

“Gen X has had more time to recover from the financial crisis and they have been more focused on savings as they begin to near retirement,” Bachner said. “Many baby boomers on average have little to no savings and are heavily relying on employer retirement plans and employer pensions.”

If it is true that Gen Xers are more likely to build personal savings, it’s certainly not a given that they’re better than their parents at retirement planning.

“A large proportion of Gen Xers are lagging behind in terms of saving for their retirement,” Tompkins said. “A significant proportion have made early withdrawals from their retirement plans. Baby boomers have more in savings than Gen Xers, and many of them are looking to work past 65 years.”

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Adam Garcia is the CEO at investing site The Stock Dork. According to his data, the two generations are more starkly divided by their outlook on real estate than just about anything else.

“Forty-five percent of Gen Xers state that their primary goal is to buy a house,” Garcia said. “Whereas, only 15% of baby boomers are willing to invest further in property.”

That, of course, could have more to do with their ages and stations in life more than any philosophical differences on the profitability of real estate.

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