Younger Generations Rely on Tax Refund Immediately: Is Boomer Or Gen X Debt Any Better?
Written by
Dawn Allcot
Edited by
Travis Woods
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If you’ve already filed your taxes and are diligently checking the IRS “Where’s My Refund” tool for the status, you’re not alone. More than half of Americans (54%) have already filed their taxes well in advance of April 15, 2024 in order to get that direct deposit into their bank account faster.
A recent Credit Karma survey revealed that the younger generations — Gen Z and millennials — are especially eager to claim their refund, NBCNews.com reported. That’s because 38% and 40% of these taxpayers, respectively, rely on the money to pay for rent and groceries. Across generations, 31% of taxpayers said they will be spending their tax refund on necessities.
Not surprisingly, student loan debt creates a significant amount of financial burden for Gen Z and millennials. Fifty-four percent of Gen Z and 48% of millennials said they need their tax refund to cover loan repayments.
Debt Hurts Gen X, Too
Despite the survey results, further research shows that Gen X is struggling just as much as their younger counterparts. A research collaboration from PYMNTS Intelligence and Sezzle found that Gen X has debt equal to 3.97 years of annual disposable income. The researchers define disposable income as wages, bonuses, dividends and other income sources after deducting taxes and mandatory contributions. More members of Gen X also hold mortgages compared to millennials, which contributes to their mounting debt.
Tax Savings for Gen X
While Gen X may hold substantial debt, they might have more opportunities for tax benefits than their younger counterparts. Owning a home entitles them to certain tax credits. And Gen X, more than any other cohort, is more likely to be caring for their own children and to claim aging parents as dependents. While this means more day-to-day expenses, it also leads to tax credits that can reduce their tax bill or boost that much-needed tax refund.
Baby Boomers Not Poised to Pass on Their Massive Wealth
According to Federal Reserve data, baby boomers have the highest net worth of any generation by a landslide. As of mid-2023, boomers had accumulated nearly $80 trillion, compared to less than $20 trillion for millennials and roughly $42 trillion for Gen X. (Data for Gen Z was not available at FederalReserve.gov.)
That means boomers hold 52.8% of the wealth in the U.S. Unfortunately, high healthcare costs for older Americans mean much of that money won’t be passed down to heirs.
Bottom Line
In today’s inflationary economy, no generation has it “easier” than others. Your personal situation, your income source (and level), and how you manage money and prioritize spending all play into your financial future.
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