Why Are Gen Xers So Stressed About Money?

Money Mindsets sat down with Harness Wealth cofounder David Snider.

Snider is a former investor at Bain Capital, and he lost over $1 million due to bad investment advice when Harvard academics misguided him on what to do with early equity. He realized that financial advice isn't "one size fits all." Here we discuss a survey that set out to investigate Generation X’s investment and savings behaviors, and the anxiety Generation X feels about finances.

David Snider, CEO of HarnessWealth

Source: Harness Wealth.

Question: What are some of the challenges facing Generation X, unique to their generation, and how do they impact their financial planning needs?

Snider: Generation X, situated between Millennials and Baby Boomers, are typically referred to as the “sandwich generation” because of the dual caretaker roles many fill as they care for both aging parents and children of their own. Their complex family needs require Generation X to consider education and living costs for their children, as well as medical and caretaker needs for their parents. Those with aging parents will also need to prepare for an upcoming wealth transfer.

In addition to family needs, Generation X is also far more likely than Millennials to have wealth wrapped up in a small business. A number of those in Generation X are self-employed, and they’ll need to pass on or sell their business eventually, which requires thorough tax and estate planning.

More so than their predecessors and successors, Generation X is incredibly busy. For the typical medium- and high-net-worth Generation X household, both members are in the labor market and working longer hours than their parents did. This leaves less time left over to dedicate to financial planning.

Lastly, Generation X, especially the oldest of the generation, is also nearing retirement age, which requires significant financial planning for financial security.

Question: How have these financial planning challenges impacted Generation X emotionally and psychologically?

Snider: For a generation not far from retirement, financial security really matters. But according to a 2019 study by MetLife, more than one-third of Generation X workers don’t feel confident about their finances. This could be because, according to that same study, only 53 percent of them have saved equivalent to only three months of their salaries. This is incredibly stressful and anxiety-producing, as older individuals in Generation X are planning to leave the labor market, but don’t have enough money saved up for retirement.

Their unique family needs, caring for both children and aging parents, is another added stressor for Generation X. To have two different generations dependent on them financially can create not only a financial burden 5but an emotional one as well.

Question: I see you conducted a survey to investigate Generation X’s investment and savings behavior. What did the findings reveal about the anxiety Generation X feels about their finances?

Snider: More than half of the respondents, or 56%, reported moderate to extreme anxiety managing their finances. Digging deeper, nearly three-fourths, 72%, of those with below $250K in assets and 50 percent with $250-750K indicate they feel they lack strong knowledge of financial planning. They’re worried about their financial knowledge deficiencies, yet their needs simply aren’t being met.

A large majority, 83 percent, feels comfortable with fintech, though only 7 percent are using online tools primarily. Of those who don't have an adviser, 81% would use one if they found the right one. But they’re having trouble meeting their match.

Despite the stress and anxiety that Generation X is feeling over how to manage their finances, they don’t know where to turn. Lacking the knowledge of how to manage their finances themselves but not knowing where to find the right advisor is only adding the stress levels of Generation X.

Question: What were some of the reasons why Generation X couldn’t manage their finances themselves?

Snider: During prime working years for most of Gen X there was a shift in companies managing their employees’ retirement savings through pension plans to an employee-directed model of 401(k) savings. That shift was not accompanied by a commensurate amount of financial education. Not surprisingly, the majority of those in Generation X believe that they lack the expertise to manage their own finances, even though they spend a significant amount of time on money management.

Question: Did any of the results of the survey give you hope for Generation X?

Snider: Though the catalyst is an unfortunate one, Gen X is expected to inherit over $20 trillion over the next decade, and many still have many more prime working years to generate wealth. The key for everyone in this group is being proactive in ensuring that they are taking actions now to ensure they have a financial plan to make the most of whatever their situation is. Gen X survey respondents indicated a broad openness to using a financial, estate, or tax planning advisor, and of those who do not currently have an advisor, 81 percent said that they would use one if they believed them to be the right fit.

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In our survey results, individuals who manage their finances with a financial advisor are twice as happy as those who self-manage. Being able to find the right advisor significantly improved Generation X’s peace of mind knowing that their finances were being properly managed.