As Generation X approaches retirement age, inflation appears to be weighing more heavily on them than on other people.
According to new study from State Street Global Advisors, a bigger percentage of Gen Xers (years 42 to 57) are anxious about the nation’s economic outlook, maintaining their quality of living, retiring on time, and being able to handle retirement expenses compared to millennials (ages 26 to 41) and baby boomers (ages 58 to 76).
“Gen X is showing signs of stress with the highest concern about inflation … the country’s economic outlook, market volatility, as well as their ability to stay the course,” stated Brie Williams, State Street Global Advisors’ head of practice management.
Based on an analysis of survey data from 243 persons with investable assets of $250,000 or more, the study was conducted. The error margin is 5% plus or minus.
Even while there were indications that inflation was slowing down in July, overall prices were still up 8.5% from a year earlier. In an effort to contain inflation, the Federal Reserve has raised a key interest rate five times this year. Another increase is anticipated to take effect next month.
Gen Xers reduced expenditures while maintaining retirement savings
The Fed’s target rate for inflation is 2%, thus the higher-than-average rate has led a larger proportion of Gen Xers (61%) to reduce discretionary spending like eating out. It is 37% for millennials and 54% for baby boomers.
The results are comparable for necessities like groceries and gas: Compared to millennials (26%) and baby boomers (21%), Gen X has made bigger cuts (41%).
Additionally, they are more likely than the other generations to have reduced contributions to their normal savings accounts (36% against 18% for the other generations), but not to their retirement accounts. Only 5% of Gen Xers, compared to 18% of millennials and 11% of boomers, say they have reduced the amount they contribute to their retirement nest egg.
“I think the actions that they’re demonstrating are relatively prudent so far,” Williams said.
The tightening of the purse strings and modifications to short-term expenditure and financial goals may also have an advantage later on, Williams added.
The age group “is trying to lean on their resilience to navigate the way forward,” she said. “When you see Gen Xers taking a prudent [approach] … it means sticking to a budget or investment discipline will be easier when the economy improves.”