Generation X, the generation now entering its 60s, is experiencing a notable level of financial dependence on their parents, according to recent studies. A Northwestern Mutual study indicates that 33% of Gen Xers confess to relying on financial support from their parents, with 22% believing they will never achieve true financial independence. This sentiment is echoed by 42% of all adults surveyed who report feeling financially dependent on their parents.
This dependency is particularly striking for a generation largely in its peak earning years, juggling careers, homeownership, children, and aging parents. David Hood, a wealth management adviser, notes that the journey to financial independence for Gen X has been disrupted by multiple economic downturns, market corrections, and periods of rising costs. Events such as disability, illness, layoffs, or loss of a spouse can also derail financial plans, leading 59% of Gen Xers to believe achieving financial independence is more challenging today than for previous generations.
Homeownership, a common marker of financial stability, is a significant concern. Among Gen Xers who do not own a home, only 31% believe that owning a property is currently financially affordable or will be in the future, a decrease from the previous year. This pessimism is concentrated among those who have not yet entered the housing market, possibly due to lingering effects from the 2008 financial crisis or missed opportunities during the pandemic's low-rate refinancing window.
However, data from the National Association of Realtors® suggests a different reality for many in Gen X. The cohort boasts a median household income of $125,000 and represents 25% of recent homebuyers, purchasing homes with an average size of 1,900 square feet. Experts like Hannah Jones, senior economist at Realtor.com®, suggest that these statistics may represent two distinct groups within Gen X: those who have never owned a home and are struggling with affordability, and repeat buyers who are leveraging accumulated equity.
"Homeownership and financial independence are related, but they’re not the same thing," Hood explained. "For many Gen Xers, owning a home is a goal they’ve already achieved or one that feels tangible and attainable because it follows a relatively clear road map." He contrasts this with financial independence, which is broader and requires confidence in maintaining one's lifestyle through retirement amid future uncertainties.
A significant trend observed among Gen X buyers is a preference for multigenerational living. At 19%, they are the most likely generation to purchase a home designed for multiple families. The primary reasons cited for these purchases include accommodating adult children or other relatives over 18 moving back home (36%) and caring for aging parents (35%). This reflects the growing number of adults living at home and the pressures of affordability and caregiving.
This shift toward multigenerational housing might offer an alternative perspective on financial dependence. Instead of solely relying on parental financial transfers, Gen X may be pooling family resources and equity to purchase larger properties that can house multiple generations. This strategy could secure the financial future for all involved.
"Gen X’s buying power looks driven by something more mundane and more durable than a wealth transfer: They’re mostly repeat buyers drawing on 15 to 25 years of accrued equity, not first-timers relying on family cash," Jones noted. She added that the same forces driving housing wealth accumulation for Baby Boomers are at play for Gen X, albeit one step behind. Conversely, Gen X is increasingly becoming the generation that provides financial assistance, with 74% of parents with adult children living at home planning to help them buy a home, sometimes prioritizing it over college expenses.
Ultimately, Gen X's confidence in homeownership appears rooted in its attainability as a tangible accomplishment. Their lingering concerns about overall financial independence stem from a broader apprehension about preparedness for future risks and uncertainties, highlighting a desire for a robust financial plan that can withstand unforeseen life events.