Generation X
This generation is not only saddled with the highest mortgage debt of all the age groups but they also owe the most debt. In a recent study by Go Banking Rates, they found that 46% of this generation carries credit balances with an average of $4000 or more.
According to Experian's research, Gen X actually carries more debt per individual than the average millennial.
With federal student debt totaled at $1.57 trillion, the majority of federal student debt is concentrated with Generation X. The average Baby Boomer with student loans tends to owe more than the average Millennial. However, on the national scale, Millennials have a larger overall debt than Baby Boomers.
Another source of increased student debt is higher college attendance. Since 2000, undergraduate enrollment has increased by more than 3.5 million students. 95 More people are getting graduate degrees too. 96 For many, borrowing money to pay for training and education can yield returns over a lifetime.
It's the second largest form of debt in the United States behind home mortgages. 74% of Gen Z borrowers and 68% of millennials who took on student loan debt for their higher education delayed a major financial decision as a result of their debt, according to a report released Wednesday by Bankrate.com.
Former Société Générale rogue trader Jérôme Kerviel owes the bank $6.3 billion.
Senior citizens remain the age demographic with the largest amount of outstanding debt, and have reduced it by the slowest rate since 2008 (just 6 percent), while 25-34 year-olds paid theirs off quickest, at a reduction rate exceeding 50 percent.
“Shark Tank” investor Kevin O'Leary has said the ideal age to be debt-free is 45, especially if you want to retire by age 60. Being debt-free — including paying off your mortgage — by your mid-40s puts you on the early path toward success, O'Leary argued.
Boomers are most burdened by credit-card debt, which an average of 81.4% of boomer consumers are dealing with. That's more than any other generation, and they also carry the highest overall median balance of $3,958.
Key findings
Just 13% of millennial credit cardholders are debt-free, slightly higher than the 11% of Gen Xers who said the same, but far less than the 29% of baby boomers without any debt. 67% of millennials report having credit card debt, while just 36% face student loan debt.
That is why the generations today each span 15 years with Generation Y (Millennials) born from 1980 to 1994; Generation Z from 1995 to 2009 and Generation Alpha from 2010 to 2024.
Since debt balances grow with age—peaking at 46—the fact that the younger members of a generation have less debt than their older peers isn't exactly surprising.
Americans owe about $1.75 trillion in student loans, according to data from the Federal Reserve. Millennials owe an average of $38,877 in student loan debt, according to an Experian consumer debt study. 36% of US millennials say student loan debt is keeping them from owning homes, a survey found.
$929 billion in student loan debt belongs to women. Women hold 58% of all student loan debt. Female student borrowers have an average debt is 9.6% higher than their male peers one year after graduation. Women take an additional two years on average to pay off student loans.
White Americans have the highest average credit card debt of any racial group at $6,940. Higher income corresponds to larger credit card balances, but consumers in the middle income brackets are the most likely to have credit card debt.
And yet, over half of Americans surveyed (53%) say that debt reduction is a top priority—while nearly a quarter (23%) say they have no debt.
States With the Least Debt in 2020
Alaska takes the No. 1 spot, with a tiny debt ratio of only 14.2%. Its total liabilities amount to only $12.65 billion compared to total assets of approximately $89.17 billion in 2019.
Generally speaking, a good debt-to-income ratio is anything less than or equal to 36%. Meanwhile, any ratio above 43% is considered too high.
In February, a Bankrate survey observed that 54% of younger millennials and 46% of Gen Z respondents said their emergency savings had declined since 2020. The survey also revealed that millennials were more likely than other generations to have higher credit card debts than savings balances.
Being Frugal
One of the biggest shared financial habits that millennials and Gen Z inherited is frugality, according to Starr Wells, owner of personal finance blog A Centsational Life.
When asked about their personal finance knowledge, Gen Z is specifically concerned about taxes. Paying taxes ranks as their second biggest concern and the No. 1 skill they'd like to learn, according to Investopedia's survey. The other big concerns for Gen Z are saving, borrowing, and managing debt.