Gen X: The New Struggling Middle Child Balancing Retirement and Adult Children

The economic landscape has shifted, and Generation X (Gen X), once considered the dependable consumer, now finds itself in a challenging position. As the Bank of America Institute's research reveals, Gen X is the "struggling middle child" of the U.S. economy, grappling with the dual responsibilities of saving for retirement and supporting adult children. This article delves into the financial pressures faced by Gen X and the implications for the broader economy.


The rise in discretionary spending among Gen X has slowed since early 2023, with spending down 2% year-on-year in August. This shift is not due to cost-of-living increases or wage stagnation but rather a strategic decision to invest and defer spending. As Joe Wadford, economist at the Bank of America Institute, explains, Gen X is allocating funds primarily to retirement savings and supporting young adult children.


The increased focus on retirement savings is a positive sign for the economy, as it indicates optimism about the future. Gen X's investment in 401(k) plans and individual retirement accounts (IRAs) has surged, with contributions 40% higher than other generations. Additionally, Gen Xers are taking advantage of catch-up contributions, allowing them to save more as they approach retirement age.

However, the financial pressures faced by Gen X are real and multifaceted. The rising cost of living and inflation have impacted their saving and investing decisions. Moreover, personal experiences such as caring for aging parents or supporting adult children have shaped their financial priorities. Changes in the job market, including increased job insecurity and shifts in career paths, have also affected their ability to save and invest for retirement.


To alleviate the financial pressures faced by Gen X, policy changes and initiatives could help. These could include tax incentives for retirement savings, affordable childcare options, and job market reforms to enhance job security. By addressing these challenges, policymakers can enable Gen X to better balance retirement savings and supporting adult children, ultimately fostering a more robust and resilient economy.


The shift in Gen X spending patterns has influenced consumer confidence and economic growth in the U.S. As the generation focuses more on investing and less on discretionary spending, businesses heavily reliant on Gen X's consumer spending may face challenges. However, the overall economy benefits from increased investment and a more optimistic outlook on the future.

In conclusion, Gen X's new role as the "struggling middle child" of the U.S. economy highlights the importance of addressing the financial pressures they face. By implementing targeted policy initiatives and fostering a more supportive economic environment, policymakers can help Gen X balance retirement savings and supporting adult children, ultimately contributing to a stronger and more sustainable economy.