Generation X retirement prospects challenged by student loan debt

Didier Malagies • August 21, 2023


The oldest members of Generation X — the cohort most experts define as having been born between 1965 and 1980 — will soon be confronted with financial challenges that could have notable impact on their ability to save for retirement: the resumption of student loan payments. As pandemic-era interest and payment relief is set to expire this coming fall, which makes future planning more challenging, according to a report from the New York Times.


“As of the first quarter of this year, members of Generation X held about a quarter of the nation’s outstanding $1.6 trillion in student loan debt — to the tune of nearly $49,000 per borrower, according to TransUnion, the credit reporting bureau,” the Times reported.


The challenges are far from isolated to individual members of Gen X, according to experts interviewed by the Times.


“In general, we’ve seen clients focusing more on savings and not focusing on those student loans, ”said Trent Graham, a financial counselor at GreenPath Financial Wellness to the Times. “They really didn’t have a plan to address those student loans.”


Graham described that many Gen X student loan borrowers were “surprised” by how much the debt could grow, as such loans have generally continued to accrue interest even when placed in forbearance or deferment, though deferment of subsidized loans do not accrue additional interest as noted by the Times. However, pandemic-era pauses also paused interest accruals — an unusually high level of relief for such loans — in addition to suspending required monthly payments.


A big impact of student loan debt is that borrowers of such loans are less likely to save anything for retirement, according to Matt Rutledge, an associate professor of the practice of economics at Boston College.


“It’s the presence of any loan at all; if you have a loan, you probably think of yourself as not having the bandwidth to think about retirement yet,” he said, noting that 65 million members of Generation X will see an outsized impact even as they reach the peak of their earnings potential.


“For people who have been carrying these loans for multiple decades, they probably didn’t save much to begin with, so you really are taking away some of their best saving years,” Rutledge added.


Generation X is already very debt-burdened. According to data from LendingTree cited by the Times, the Generation X cohort has the most debt in terms of both mortgage and non-mortgage obligations, averaging to a level of roughly $167,000 per borrower.



The oldest members of Generation X will all turn 58 by the end of 2023. This means that the cohort is five years away from qualifying for a Home Equity Conversion Mortgage (HECM), but certain older members of the generation already qualify for certain proprietary reverse mortgage loans with a minimum qualifying age of 55.


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