An increasing comfort with debt may be having a negative effect on Americans’ ability to save for retirement — particularly so for Generation X.
A new study from Allianz Life Insurance Co. of North America, Generations Apart, finds that nearly half (48%) of both Gen X and baby boomers agree that credit cards now function as a survival tool.
“Over the last three decades, there has been a collective shift in how people view debt — it’s now perceived as a normal part of one’s financial experience and that has fundamentally altered the way people spend and save,” said Katie Libbe, Allianz Life vice president of Consumer Insights, in a statement.
While debt plays a significant factor in any generation’s ability to save, what’s striking is how Generation Xers are burdened by significantly greater debt loads than baby boomers.
According to the study, Gen Xers reported carrying about 60% more mortgage debt than their boomer counterparts (average of $144,000 versus $90,000 for boomers), 140% more student loan debt (average of $12,000 versus $5,000 for boomers) and 33% more credit card debt (average of $8,000 versus $6,000 for boomers).
In addition to carrying more debt, more Gen Xers see debt as a necessary way of life.
The study suggests that Gen Xers’ greater debt load may be related to earlier use of credit cards.
According to the study, 76% of Gen Xers got their first credit card at age 18 to 24, versus 68% of baby boomers.
The bigger concern, though, is how the study finds Gen Xers are currently using credit to finance their lifestyles.
The study finds that one in five Gen Xers believe that going into debt to handle day-to-day purchases is “just a fact of life” versus only 14% of boomers. And, according to the study, nearly half of Gen Xers revolve their credit card balances (only paying a portion each month) compared with 32% of boomers.