Generation X cuts expenses due to high inflation and saves hard for retirement

By Sarah O'Brien —

As Generation X approaches retirement, inflation seems to weigh more heavily than for others.

Compared to millennials (ages 26-41) and baby boomers (ages 58-76), a higher proportion of Gen Xers (ages 42-57) are concerned about the country's economic prospects and how to maintain their standard of living, retire on time and afford the costs of retiring from work, according to a recent study by State Street Global Advisors.

The research was based on a survey of 243 adults with investments of $250,000 or more.

The margin of error is 5%.

Although inflation showed signs of moderating in July, it was up 8.5% from a year earlier.

The Federal Reserve has raised the key interest rate several times this year in an effort to rein in inflation, and is expected to make another hike next month.

Members of Generation X cut their expenses

The higher-than-normal pace of inflation — the Fed's target is 2% — has caused a larger proportion of Gen Xers (61%) to cut back on expenses such as dining out.

Among millennials, it is 37%;

and in boomers, 54%.

When it comes to essential purchases like food or gas, the results are similar: 41% of Gen Xers have cut back, more than millennials (26%) and boomers (21%).

They are also more likely to reduce

— 36% versus 18% for the other two generations — but

Only 5% of Gen Xers say they have cut back on the amount they contribute to their retirement savings, compared to 18% of millennials and 11% of boomers.

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“I think the actions that they are showing are relatively cautious so far,” Williams said.

This age group “is trying to lean on their resilience to navigate forward,” he added, “when you see them take a cautious [approach], it means that sticking to a budget or investment discipline will be easier when the economy get better”.