Segmenting US households by Generational Age Cohort is often productive because doing so provides marketers with reference points—the shared experiences of cohort members. Age cohorts also provide a general direction about Life Stage. For example, overall, Generation X members are not only in their peak earning years but also among the most likely of all households to have dependent children. All segmentations, however, have some limitations. It is always a good idea to define clearly your end-goal application before deciding which type of segmentation to use. A close look at Generation X–headed households provides an excellent opportunity to study how differences within cohort members can be misleading. Gen X–headed households are the smallest of the age cohorts—roughly 33 million of 130.6 million US households. For this segment summary, the age cohort divides roughly into thirds: Youngest and Middle households each represent about 10.3 million households; Oldest, 12.1 million households.

Demographics

Youngest, Middle, and Oldest subgroups of Generation X households exhibit important demographic differences. Most notable is the difference in education: 43% of Youngest household heads (HHHs) have a four-year college degree or higher, in comparison with 29% of Middle HHHs, 31% of Oldest HHHs, and 32% of all US households.

• The mean annual income for young Gen X households is $77K; it is $74K for both Middle and Oldest Gen X households.
• All Gen X HHHs are more likely than average to have full-time employment.
• The majority of households have dual heads. Oldest households are more likely than the other two subgroups to have single heads.
• Youngest households are two times more likely than average to be married no-child households; Middle households are three times more likely than average to be married no-child households. Almost half of Oldest heads are preretired.
• All three subpopulations are more likely than average to have dependent children. Youngest and Middle are the most likely to have children younger than age 11; Middle are somewhat more likely than Youngest to have children between the ages of 12 and 17. Middle and Oldest are more likely than average to have an oldest child age 18 or older. Oldest households are also more likely than average to have Boomerang Kids. Dependent-child differences reflect Life-Stage differences.

Financials

Postrecession, many Gen X households are financially fragile. About half of Middle and Oldest households either require assistance or struggle to make ends meet, in comparison with 40% of Youngest Gen Xers and the same proportion for all US households. Youngest households are more likely than Middle and Oldest households to feel financially stable. Overall, the majority of Youngest and Middle Gen X households are somewhat confident about their financial future. It is troubling that 42% of the Oldest—those closest to retirement—are not very or not at all confident.

• Youngest households have higher-than-average liabilities and significantly below-average savings, assets, home equity, and net worth. Middle households are similar. Oldest households have above-average savings, financial assets, investable assets, and total liquid assets. Their total assets and liabilities are average in comparison with those for all households; home equity and equity in other real estate are below average.
• All Gen X households have below-average mean amounts in retirement products: $72K for Youngest, $91K for Middle, and $161K for Oldest (average mean for all US households is $171K). For Younger cohort members, in particular, low balances are not surprising.
• For some households, the mean amount owed on education loans inhibits their ability to save and invest. Youngest households owe a mean of $35K, Middle households owe $46K, and Oldest households owe $27K.
• Youngest and Middle households are more likely than average to have a 401(k), 403(b), or 457 plan; they are below average for using a full-service stockbrokerage.

Financial Attitudes and Tidbits

Youngest Gen X households are not yet ready to focus on retirement; Oldest households (mean age 47) should be ready. Delayed family formation and the presence of Boomerang Kids, in combination with lower-than-average assets, indicate that Oldest cohort members will follow Boomers' late-retirement practice. One-fifth or more of Youngest and Middle households expect an inheritance to increase their retirement income; depending on their parents' longevity, an inheritance may be a dream rather than a reality.

• Roughly 95% of Youngest HHHs use the internet for banking, for credit- or loan-product application and acquisition, for insurance, and for other financial services; they are more likely than other Gen Xers to use the internet except for online investing.
• In the past two years, Youngest HHHs are more likely than average to use a wireless device to transfer funds and make peer-to-peer transactions; Oldest are more likely than average to trade stocks, manage financial accounts, and research financial products.
• Youngest households are more likely than average to be interested in learning about investing and preparing for retirement; Middle households, in learning more about choosing investments, life insurance, and retirement; Oldest households, in learning about credit and debt management, health insurance, mortgage refinance, and retirement preparation. The majority of Gen Xers do not use any sources for financial information.
• Middle households are less likely than average to be satisfied with their financial situation; they are more likely than average to be spenders rather than savers.
• Oldest households are more likely than average (38%) to resent financial-institution profits from their business—possibly because they were hit hardest during the recession.

Implications

As Youngest Generation X–headed households mature, they will have many financial-product and -service needs. The data suggest that even more of their products than at present will be commodities; in combination with technology comfort, one result is that more they will research products and services and buy online. Similar to the oldest Millennials, most Youngest Gen Xers aren't interested in engaging in personal interactions, especially for commodity products. Middle Gen X–headed households will continue to struggle; they represent the best opportunity for basic financial products and services and for new offers to help manage debt, provide protection, and save—a minority will become investors. Oldest Gen X–headed households are the best target for retirement products and information and advice—over half are planners, savers, and financially responsible.

Learn more: Contact us to request an on-site presentation of these findings along with a Q&A session. Presentations are available to MacroMonitor subscribers for a small additional fee.