Weekend Economists Talk Like Pirates September 19-21, 2014

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23. College Debt Leaves Generation X Grads Less Wealthy Than Parents

http://www.bloomberg.com/news/2014-09-18/college-debt-leaves-generation-x-grads-less-wealthy-than-parents.html

Most college-educated 30- and 40-somethings earn more than their parents did at the same age, yet they’re saving less. Student debt is partly to blame.

While 82 percent of Generation X Americans with at least a bachelor’s degree earn more than their parents did, just 30 percent have greater wealth. A smaller share of workers without college education -- 70 percent -- have surpassed their parents’ incomes yet almost half had higher wealth, according to a Pew Charitable Trusts report released today.

Lackluster saving among the cohort, those born between 1965 and 1980, has come as student-loan balances persist into middle age. Generation X’s financial straits could come with economic aftershocks, making it difficult for parents to afford college for the next generation and forcing workers to hold onto jobs longer or lower their living standards as they age.

“They may not be financially secure as they approach retirement,” said Diana Elliott, research manager at Pew’s Economic Mobility Project. “To the extent that Gen Xers are still paying student-loan debt, don’t have the wealth accumulated to invest in themselves, they also don’t have that money to invest in their children.”