The modern age is witness to a fascinating spectacle – debt knows no generational bounds. Usually, people in the accounts receivable management industry look at the age of an individual in order to determine the best contact strategy (ie, focusing more on digital communications with younger individuals and phone calls with older ones), but someone’s age also plays a role in how they manage and pay their debts, according to a new study from LendingTree. Whether it’s Baby Boomers, Gen Xers, Millennials or Gen Zers, each generation carries its own burden of debt. But the strategies to tackle debt and the intensity of financial obligations vary significantly between these generations, leading to unique debt patterns and trends.
The Generation X Predicament
Gen Xers (ages 43-58), bear the heaviest burden, carrying the highest average mortgage and nonmortgage debt of any generation. The average nonmortgage debt for Gen Xers, $45,781, is more than double that of members of Generation Z. Gen Xers also saw a considerable portion of their nonmortgage debt in auto loans, accounting for 36.8% of the total.
Surprisingly, both Baby Boomers and Gen Xers saw a drop in their nonmortgage debt between 2021 and 2023, with reductions of 26.4% and 2.8% respectively. In contrast, Gen Zers and Millennials experienced debt increases during this period.
Boomer Debt Reduction Success
Between 2021 and 2023, Baby Boomers managed to reduce their total debts by $21,870 (15.5%), resulting in an average balance of $119,017. This significant reduction is especially noteworthy as Boomers were the only fully adult generation to increase their debt during the COVID-19 pandemic, providing them with more room to decrease these debts.
Debt Among Younger Generations
While the older generations managed to reduce their debts, younger consumers such as Gen Zers and Millennials saw increases. Gen Zers notably increased their nonmortgage debt by 99.3%, adding an average of $10,797 between 2021 and 2023, with significant spikes in personal loans and credit card balances.
Millennials, on the other hand, remained the second-highest nonmortgage debt carriers, with an average balance of $41,557, despite being over $43,000 lower than Gen Xers in total debt.
The Bigger Picture
In essence, the debt scenario manifests the weight of financial responsibility that tends to increase with age, particularly for Gen Xers. Despite carrying the most debt, Gen Xers managed to reduce their nonmortgage debt, albeit marginally, between 2021 and 2023.
Contrastingly, Baby Boomers significantly reduced their debts, while younger generations saw increases. This disparity underscores the unique strategies and financial pressures different generations face, underlining the importance of personalized debt management solutions.