Debtmerica | How Debt Varies Across Generations in 2024

Debt is a defining feature of personal finance, and how generations manage it reveals a great deal about their economic experiences and financial habits. In 2024, debt levels and types vary significantly across generations, shaped by factors such as homeownership, student loans, cost of living, and overall financial stability. Let’s take a closer look at how debt differs across the generations, from Generation Z to the Silent Generation, and what it means for their financial futures.

Generation Z (Ages 11-26): The Newcomers to Debt

Generation Z, the youngest generation in the workforce, is just beginning to encounter debt, primarily through student loans and credit cards. Their debt profile includes:

Student loan debt: With many Gen Zers entering or recently graduating from college, student loans represent their largest debt burden. Although the cost of higher education continues to rise, many Gen Z students are more cautious about borrowing than Millennials were, thanks in part to lessons learned from the previous generation.

Credit card debt: As they establish credit histories, Gen Zers are using credit cards, but often in lower amounts. Their average credit card balance is relatively low compared to older generations, as they tend to use debit cards and digital wallets more frequently.

Tech-driven spending habits: Many Gen Z individuals rely on fintech solutions to manage debt, helping them monitor their finances and avoid falling into high debt early on. However, rising living costs and inflation mean that many could face growing debt burdens as they establish their careers.

In 2024, Generation Z’s total debt is still modest. According to LendingTree, this generation owes a median of $27,781 across the largest 100 metropolitan cities in the country. However, this is expected to increase as they take on more responsibilities such as housing, transportation, and personal loans.

Millennials (Ages 27-42): The Generation with the Highest Debt

Millennials have the unfortunate distinction of carrying the highest levels of debt among all generations. Their financial challenges are numerous and varied, stemming from a combination of high student loan debt, rising housing costs, and the after-effects of the Great Recession. Their debt profile includes:

Student loans: Millennials were hit hardest by the student debt crisis. As of 2024, many are still paying off student loans, with some carrying tens of thousands of dollars in debt. This burden has delayed major life milestones like homeownership and starting families.

Housing debt: Millennials have begun to enter the housing market in significant numbers, but high home prices and interest rates have led to substantial mortgage debt. For those who managed to buy homes, many are stretched thin by mortgage payments, especially in urban areas.

Credit card and personal loans: Millennials, more than any other generation, rely on credit cards and personal loans to bridge gaps in their budgets. This is especially true given rising living costs, healthcare expenses, and childcare. Many are juggling high-interest credit card debt alongside student loans and mortgages.

The financial pressures faced by Millennials have led them to adopt more frugal habits in some areas, but their debt load remains a major concern as they enter middle adulthood.

Generation X (Ages 43-58): The Sandwich Generation with Diverse Debt

Generation X, often referred to as the “sandwich generation” due to their responsibilities for both aging parents and growing children, carries a substantial amount of debt, though it is more diversified than that of Millennials. Key aspects of their debt include:

Mortgage debt: Many Gen Xers are in the middle of their mortgage payments, contributing to their overall debt. With homeownership rates high in this generation, mortgages form the largest portion of their financial obligations. In some cases, they may also be managing second mortgages or home equity loans.

Auto loans: As Generation X is in their peak earning years, they often take on auto loans for new vehicles, which can add to their debt load. However, they are typically better positioned to pay down this debt quickly compared to younger generations.

Credit card debt: Generation X holds a significant amount of credit card debt, as they are balancing family needs, children’s education, and other lifestyle expenses. Unlike Millennials, however, they tend to have higher credit limits and more established credit histories, giving them more options for managing their debt.

Generation X tends to have a balanced but substantial debt load, which reflects their stage in life—supporting family, paying for children’s education, and preparing for retirement while managing home and lifestyle expenses.

Baby Boomers (Ages 59-77): The Retiring Generation with Mortgage Debt

As Baby Boomers near or enter retirement, their debt burden is decreasing but remains significant, particularly in the form of mortgage debt. In 2024, Baby Boomers are:

Paying off mortgages: Many Baby Boomers are either nearing the end of their mortgage payments or have paid off their homes entirely. However, those who purchased homes later in life or took out second mortgages are still managing substantial mortgage debt.

Minimal student loan debt: Unlike Millennials and Gen Z, Baby Boomers have relatively little student loan debt. However, some may have taken on loans to help their children or grandchildren, adding to their financial obligations later in life.

Credit card and medical debt: Baby Boomers tend to carry less credit card debt than younger generations, but those with credit card debt may face higher interest rates. Medical debt also becomes a growing concern as they age and healthcare costs rise.

Despite carrying less debt than younger generations, Baby Boomers are focused on paying down what remains as they transition to fixed incomes in retirement. Their financial goals are shifting toward reducing liabilities and maintaining financial security in their later years.

Silent Generation (Ages 78-95): The Debt-Free Generation

The Silent Generation, many of whom are well into their retirement years, have the lowest levels of debt. Their debt profile is characterized by:

Minimal or no debt: Most in the Silent Generation have paid off their mortgages and other forms of debt, entering retirement with little to no outstanding financial obligations. They have traditionally been more conservative with credit and borrowing, reflecting the values of their era.

Healthcare expenses: For this generation, medical debt may be the primary financial concern. As healthcare needs increase with age, out-of-pocket expenses for treatments, prescriptions, and long-term care can add up, though many rely on Medicare or supplemental insurance.

The Silent Generation has largely transitioned away from debt as a financial tool, focusing on preserving wealth and managing their healthcare costs in their later years.

Debt Help for Any Generation

In 2024, debt continues to be a defining feature of the financial lives of Americans, but it manifests differently across generations. Generation Z is just starting to encounter debt, mostly through student loans, while Millennials bear the brunt of educational costs and high living expenses. Generation X balances a wide array of debts, from mortgages to credit cards, while Baby Boomers work to shed debt as they approach retirement. The Silent Generation, in contrast, has largely moved beyond debt, focusing on maintaining their financial independence in retirement.

Understanding the different debt burdens across generations is essential for tailoring financial advice and helping individuals better manage their personal finances. Whether it’s paying down student loans, managing mortgage payments, or preparing for retirement, each generation’s approach to debt reflects their unique economic challenges and life stages. Debtmerica Relief has over 18 years of experience in providing relief to our clients whose financial burdens have become too much to handle.

If you need help with debt, contact us for a free consultation.