The forgotten generation keeping Britain running
Kate watches the war between millennials and baby boomers with some bemusement. As a member of Generation X, sandwiched between them, hers is an experience rarely discussed with the same fervour.
'We endlessly hear about millennials and the housing market, but Gen X missed the cheaper housing boom too,' says Kate, who asked not to give her second name. 'The joke about, and among, Gen X is that we are the forgotten generation. Ignored by our parents and the media alike, we are actually the ones keeping the country running.'
She may have a point. Many members of Generation X – the cohort born between 1965 and 1980 – were denied the financial spoils granted to baby boomers, yet receive none of the pity (or scorn) afforded to millennials and Gen Z.
Now aged between 45 and 60, they were too young to benefit from lucrative final salary pensions, but too old for auto-enrolment to make much of a difference. Their best years were blighted by financial crises, just as house prices soared out of reach.
'I was pay cheque to pay cheque'
Kate, now 56, moved from Australia to London 30 years ago. She argues that life was tough for many young Gen Xers, which had a knock-on effect later in life.
'We largely left home, or were thrown out, at the age of 18, unlike younger generations who have been able to continue living with their parents throughout their 20s and even into their 30s,' she recalls.
London in the 1990s was not cheap, either. 'I was very much from pay cheque to pay cheque, despite having a university degree,' recalls Kate. 'My friends and I used to have clothes-swapping parties in order to have something 'new'. There is no way I could have saved for a deposit for a home.'
Twenty-somethings today grappling with the brutal rental market can take some comfort in the fact that the struggle never changes. Kate describes rent devouring around half of her monthly take-home pay.
'A friend of mine had three different jobs that paid for three different things – her rent, her bills and discretionary spending,' she says. 'In those days, you had to go through your bills line by line with your flatmates.'
Kate ended up renting into her 40s, well after the point she had hoped to finally get a foot on the housing ladder.
'There was a massive rise in house prices in the 1990s and I wasn't in a position to buy,' she recalls. 'Council houses were being sold off, and I feel Gen X missed out on that. I recently bought my first flat and was only able to do so because my mother died prematurely of cancer and I inherited her house.'
The 2008 financial crisis hit Gen X right around the time they were turning 30, souring dreams of homeownership for many. Housing affordability, defined as the ratio between house prices to annual earnings, had been rising throughout the decade, but plummeted as the world went into recession and borrowing became more difficult.
Some, like Kate, ended up trapped in rental housing long after their incomes might have suggested they could buy – a familiar story to frustrated millennials. In 2020, the Office for National Statistics warned that Gen X, then in their mid-30s, were three times more likely to be renting than the same age group 20 years before.
'I feel like I missed out'
Others, like Adrian Evans, 56, were lucky enough to buy property before interest rates soared in the 90s. A lucrative stint in a factory in his 20s ensured he could pay off his mortgage after eight years.
'Houses are really overvalued,' he says. 'I think the banks have let this happen, and I do have sympathy for younger generations, but I also wonder if maybe some of them didn't need to go to uni and saddle themselves with all that debt.'
But it hasn't been an easy ride. When Evans left school in the 1980s, the future looked uncertain. All around him in South Yorkshire, steel mines and factories were closing. Opportunities were scarce.
'It was devastating,' Evans says. 'I drifted between low-paid jobs. I recovered pool tables and even did a stint in an abattoir. You had to take the work because there was no work.'
Even now, Evans would struggle to describe his work history as resembling a career. He was born too early to be swept into university by Sir Tony Blair's pledge to make half of young people graduates. 'To be honest, I feel like I missed out,' he says.
The working lives of many Gen Xers, whether or not they were university educated, were devastated by financial crashes, the collapse of the dot-com bubble, and in Evans's case, deindustrialisation.
'I remember just before my 40th birthday trying to organise a party, knowing lay-offs were looming at work,' Evans says of the climate in the mid-2000s.
Official figures show that by the middle of their working lives, Gen X begin to stagnate financially. Over the 10 years following graduation, their average disposable income grew by 72.6pc, but over the next decade, taking them to middle-age, this figure plummeted to 5.5pc.
Even millennials are faring better in this regard. It is yet to be seen how theirs and Generation Z's earnings will perform later in life, but income growth for late-career Gen Xers is a mere 9.6pc, compared to 35.8pc for boomers and 57.5pc for those born in the 1940s.
Those who did manage to secure a home have been lucky. Though they may have accumulated housing wealth more slowly than their elders, Gen Z and Millennials still have it worse in this regard, says Lucian Cook of Savills.
Over 60s account for £2.89 trillion in housing wealth, equivalent to more than half of all owner-occupied homes. Meanwhile, Gen X has amassed £2.4 trillion in bricks and mortar, compared to the £820bn owned by millennials.
'Baby boomers have continued to build wealth, having largely paid off their mortgages and benefited from decades of rising property values,' Cook says. 'Generation X is following a similar path. However, millennials and Gen Z have had much less opportunity to work their way up the housing ladder profitably due to higher prices, stricter lending criteria and weaker wage growth.'
'Stuck in the middle'
Another quirk of timing means that many members of Gen X's careers have slowed down or been derailed just as they reached their supposed peak earning years, causing a knock-on effect on their retirements. Financial crises aside, some industries – particularly in media and the arts – shrank rapidly throughout the 2000s and 2010s.
Paul Sanders, 58, is a self-employed music teacher and has seen this happen first-hand as his pay stagnates relative to rising living costs.
'My income has effectively stayed at a fixed level,' he says. 'I remember starting out thinking this is quite good now, but in real terms, it will be the same by the time I retire.'
Pay for arts teachers has been eroded by inflation, he says, to the point that music itself has become a discretionary spend. Sanders believes he is lucky that his father, a former bank manager, imparted the basics of financial planning, so he has saved into a private pension throughout his working life.
Polling by Standard Life paints a bleak picture of Gen X's pension prospects, who have been left behind by their wealthier older peers. More than half of Gen X fear their finances will not cover their retirement, compared to just 31pc of baby boomers.
This is because Gen Xers were 'caught between the decline of defined benefit pensions and the massive expansion in defined contribution savings over the past decade', says James Norton, of Vanguard.
Lucrative final salary schemes were in decline by the time Gen X were in the early stages of their careers. In 2000, more than 9 million people were members of one of these defined benefit schemes, a figure that had dropped to 6.8 million by 2012.
Many members of Gen X neglected to take up defined contribution alternatives, while auto-enrolment – which ensured workers saved into a pension – only came about in 2012. Since 2020, fewer than one in 20 defined benefit pension schemes were open to new members, with almost 72pc closed to future accrual in 2023, the House of Commons' Work and Pensions Committee found.
Lily Megson, of My Pension Expert, says: 'Many Gen Xers missed out on pension growth in their early career – in fact, around two-thirds of over-40s wish they'd been taught about pensions earlier, and some didn't benefit from auto-enrolment until well into their working lives. Now they're playing catch-up with retirement on the horizon.'
Higher life expectancy mean that members of this generation are inheriting later, while they are also having longer working lives, says Simon Wong, wealth planner at JM Finn. All the while, they are sandwiched between looking after ageing parents and paying for their children into adulthood.
'Boomers were comparatively young when they had children. Gen Xers tended to have children later,' he adds. 'They're now supporting both university-age children and ageing parents in their care home period, and doing it on rapidly shrinking salaries with 10 to 15 years to go to reaching an increased state pension age of 67.'
Sanders, for his part, has made his peace with where being born into Generation X has left him. 'I stayed doing what I was good at,' he says. 'I could have gotten a salaried job and climbed the greasy pole, and I am certainly glad I didn't.'
Even so, there is a lingering sense that maybe if he'd been born earlier, his fortunes might have improved. On this 50th birthday, he wistfully went looking for a new home, but found the endeavour rather pointless.
'I did envisage myself upsizing by this point, but for what I could afford, there was no significant improvement to what I have now. I'm stuck in the middle.'
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