A recent Experian study has found that the generation gap applies to finances and debt as well.
According to the study, baby boomers are strong and steady in their pursuit of the American dream, while Gen Y has focused on building credit with their student loan and auto loan payments. Generation X not only has the highest amount of debt but the second to lowest credit scores, and the Greatest Generation has reduced their overall debt and has the highest credit scores of all of the generations.
Findings from the study showcased the types of debts Americans have, the amounts they owe and the differences between the generations. The four groups studied are the Greatest Generation (age 66-plus), baby boomers (age 47 to 65), Generation X (age 30 to 46) and Generation Y (age 19 to 29).
"The gap between the highest and lowest average credit scores is vast–829 for the Greatest Generation to 672 for Generation Y–yet the amount of average debt for these two groups is very close. On the other hand, the baby boomers and Generation X are carrying much higher amounts of debt–about three times more–than the Greatest Generation and Generation Y," said Michele Raneri, vice president of analytics, Experian.
Based on the results, nationally, the average debt in the United States was revealed to be $78,030 and the average VantageScore as 751. Average debt was calculated using first and second mortgage loans, auto loan/lease, other types of installment loans, as well as revolving accounts, but not necessarily a combination of all for each consumer.
The study looked at the distribution of debt over six key areas, including first mortgage, second mortgage, bank and retail cards, auto loans and student loans. Each generation's largest debt contributor has been the first mortgage with Generation X (76.3%) moving slightly above the national average by five percent. The Greatest Generation and Generation Y came in under the national average by 8% and 17%, respectively, and the baby boomers were in line with the national average. The only category boomers were actually 23% higher than the national average was second mortgage.
As for Gen Y, the study found some major shifts regarding its largest debts. Mortgages contributed to 59.9% of their debt, followed by student loans at 15.1%, auto loans at 13.7% and bankcards at 5.2 %.
"While having the smallest amount of debt overall in the study, proportionally, their debts compared to the national averages are significant," said Raneri. "This generation's debt for mortgage is 17 percent lower, 421 percent higher for student loans, 136 percent higher for auto loans, and 24 percent higher in bankcards."
According to the study, the Greatest Generation has less than half debt of baby boomers and Generation X, but proportionally, their highest debt burden falls in the mortgage category at 66.6%, followed by their second mortgages at 13.4%, and bankcards at 6.0 percent.
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