Gen Z debt surging faster than any other generation: Latest study
Gen Z debt is rising faster than any other generation, a new study conducted by Accredited Debt Relief and Money.com has revealed
Chicago: Gen Z debt is rising faster than any other generation, a new study conducted by Accredited Debt Relief and Money.com has revealed.
As per the study, as many as 45% of Gen Z said their debt increased in the past year, more than any other generation, while Gen X is most likely to be cutting retirement savings to keep up.
The survey of some 2,000 U.S. adults carrying debt found that younger generations are accumulating debt faster and feeling more stress from it, while older generations report more stability but face their own generation-specific pressure points, like Gen X's retirement savings gap.
Key Findings
45% of Gen Z and 39% of millennials say their debt increased over the past 12 months, compared with 34% of Gen X and 30% of baby boomers. Boomers are the only generation more likely to report decreasing debt than increasing debt.
Nearly 6 in 10 Gen Z and millennial respondents say they often or always feel stressed thinking about their debt, compared with 36% of baby boomers.
38% of Gen Z and 31% of millennials say debt has kept them from saving for or buying a home. 41% of Gen X say debt has forced them to cut back on retirement savings — the highest share of any generation.
To manage debt, 55% of all respondents have cut back on eating out, 42% on clothing or personal care, 35% on groceries, and 19% have reduced emergency savings.
78% of respondents point to inflation and 68% to housing costs as major contributors to their debt — both outpacing the 66% who blame their own spending or borrowing decisions.
Gen Z Falling Further Behind, and Feeling it More
Rising costs are straining every generation, but the survey found younger Americans are significantly more likely to say their debt is moving in the wrong direction. 45% of Gen Z and 39% of millennials say they owe more than they did a year ago, compared with 34% of Gen X and 30% of boomers.
Boomers were the only generation substantially more likely to report decreasing debt than increasing debt over the same period, the survey found.
The survey also found that fewer than 3 in 10 Gen Zers and millennials say they feel optimistic about paying off their debt, compared with 37% of Gen Xers and nearly half of boomers.
What's Driving the Debt?
The survey found inflation and housing outrank personal spending.
Every generation ranked inflation as the top contributor to rising debt, with nearly 8 in 10 respondents saying it had at least a moderate impact on their finances. Two-thirds also cited their own spending decisions and the cost of housing.
Some causes were generation-specific. Sixty-eight percent of millennials pointed to low wages or job loss, and more than half cited the cost of raising children or caring for elderly family members. Gen Z stood out for citing a lack of financial education (51%) and recent changes to laws, taxes and government programs (55%) — likely reflecting recent shifts in federal student loan policy.
How Americans are Fighting Back Against Debt
Repayment strategy also varies by generation. Half of boomers and 41% of Gen Xers say they paid more than the minimum on their debt in the past year. Younger borrowers were more likely to bring in extra income instead — about a quarter of Gen Z and millennials took on a side gig — while Gen Zers were also more likely to borrow from family, draw down savings or delay payments to manage debt.
"Paying down debt aggressively makes sense, but it shouldn't come at the cost of having a financial safety net", Bobbi Rebell, Chief Financial Education Advisor at Accredited Debt Relief, said.
"Draining your emergency savings to pay off a balance can create a cycle of debt when the unexpected happens again. The goal is to pay debt off in a way that's sustainable and protects the borrower from future financial setbacks", she added.
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