Vera Johnson from Seattle is barely making do, let alone saving for retirement.
"I try to remain in the present moment and not live in fear of the future," said Johnson, who has neither retirement savings nor a college fund for her two children. "My property is underwater, the properties around me are underwater, I'm not building equity in my home."
The 45-year-old almost lost her home to foreclosure in 2010 after the housing-market collapse in the worst recession since World War II. She embodies the financial challenges facing America's Generation X, those born between the mid-1960s and 1980, which lags behind other generations in building assets.
Good timing is not the age group's forte. Many took out mortgages just before prices plunged, making them the most disadvantaged by the housing crisis, while the 2008 stock-market slump dealt them a further setback. Only one-third of Generation X households had more wealth than their parents held at the same age, even though most earn more, The Pew Charitable Trusts found.
When their working years end, Gen-Xers might have to live on just half of their pre-retirement income, compared with 60 percent for the Baby Boom generation, Pew said last year.
"Generation X is at this really critical historical spot," said Diana Elliott, a research officer in financial security and mobility at Pew, a non-profit global research and public policy organization in Washington. "They are not doing well relative to the last generation. It should give us concern as a country."
Mortgage Payments
Johnson had trouble making her mortgage payments after the downturn in housing and the recession sent sales plummeting at the nursery business she owns. While she was able to avoid foreclosure on her house after a loan modification, business remains slow and payments are a stretch, leaving nothing extra for saving, she said.
Gen-Xers lost about half of their wealth between 2007 and 2010, according to a Pew Economic Mobility analysis last year. Even before the housing collapse, they were having trouble keeping up with their parents in building assets, according to Pew, which defines Generation X as people born between 1966 and 1975.
"Gen-Xers are the least financially secure and the most likely to experience downward mobility in retirement," the Pew analysis found last year.
The bursting of the dot-com bubble, which culminated in a 67 percent drop in the Nasdaq Composite Index (CCMP) from 2000 to 2002, was a particularly severe blow to Gen-Xers just starting their careers. While most didn't directly own stocks, the economy slipped into recession and unemployment for 25- to 34-year-olds in 2003 hit its highest level in almost a decade.
Student Loans
Student loans also slowed asset-building, said Signe-Mary McKernan, an economist at the Washington-based Urban Institute.
"Under the impact of successive booms and busts, many Xers have struggled to afford a family or keep their home, much less do better than their parents," Neil Howe, co-author with William Strauss of books on generations in American history, said at a May 8 research symposium in St. Louis. "Then came the Great Recession, which hit Xers much harder."
The median income for 35- to 44-year-olds dropped 9.1 percent in the three years ended in 2010, according to the Federal Reserve's Survey of Consumer Finances. Incomes of those age 35 or less, including the youngest Gen-Xers and Millennials, fell 10.5 percent.
While incomes of 35- to 44-year-olds deteriorated less than those of younger Americans, their net worth slumped by 54 percent, the most for any age group, as the value of stock holdings and properties declined. The median net worth of those younger than 35 declined 25 percent.
Bad Timing
The group aged 35 to 44 fared badly in part because its members had taken on debt to buy real estate at just the wrong moment, said William Emmons, senior economic adviser at the St. Louis Fed's Center for Household Financial Stability. Those born from 1978 to 1983, straddling the line between Gen-Xers and Millennials, are at "ground zero" as the age group hurt most severely by the housing crisis, he said.
"Generation X was hit the hardest," Emmons said. "For those families themselves, there's limited time to make up some of those losses. For the economy overall, families that are struggling pretty hard to make up their savings aren't spending as much, so that's a drag."
