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​Tough times ahead for Gen X as finances lag

When it comes to saving for retirement, the "slacker" generation is living up to its nickname.

Generation X is falling behind its parents' generation in saving for retirement, although its lagging assets are due to issues such as bad timing -- buying houses during the run-up in the real estate sector -- and a decline in income during the recession.

What might make some scratch their heads is that Gen Xers are actually earning more than their parents, according to a May study from the Pew Charitable Trusts, which defines Generation X as those born between 1966 and 1975. The study found that the median family income for Gen Xers is about $71,100, compared with $63,100 for their parents. But at the same time, Gen Xers hold only about half the assets of their parents, the study noted.

Gen Xers were hardest hit by the Great Recession, Pew found last year. Gen Xers lost almost half their wealth during the economic slowdown, compared with just 28 percent and 25 percent, respectively, for the groups Pew calls "early and late boomers." Late boomers were born between 1956 to 1965, while early boomers were born between 1946 to 1955.

Gen Xers were also impacted by earlier recessions and stock slumps. Many entered the workforce during recession of the early 1990s. Then, as they were getting their footing, the dot-com bubble burst from 2000 to 2002. As the housing market picked up in the 2000s, many in the generation bought homes at high prices, then were hurt once home values fell and the Great Recession kicked in.

"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 research symposium last month, Bloomberg News reports. "Then came the Great Recession, which hit Xers much harder."

Gen Xers' change in fortunes is illustrated by conflicting trends in home debt and values. The median value of mortgages held by 35- to 44-year-olds jumped by 54 percent to $131,000 from 1995 to 2007, but during the same time period, the median value of the age group's primary homes has slipped by one-fifth, Bloomberg notes.

On top of that, Gen Xers are also earning less, with median income for Americans between 35 to 44 years old declined 9.1 percent from 2007 to 2010, according to a survey from the Federal Reserve.

That may explain why Gen Xers are more pessimistic about retirement than older and younger generations. According to a Pew study, 44 percent of Gen Xers said they aren't confident they'll have enough money at retirement, compared with 40 percent of Boomers and just 35 percent of Millennials.

With the stark reality of lower assets and income, Gen Xers now say they'll work longer -- or even never retire, according to a survey from the Employee Benefit Research Institute. Almost one-third of Americans between 35 to 44 say they'll retire after they turn 66, compared with 25 percent a decade ago. And one out of ten say they'll never retire, compared with 4 percent in 2004.

For those in their 40s, it's key to resist taking on more debt, while also cutting back on expenditures to save more for retirement.

In its 2013 study, Pew noted, "Gen-Xers are the least financially secure and the most likely to experience downward mobility in retirement."

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