Generation X Sees 59 Percent Decline In Net Worth


Financial panic button for younger Americans – The sandwich generation saw a 59 percent decline to their net worth as they deal with college aged students living at home and elderly parents.

Unfortunately more data pointing to the deterioration of the middle class came out this week regarding net worth figures.  One of the more ominous data points regarded the sandwich generation of those taking care of college aged kids and parents.  The net worth figures this time released by the US Census coincide with the information released by the Federal Reserve.  In short, American balance sheets are in a deep panic.  Over 90 percent of Americans have been crushed through this recession if we examine net worth data.  They have seen their wealth decline from a net worth perspective but also their incomes have fallen.  Not the ideal sort of combination for economic prosperity.  The information released is troubling but beyond that, it must serve as a push for a panic button to fight for the middle class.  Whether people acknowledge or not, the middle class is being lost day by day.


Being crushed in the middle

The Federal Reserve report showed that overall households lost 40 percent of their net worth between 2007 and 2010:

That is a crushing blow.  Yet data released from the Fed shows those in the middle, those from 35 to 44 saw a stunning 59 percent hit to their net worth:

“(LA Times) Household heads ages 35 to 44 — the group usually saddled with a mortgage and college-bound kids — have watched their median net worth slump 59% from before the recession.

It’s the most painful decline among age groups studied by the Census Bureau. Overall, American net worth took a 35% dive from 2005 to 2010, according to data tables released Monday.”

This generation is largely taking care of elderly parents but also paying the high college costs for their children going to college.  Many are also dealing with their young adults coming back home from college since they are unable to pay for bills with the work they are landing (if they even land work).  So some of these households have grandpa/ma, dad/mom, and son/daughter all living under one roof.  This has been a big reason for slower household formation growth.

The employment-population ratio is still at very low levels:


What is deeply troubling regarding these reports is that it shows that those that go to college do earn more over a lifetime:

“And the chasm is widening. College graduates made nearly twice as much as those with only a high school diploma in 2000. In 2010, they were making nearly 3 1/2 times as much.”

Yet this data is largely skewed by those who went to school prior to 2000 when student loan debt was below $200 billion for the country.  Today it is near $1 trillion and the job market and stock market are the weakest they have been in over a generation.

Read the rest at My Budget 360