Generation X Has Taken a One-Two Punch in These Economic Times

Two Bursting Bubbles in 10 Years Dish Out Hard Times

In this latest financial meltdown a lot of attention has been spent talking about the baby boomers who are looking to retire but have recently seen their nest egg drop 30% or more in a little over a year. This is obviously a significant event and will lead to a lot of changes in how the older generation views retirement and investing in general, but what about us? This generation has taken it on the chin twice in just the past decade right as we’re trying to hit the ground running. This has some members of Gen X reconsidering what it means to have job security and how to invest for the future.

Dot Com Goes Bust

We don’t have to turn back the clock very far to see what happened to our generation in the first major economic meltdown. The late 90s were the roaring internet years. It seemed that every day a new technology company was starting up or going public and the stock market was enjoying the ride of its life. People were making money at a record pace as the internet propelled innovation and new jobs, and of course, inflated stock prices.

I found this article on MSNBC that talks about this scenario and shares some stories of fellow Gen Xers. They start out talking to Marc Matsumoto who has a story that many people can relate to.

He graduated from University of California, Davis, in 2000 and was inundated with job offers from tech firms. “It was ridiculous. I would get 30 calls a day from recruiters,” he recalls.

He chose a six-figure job with a software firm, but ended up unemployed after only six months as the dot-com boom went bust.

This scenario has played out numerous times in this generation. The majority of Generation X was coming into their own in the 90s and many were attracted to these new technology careers. Many were going to college to study computer science or engineering and hoping to land a high-paying job in this exciting and rapidly growing sector.

And the good news is that if you found yourself graduating in the mid to late-90s, this dream often came true. While the hot sector was in technology, even those who weren’t seeking an internet job had a better chance at finding solid employment as the economy was doing well. But, just like the story Marc shares, for some this dream didn’t last very long and even young, highly-skilled workers found themselves in the unemployment line.

Going Beyond Employment

While it’s easy to see how the collapse of the internet bubble led to a lot of young people losing work, it goes beyond that. Even if your job was safe and were in a relatively unrelated industry, there’s a good chance you were still significantly affected. Look no further than what happened to the stock market starting around 2000. In the preceding few years, the stock market saw a meteoric rise. Good news if you had money to invest. Bad news if you were part of Generation X and just starting to seriously save money for retirement for the first time.

As this generation set out in the workforce in the 90s, it was time to start saving for retirement. This generation does a good job in recognizing that the government probably won’t provide much help when it comes to providing a retirement income, so taking the plunge to start setting money aside in a 401(k) or something a lot of people started doing in the 90s. But how quickly things change.

Many Gen Xers who started investing in the 90s quickly saw their retirement portfolios drop like a rock at the turn of the century. All the euphoria that surrounded the rapid gains was quickly replaced with anger and confusion as their portfolio values were cut in half or more. So, not only did a lot of people lose their jobs as many of these internet companies laid people off or closed altogether, but even those who were well-removed from the technology sector found their new investment plans shaken.

Fast Forward to Today

Whether it was falling on hard times due to disappearing jobs or simply a devastating blow to your retirement portfolio, this generation spent a number of years just trying to get back to where they were before the bubble burst. Those who lost their jobs may have had to explore a new career path. Those who saw their investments tank may have waited five years just to get back to where they were at the height of the excitement. Things were finally starting to look up a few years ago, but it has all come crashing down yet again.

For the youngest members of Generation X, those aged 25-34, the jobless rate has jumped to 8.7 percent from 4.9 percent a year ago, according to the Bureau of Labor Statistics. That puts them right in the middle, as younger workers have an even higher jobless rate, while older workers stand a slightly better chance of having a job.

Ouch. And I don’t have to tell you about how the stock market is doing, but Gen Xers have seen the brunt of this market downturn as well. We’ve been told for years that since this generation has a long time until retirement that you should be invested primarily in stocks. Well, if you’ve been doing that, you’ve also probably experienced a 40-50% drop in your retirement portfolio in just 18 months.

How is that for a double whammy? If you got started investing in the 90s only to see your gains wiped out in a few years, only to stay the course and spend the next five years getting back to where you were, to then find your portfolio cut in half yet again — that’s a hard pill to swallow. Many Gen Xers see the past decade as a complete waste since their money could have done better sitting in the bank. On the surface that may be true, but like I’ve said before, even though the market has been doing poorly over the past 10 years, you’re actually buying assets and it isn’t like sticking money in the bank. Thinking ahead 25+ years and even though you may not have made any money over the past decade, your assets will increase in value.

A Golden Opportunity

When trying to look at the situation with a glass half full approach, you have to recognize that even though it’s been a difficult ride over the past ten years, this could be a perfect opportunity for this generation to get ahead. Unlike the boomers who are winding down their careers, we have the luxury of time to recover economic losses. The older generation doesn’t. Not only that, but a boomer who is thinking about retirement can’t easily pick up and move to a greener pasture. They may have vested too much in their company, be in a position where leaving isn’t an option, or are banking on some retiree benefits from their employer. Generally speaking, this generation isn’t in that position.

This generation didn’t enter the workforce expecting to be with a single employer for 30 years just to get a gold watch and a pension. Generation X understands that Social Security might be a long shot, and even if there is some government retirement benefits, they will be insufficient to pay for retirement. And with companies lacking pensions and throwing loyalty out the window as they seek to streamline their costs, we understand that bouncing around from job to job may be part of the game. Because of this, Gen Xers are resilient and flexible. While others may find this recession almost unbearable, we have what it takes to make the most of it and come out even stronger on the other side.

This is a perfect time to invest in yourself and in your future. Not only can you put yourself in a position to get through these tough times, but you can position yourself to reap the rewards when the economy does turn around. By improving yourself, you’ll become a greater asset to future employers or may even find yourself on a path of entrepreneurial success. And even as your investments take their second beating in just a few short years, use this time to educate yourself and begin making smart investments that will pay off in the future.

Author: Jeremy Vohwinkle

My name is Jeremy Vohwinkle, and I’ve spent a number of years working in the finance industry providing financial advice to regular investors and those participating in employer-sponsored retirement plans.


Great post, making me glad I didnt graduate any sooner, although I think the 80s would have been a great time. My ultimate concern about people saying stocks are cheap right now is they are acting as if long run growth will be the same as it always was. This may be true globally (hence why the S&P500 could be a good investment), but the US and Europe are going to have significantly lower growth than in the last century.

Kristy @ Master Your Card
Kristy @ Master Your Card

Excellent post! I'm glad there's still some positive Gen Xers out there. All of the ones I've been speaking to lately are cashing in their investments and sitting them in the bank. Trying to talk to them about it is like talking to a brick wall - they're not trying to hear it. They been battered and they don't want to take anymore. But, I still say that staying the course is the wisest option. Investing in the market is a long-term choice (unless you're day trading and that's a whole other animal) and it's not meant to be looked at from the short-term perspective. This is why you should be adjusting your risk tolerance to what you can really that in the event something like this happens, you're not panicking and wanting to pull out. The market will get better, it always does.


Those are good points, thanks for sharing. I know I'm not alone, but we saw an elimination of raises and such this year as well. Not to mention fewer opportunities to move up.

It is making an already difficult time even worse as we do enter our peak earning years without as many possibilities for increased income or advancement.


There is a problem economically speaking that the Boomers are going to be putting a lot of downward pressure on the market with them retiring.
But also now I am in a company that is not expanding but the Boomers are also NOT retiring...Meaning that X'ers are not getting the money and promotions they deserve and also as Froogirl pointed out the incomes are not keeping any sort of pace with respect to experience, inflation or cost of living.


Also, don't forget that many of us started our careers during a recession. I graduated college in '93. It took me a few months to find a job. My brother graduated four years later with an equivalent degree. Prior to graduation, he had multiple job offers for close to what I was making after four years in the workforce.

I'm not so worried about retirement. We've been squirreling away money since the mid-90s, and I don't expect to touch that money for three decades. Presumably, the markets will recover by then.

What I do worry about is that now that we're hitting our peak earning years, we're entering what is sure to be a prolonged recession (at best) with stagnant wages and limited opportunities. This severely impacts our ability to save for non-retirement-related things -- mainly college and other general quality of life improvements.

I feel like we've gotten screwed all around.

Matt @ StupidCents
Matt @ StupidCents

This is a great opportunity for 20-somethings to start planning for retirement while the markets are being slammed. I know it's hard to look at account balances and seeing red, but that is for the short term. We have 30 years working for us!

Same thing goes for home ownership. It is becoming an attractive time to be a first time home owner with low rates and ample supply (not to mention the credit).

Call me an optimist.

Stupidly Yours,



I can't believe I am a financial advisor with my attitude. Thankfully MBA classes start in May!

Thanks for the response, I really enjoy your blog!


@ObliviousInvestor - You're exactly right. A sideways market early in your investing career is wonderful in the long-term. And those that recognize this will pay off in the decades that follow. Even if the stock market doesn't return to its touted 9-11% annual return average, those who were able to, and could stomach 10-15 years of volatility to accumulate investments will eventually see the rewards.

The problem is that most people won't look at it this way and they read the headlines showing a negative 10-year average return on stocks, and may find that they would rather bail and do something "safer" since everything they were taught appears to be wrong.

@Chris - You followed up with exactly some other concerns. First, you need buyers in the market. Now, there will always be buyers, but like you mentioned there is a shift moving towards those who will need to begin selling in order to generate income, and put additional strain on the markets.

In a perfect world that would be offset by the younger generation buying because they are investing for the long-term. But when you have a whole generation who have spent the last 10-15 years seemingly earning nothing on their investments, if you start to see a large scale shift away from that it could pose a problem, although I'm no economist so I may be completely off base.

And you're right about a lot of X-ers feeling burned after the last market downturn and now this one. I have met with a lot of 30-somethings in the past year who have basically thrown their hands in the air and have given up on the market. I can't even begin to tell you how many sit down and are in disbelief. In 2007 most were saying "thank god, I'm finally starting to get back to where I was 7 years ago", and now they are back to those levels again and it's just too much so they move into money markets or bonds.

So I do think that is a real concern where this generation has been burned twice, and in some cases badly very early on in their careers, so there is some cynicism going forward that it's a lost cause and will abandon the idea of investing.


Great post and very true!

I just worry that there won't be enough money chasing stocks to make the market "rise". The problem is a stock only goes up on the secondary market if there is another guy willing to buy it for more, right? My concern is that the baby boomers with the vast majority of the wealth are going to be net sellers in the equity market. Could they possibly take the chance in exposing their retirement to stocks AGAIN after being burned twice in their peak earning years? My guess is no.

As far as my fellow generation X-ers, I worry that many of them getting burned twice so early in their formative investing years will also be very reluctant to enter the stock market again. It happened with depression era folks and I could see it happening again.

The Fed is effectively putting a gun to our collective heads saying "you WILL buy stocks" by keeping interest rates so absurdly low, so it is possible that we'll all just plug our noses and jump back into equities since there are few alternatives. I just fear the gig may be up and people are going to take their ball (money) and go home (bank, mattress, coffee can).

Just something to chew on..


Hi Jeremy.

I agree with your statements about Gen X having taken it in the chin twice in terms of jobs due to the two recessions.

But I'd argue that Gen X has been exceptionally fortunate in terms of investing. During your highest earning years (ie, those years that you're buying investments), the market has gone nowhere.

Correct me if I'm wrong, but isn't exactly what you want as a buyer?

Compare this to the Baby Boomers who had a huge run up while they were buying, and now that they're starting to retire and getting ready to sell, the market tanks. Yikes!

Is there something I'm missing here?

-Mike (a Generation Y investor who's happy to be buying at low prices)