September 8 2009|10.01 AM UTC

Samantha Eckles

The Impact of the Recession on Different Age Groups

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These days, the words “the recession” call to mind ubiquitous images of  anxiety, hardship and worry. Bemoaned daily by our leaders and cultural spokesmen, the recession has become almost an abstraction, synonymous with generalized dread rather than specific problems experienced by specific groups of people. However, recent surveys show that not everyone is being affected equally or even in the same ways. Today we will summarize some of these findings in order to pinpoint recessionary pressures on particular age groups.

Teenagers aged 16-19



Citing an impressive collection of research and statistics, the blog Political Calculations claims that the recession has “outgrown” teenagers aged 16-19. While this age group bore the brunt of job losses from July 2006 to July 2008, Political Calculations demonstrates that the bulk of job losses since October 2008 have been among adults 25 or older, remarking furthermore on the “apparent stabilization of the net disappearance of jobs held by teens and young adults.” Unfortunately, the authors predict that job losses for this age group will resume with the passing of new, higher minimum wage laws in July of 2009, as these and our next age group are “disproportionately employed at these wage levels.”

Young adults aged 20-24



The same Political Calculations research illustrates a similar trend among young adults aged 20-24. Despite a continuing net loss of jobs from October 2008 to January 2009, it is shown that this trend “unexpectedly declined in February 2009″ and has continued doing so ever since. While the authors again predict gloomy prospects for this group following the passage of a higher minimum wage, the good news is that automotive industry turmoil has relatively little effect on this or the previous age group. Attempting to explain the somewhat brighter job prospects of these two age groups compared to older individuals, the authors cite “their lack of exposure to the current employment fallout affecting the auto industry.”

Adults aged 18-29



According to recent survey research conducted by Pew Research Center’s Social & Demographic Trends project, adults 18-29 have been hit exceptionally hard in terms of the job market. With double digit unemployment in many states, the job market has taken a bigger hit during this recession than in recent decades. We have already seen that most job losses since October 2008 have come at the expense of those 25 and older. However, even those younger than 25 are at a disadvantage, as many of these people are attempting to start careers following college or even potentially get their first job. In early June, the New York Times wrote about how frightening the job outlook is for these individuals:

“The unemployment rate rose to 9.4 percent in May, the government says. That is bad enough, but we’ve seen worse.

What is more alarming is the long-term unemployment rate. The government says that 4.5 percent of the work force has been out of work for 15 weeks or more. The worst previously seen — at least since 1948, when the government began counting people that way — was 4.2 percent, in December 1982.”

On the bright side, Pew also notes that adults aged 18-29, with their long time horizons, “remain relatively upbeat about their financial future.” 72% of those surveyed also claim that they have not had trouble affording medical care for themselves or their family (perhaps because many are still covered by their parents or universities), and 69% deny losing money in retirement accounts such as 401(k)s, according to

Adults aged 25-44



While job losses have mounted for this age group, some researchers foresee plenty of time to recover. For instance:

The head of macroeconomics at PriceWaterhouseCooper, John Hawksworth says, “While no age group is fully immune from the adverse effects of the downturn, our analysis suggests that people in their mid-20s to late-40s will on average have relatively better financial prospects through the recession than younger or older generations.”

Adults at the older end of this threshold are still 10 years away from the well-known employer bias against hiring workers 45 and older, while those on the younger end have even more prime working years left when the economy improves. It is worth noting however that the recession has caused this age group to change its behavior markedly. Pew reports that “fully 60% of younger and middle-aged adults” claim to be doing more of their shopping at discount stores. This is compared to a much lower percentage of adults 65 and over who report discount shopping, as will be explored later.

Adults aged 45-60



The British website TheMoneyStop cites research from PriceWaterhouseCoopers claiming that adults aged 45-60 have been hit hardest. As noted earlier, these are adults nearing the twilight of their earning years and beginning to think about retirement. Elaborating on this point, TheMoneyStop notes

“Those aged 45 to 60 generally have a lot more money invested in pensions and retirement funds than younger people and therefore have a lot more to lose. Since they are coming to the end of their working life, they do not have a lot of time left in which they can wait for the values to start to recuperate and climb back up to the usual levels.”

Also troubling for this age group is the fallout from the housing bust. The same 45-60 year old adults who have been diligently building their retirement nest eggs have also been building equity in their homes – many of which have plummeted in value since 2008. As so many financial experts remind us, a home is the only appreciating asset most of us will ever own. Homeowners whose equity has taken a hit – particularly the older homeowners in this age group – must now hope for home values to rise so that they can cash out when the time comes. Another painful reality for this age group is that one of the few positives of the fallout – lower mortgage rates – are not especially helpful to those who have ten to twenty years or more already invested into one home.

Well-prepared individuals notwithstanding, the near future looks bleak indeed for adults aged 45-60.

Adults aged 50-64



Of the 2,969 adults interviewed during Pew’s nationally representative phone survey, adults aged 50-64 report still more pain relating to stock market and pension losses. More specifically:

“Two-thirds of adults ages 50-64 say they lost money in the past year in mutual funds, individual stocks or 401(k)-type retirement accounts. Of those who report such losses, two-in-ten say they lost more than 40% of their investments’ value and nearly four-in-ten say they lost 20% to 40%.”

Adults in the 50-64 age group are uniquely exposed to this risk in a way that much younger and much older adults are not. Younger adults in the 18-35 range, for example, either had far less money invested in stocks or abundant time in which to recoup their losses. On the other hand, adults 65 and over (as we will see shortly) have generally cashed out of their stock portfolios or transferred their money into more conservative vehicles like bonds before the recession hit. Unfortunately, those 50-64 are generally not ready to retire and as such, a disproportionate amount of their wealth remained in stocks to be eaten up by the crash. It remains to be seen how the market fares in the precious few years these adults have before age 65.

Adults aged 65+



Most research on recessionary impact on age groups concurs that adults 65 and over have suffered the least. Pew states that this age group has “escaped the full fury” of the recession by virtue of already having retired and downsized their lifestyle. The website Global Economic Watch reports on what has been, for this age group, a “kinder and gentler recession.”

“They are less likely than younger and middle-aged adults to say that in the past year they have cut back on spending; suffered losses in their retirement accounts; or experienced trouble paying for housing or medical care. They’re more likely to report being very satisfied with their personal finances. And they’re less likely to say the recession has been a source of stress in their family.”

Simply put, adults 65 and older got out before the bomb went off. As a group, these adults possess enough of their wealth in liquid, spendable form (or in non-affected vehicles like annuities) to be relatively insulated from day to day stock price movements or fluctuations in unemployment. As is typically the case with recessions, those least affected are those at the opposite poles of the age spectrum – high school teens and college aged adults on one end, and retired senior citizens on the other.

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{ 8 comments… read them below or add one }

Dan September 8, 2009 at 1:36 pm

Great comparative article! I think it’s also important to note that many college students graduating from school are hit with huge student loan payments after graduation and months of unemployment result in a lot more difficulties with finances down the line.



leathej1 September 8, 2009 at 1:37 pm

Whew! Thank goodness ages 37-44 weren’t affected at all, or they would have been mentioned. Wow, I really dodged the bullet on this one… :)


BillShrink Guy September 8, 2009 at 2:00 pm

leathej1: Actually sorry to say but you didn’t quite dodge that bullet. That was suppose to be 25-44 (I know, big group, but thats why we have the 20-24 group above too). Thanks for the catch :)

Reply September 8, 2009 at 2:31 pm

It would be interesting though to look at retirees over the age of 65 and include health care costs in the equation. I think then you would see that they are actually a little more hard hit then the other demographics.


DHump September 8, 2009 at 3:01 pm

How about the other group that was impacted the least? Those of us in all age ranges that bothered to be educated (in tangible ways, not a BS in “green studies” or some other nonsense), live within our means, save more, and spend less?

The ailment is not being felt by “age groups” so much as individuals with poor monetary sense.


youngguy September 8, 2009 at 3:32 pm

There seems to be almost conflicting information about the young age groups, and I partially disagree with the summary. FYI I am 24, still employed. We’ve been hit “exceptionally hard” yet you say most job losses have been 25+…

Personally I love the recession. Just out of college I have no mortgage, retirement, or other investments that lost money; EVERYTHING is cheap (cars, groceries, etc); and the outlook is amazing. We know the market will recover, so all I can see is cheap investments when I’ve had no losses, and most large companies don’t fire their new hires, they fire the guys who have been there much longer with higher pay. So in addition to relative job security, I have opportunities opening up all over my company


Natalie September 12, 2009 at 2:51 pm

My parents (age 60ish) lost a large portion of their savings. They are growing their investments and seem to be on the right track, but they are worried that the market will retreat again.

My husband and I (age 30ish) were spared from layoffs, live modestly and invest aggressively in our IRAs and 401Ks- so far so good.

I am worried about my young sister-in-law. In December she will graduate from college, jobless, with large student loans. It’s tough to keep your head above water with the weight of all that debt.

BTW, my company happens to be giving iPhones away right now for anyone who is interested. You can check it out here

We want to know why you save and invest.


denise April 20, 2010 at 8:17 pm

I think that you need to broaden your research–which sort of people did you call? the six figure people? am mid 40 and was forced out of my job–now am in school–no savings and no ira’s no investments–
the class of people you polled werent the ones that were hit hard and i believe you are giving people false hope concerning the economy–it isnt and never will fully recover due to the fact that people like you are so narrow in your studies of these types of subjects–
broaden your view !! and am sure you will get a larger number of those who are barely suviving!!!!! especially in the senior citizeb community.


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