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Born at the right time? Seniors avoided the economy's worst

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Conventional wisdom says Americans born before the end of World War Two attained wealth and financial security the old-fashioned way—by working hard and pinching pennies.

But new research by economists at the Federal Reserve Bank of St. Louis finds what might be an even simpler explanation—today's seniors were just born at the right time.

They entered the job market during the booming post-war economy and advanced in their careers as wages, stocks and houses all grew steadily in value, said William R. Emmons, senior economic adviser at the Center for Househod Financial Stability at the Federal Reserve Bank of St. Louis and one of the study's authors. Today's seniors grew up before financial deregulation made access to revolving credit easy, and they were the first to benefit from safety net programs like Social Security and Medicare. Most worked for companies that offered healthcare and defined-benefit pensions as standard benefits.

(Read more: Retirement roulette is the new American normal)

Pennsylvania resident Joan Knepp is a case in point. The 71-year-old spent 35 years working in the cafeteria at Penn State University and retired 12 years ago with a pension that supplements her Social Security income.

But money got tight when she unexpectedly had to spend several thousand dollars relocating her mobile home after the owners of the property sold it nearly a year ago. But she can handle it.

"I don't exactly stay home and cry about it, but there's things I would like to do," she said. Knepp said she wouldn't ask her son, who drew down his retirement savings when he was laid off, for financial help.

"They're doing the best they can… but I know they don't have it."

Economists say this type of scenario is playing out across the country. "It's not so much that older workers have done that well — it's just that they were largely shielded from some of the losses from the recession," said Matt Rutledge, research economist at Center for Retirement Research at Boston College. Already retired, this demographic did not have much money invested in stocks, and most owned their homes outright or had accumulated enough equity that the drop in real estate values didn't have the kind of impact it did on their children and grandchildren.

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An even bigger impact is the anemic labor market, which is holding down wages along with younger Americans' ability to invest and save. So-called millennials or Generation Y, born 1978-1990 entered the job market during the worst financial climate since the Great Depression, and were behind the eight-ball on income from the outset.

"When we retired, the economy was pretty good. We were lucky," said Dan Bjick. After spending 31 years with the phone company and taking early retirement at 53, Bjick worked at another job for five years before retiring a second time and moving to Virginia with his wife, Martha, just over two decades ago.

"We're counting our blessings," Bjick said. "Both of us did better than our parents… now this generation is [asking], 'Will we do as well as our parents?' and it doesn't look like they will." Bjick said he worries his three daughters and five grandchildren won't have the same chance as he did to build their financial foundations.

(Read more: Returning to the workforce)

"Young people just aren't saving. They don't have the means because of the cost of living and healthcare," he said. "They're not building those nest eggs that I was able to build."

Roughly 40 percent of Gen Y isn't saving for retirement yet, according to a survey by PricewaterhouseCoopers.

Younger Americans also earn less compared to their parents and grandparents, so even the ones that are investing are playing catch-up. "Sometimes these big shocks that hit at a certain time last a long time," Emmons said. "If you enter the job market in a really bad time that tends to stick with you for 10 years or more. Some people will never catch up."

"Baby boomer males seem to have earned less than their fathers," he said, of the generation born between 1946 and 1964.

Today's younger adults could find themselves facing similarly grim economic circumstances if a financial shock similar to the 2008 recession hits when they reach their 70s.

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"They're going to be a little bit more vulnerable," Emmons said. Boomers' primary assets are their homes and they're entering retirement with higher debt and lower net worth, which leaves them at risk if they have to sell at the wrong time.

As for millennials, they can only hope their luck changes for the better. "Young people at the moment are not in a great position," Emmons said. "If things stayed the way they were, it's not a pretty picture."

By Martha C. White, NBC News contributor

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