Retirement Planning

A new generational study of retirement security finds that Gen Xers are “the least financially secure and the most likely to experience downward mobility in retirement.”

The Pew Charitable Trust study released Friday explores how the recession and prolonged economic downturn affected the wealth and retirement security of baby boomers relative to younger and older age groups. Early boomers, the study concluded, “may be the last generation on track to exceed the wealth of the cohorts that came before them and to enjoy a secure retirement.”

Gen-Xers (those in their 30s and 40s), though, lost nearly half (45 percent, or about $33,000) of their overall wealth in the recession, compared with a decline of about 25 percent for younger and older baby boomers.  They are behind financially where older boomers had been at the same age.

“Many younger Americans were already behind in saving for retirement, and suddenly millions of them were out of work or owned homes worth far less than they had been just a few years earlier,” the study found.

Gen Xers are plagued by their high debt (including student and auto loans, credit card debt, and mortgages), as well as a lack of savings and wealth accumulation, which, the study found, predated the economic downturn. In 2010, Gen-Xers had more than $80,000 in debt, exceeding by $20,000 the levels of the next-most-indebted generation, the late boomers. Meanwhile, the two oldest generations, Depression babies and war babies, were shedding debt. The former, on average, had zero debt while the latter had just over $15,000.

A further cloud on the retirement horizon is that Gen Xers have significantly lower asset-to-debt ratios than their older counterparts. As of 2010, Gen-Xers’ assets were about double their debts, compared with late boomers, whose assets were about four times higher than their debts.

A first quarter wealth level study of Main Street investors (with a net worth between $100,000 and $1 million, not including primary residence) conducted by Spectrem’s Millionaire Corner found heightened concern among Gen-Xers (and the youngest baby boomers) about their prospects for a secure retirement. Thirty-eight percent, compared with 27 percent of respondents overall, said that at present their household is not saving enough to meet their financial goals. Fifty-three percent, compared with 58 percent overall, fully expect to have sufficient income to live comfortably during retirement.

Similarly, more than two-thirds (69 percent) of Gen-Xers surveyed said they are concerned about being able to retire when they want, compared with 61 percent of respondents overall.