Bucks Blog: Generation X Hit Hardest By Recession

Members of Generation X, now in their late 30s to late 40s, were especially hard-hit by the recent recession, and are at risk for downward mobility in their retirement years, a new report finds.

Generation Xers, the group of Americans following the Baby Boomers, lost nearly half of their overall net worth between 2007 and 2010, according to a report from the Pew Charitable Trusts.

Generation Xers lost an average of about $33,000, reducing their “already low” relative levels of wealth, the report found.

While Gen-Xers saw greater increases in wealth from home equity during the housing boom, they have lower overall rates of home ownership compared to earlier generations, which mutes the impact on the wealth of their group overall, the report found.

The report defined Generation X as those born between 1966 and 1975, so they now range in age from 38 to 47.

By comparison, both early and late baby boomers also were hurt by the recession, but to a lesser extent, losing 28 percent and 25 percent of their median net worth, respectively.

Gen-Xers also have higher levels of debt than other age groups, the report found.

The upshot is that based on the analysis, Gen-Xers will only have enough at retirement to replace about half of their pre-retirement income, if they retire at age 65. Financial planners typically suggest that retirees should be able to replace at least 70 percent of their annual income, through savings and accumulated wealth.

Early baby boomers — those born between 1946 and 1955, who are currently 58 to 67 years old — appear on track to replace between 70 to 80 percent of their income, in contrast to the age groups that follow them.

Late boomers, born between 1956 and 1965, are also less well-prepared for retirement than earlier generations, the report found.

The report is based on data from 1989 through 2010 collected by the Federal Reserve Board and the University of Michigan.

“As policymakers focus on Americans’ retirement security, particular consideration should be paid to how younger generations of workers can make up for these losses and prepare for the future,” said Erin Currier, director of Pew’s Economic Mobility Project, in a prepared statement.

Are you a member of Generation X? How are you saving for retirement?

Article source: http://bucks.blogs.nytimes.com/2013/05/30/generation-x-hit-hardest-by-recession/?partner=rss&emc=rss