When the Great Recession hit in 2007, it affected the entire economy, and its pain was felt across the generations. But in the years since, recovery of personal wealth has been uneven.
Early boomers — those born from 1946 to 1955 — are on track for a secure retirement that will surpass that of earlier generations, according to a new study released by The Pew Charitable Trusts last Thursday.
Benefiting both from the dot-com boom and the housing bubble, early boomers had higher overall wealth, financial net worth and home equity in the years preceding the Great Recession than either Depression babies (born from 1926 and 1935) or war babies (born between 1936 and 1945) had at the same ages, putting these early boomers in a strong financial position for retirement.
LOWER WEALTH
Unfortunately, the picture of wealth accumulation and savings for Americans born after 1955 is more mixed. Neither late boomers (born from 1956 to 1965) nor Generation Xers (born from 1966 to 1975) stockpiled as much wealth in their 30s and 40s as early boomers had at the same age.
Much of the problem is due to debt. As of 2010 — the end point of the Pew study — war babies' asset levels were 27 times higher than their debt. In contrast, late boomers' assets were about four times higher than their debt and Gen Xers' assets were about double their debt.
The Great Recession hit early and late boomers at a critical point in their lives, when they were in their peak earning years and saving for retirement, according to the study. But Gen Xers were hit the hardest, losing nearly half of their wealth — 45% — reducing their already low level of accumulated savings.
At current savings rates, late boomers will be able to replace only about 60% of their pre-retirement income at the median and Gen Xers will have enough resources to replace only about half of their pre-retirement income. Because these are medians, the data suggest that at least half of late-boomer and Gen Xer households fall below these already low levels and may be facing an insecure retirement.
