Recession left Generation X least prepared for retirement, study finds

Generation Xers lost the most wealth during the Great Recession and now have a greater likelihood of slipping to a lower standard of living in retirement than do older Americans, a new research report finds.

Americans born between 1966 and 1975 lost nearly half, or $33,000, of their already small stashes of median wealth between 2007 and 2010, according to the Pew Charitable Trusts, a nonprofit research group.

Now aged 38 to 47, Generation Xers also appear to have saved and accumulated only enough wealth to replace 50 percent of their pre-retirement income, Pew's projections show. Financial planners usually aim for retirees to live on between 70 and 100 percent of the income they made before retirement.

“Gen Xers really experienced the largest percentage declines in their median net worth,” said Erin Currier, director of Pew's economic mobility project. “They lost nearly half their wealth. They also experienced the largest decline in home equity.”

The relatively young age group also had assets that amounted to less than twice their amount of debt. Adults born during World War II, by comparison, had 27 times as much assets as debt.

Pew's study, “Retirement Security Across Generations,” examined data on income, savings and home equity for members of U.S. households between ages 38 an 87. It also tried to gauge income replacement rates in retirement by calculating savings, average life expectancy, income while working and the value of pensions and Social Security benefits.

Late Generation Xers and those from Generation Y the or Millennial Generation, born between 1981 and 2000, were not examined because their income histories and wealth were not as clear, Currier said.

The findings won't come as a surprise in Oregon. An online survey by Wells Fargo & Co. late last year of 500 Oregonian adults found half of them concerned about their ability to save enough for retirement, while 60 percent under age 50 expressed such concern. One-third said their current expenses prevented them from saving for the future, the bank said.

Across all age groups, the recession impacted singles and couples vastly differently, Pew found. Anywhere between one-third and one-half of each age groups examined saw gains in either net worth, home equity or retirement account balances between 2007 and 2009.

Those Generation Xers most prepared for retirement have replacement rates 12 times above their average peers, reflecting a growing inequality in retirement readiness across age groups, Pew found. Nearly half of Gen Xers saw median gains in retirement savings of $11,000 by 2009.

Replacement Rates.jpgView full sizeReplacement rates in retirement of income during working years, by age group and marital status.

Early Baby Boomers, now between ages 58 and 67, are better poised for retirement than generations before them. Despite the recession, they had enough resources to replace 70 to 80 percent of their income in retirement, Pew found. They're also approaching retirement with higher levels of debt than their predecessors.

By contrast, Late Boomers – now between 48 and 57 years old -- appear to have only enough resources to replace 60 percent of their pre-retirement income, the study found.

Every age group, except retirees born during the Depression-era of 1926 and 1935, lost considerable amounts of wealth during the recession. But relatively speaking, younger adults took a greater hit relative to their overall wealth.

Despite the housing bust, every age group studied ended up with more home equity than before the housing boom began. Generation X homeowners' median home equity more than doubled between 1998 and 2010. Yet only two-thirds of Generation Xers owned a home in 2010, so one-third missed out on that equity run up, Pew found.

The study relied on the Federal Reserve's Survey of Consumer Finances and the University of Michigan's Panel Study of Income Dynamics. Find the study at