Retirement Security Across Generations

The Pew Charitable Trusts
Publication Date: 
May 2013

When the Great Recession hit in 2007, the oldest baby boomers faced the real possibility of downward mobility just as they were entering their golden years.The downturn also heightened concerns about retirement planning—or lack of planning—by younger generations. 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.

This report tracks the wealth of each cohort over the last two decades to assess the recession’s impact on each group’s financial security.

The study revealed:

  • Early boomers (born between 1946 and 1955) were approaching retirement in better financial shape than the age groups that came before them. Benefitting from both the dot-com boom and the housing bubble, early boomers had higher overall wealth, financial net worth, and home equity in their 50s and 60s than Depression babies (born between 1926 and 1935) or war babies (born between 1936 and 1945) had at the same ages.
  • All groups experienced wealth losses in the Great Recession, but Gen-Xers took the hardest hit. Both early and late boomers were negatively affected by the recession at a critical point in their lives, losing 28 and 25 percent of their median net worth, respectively. From 2007 to 2010, however, Gen-Xers lost nearly half (45 percent) of their wealth, an average of about $33,000, reducing their already low levels.
  • Replacement rate analysis shows that the youngest cohorts will not have enough assets for a secure retirement. Early boomers may be the last cohort on track to retire with enough savings and assets to maintain their financial security through their golden years. Even after the recession, they had acquired enough savings and wealth to replace 70 to 80 percent of their preretirement income.
  • Replacement rates have steadily declined across the age groups studied, putting the youngest on shaky financial footing. At the median, Gen-Xers will have enough resources to replace only about half of their preretirement income; late boomers will replace about 60 percent.