Generation X Less Prepared for Retirement than Parents: Report
Major media outlets and White House officials would have you believe the American economy is in full recovery mode — that despite a slow start this year (thanks to harsh winter weather), things are finally looking up.
Optimistic economists point to steady job growth, lowering unemployment rates, and a (slowly) stabilizing housing market as sure indicators that the worst is behind us.
However, not everyone is convinced we’re out of the woods, especially in light of a troubling Bloomberg report that shows most Gen-Xers are in worse financial shape than previous generations.
Who is Generation X?
Generation X includes millions of Americans born between 1960 and 1980, now in their prime working years — who should be reaching the peak of their careers.
Instead, statistics show that few generations have been in as rough of a financial spot as Gen-Xers are right now (save for the Gen-Yers and Millennials maybe).
“Generation X is at this really critical historical spot,” said Diana Elliott, a research officer in financial security and mobility at Pew, a non-profit global research and public policy organization in Washington. “They are not doing well relative to the last generation. It should give us concern as a country.”
Take Vera Johnson from Seattle. At 45 and with two kids, she’s just trying to make ends meet, let alone saving for retirement. She lost her home to foreclosure in 2010 after the housing market collapse, and has struggled to build her assets in light of the worst recession since World War II.
And Vera isn’t alone.
Only one-third of Generation X households hold more wealth than their parents did at the same age, even though most earn more, the Pew Charitable Trusts found.
Just a Case of Bad Luck?
Part of the reason Gen-Xers are worse off financially could be bad timing.
The recession hit many 25 to 35-year-olds at a critical time — when they were just breaking into their careers — and families who went into debt to purchase a house saw the median value of mortgages and home-equity loans skyrocket by as much as 60 percent from a decade earlier.
Student loans have also been a factor in preventing asset-building for many Gen-Xers. The overall net worth of 35 to 44-year-olds slumped by 54 percent — the most of any age group — in addition to the value of stock holdings and property.
Make the Years Golden
The economic woes of Gen-Xers are particularly troubling in light of the fact that, while life expectancy is increasing, retirement savings are decreasing for the average young American.
“Gen-Xers are going to live longer than the current generation of retirees, and the major source of retirement income is going to be smaller,” said Alicia Munnell, the director of the Center for Retirement Research at Boston College. After 40, if “you’ve put this off, you really have to save at a mind-boggling rate to accumulate enough to retire.”
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