While Boomers on the cusp of retirement lost significant wealth in the Great Recession, it was younger Americans who were hit the hardest.
If they don't start paying off debt and saving more, Gen Xers (those between the ages of 38 and 47) and younger Boomers (those in their late 40s to mid-50s) are on track to retire financially worse off than the generations before them, according to analysis from the Pew Charitable Trusts, a Washington, D.C.-based nonprofit.
"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," the report said.
Including Social Security benefits, Gen Xers are projected to have enough money in retirement to replace only half of their annual pre-retirement earnings. Financial planners recommend retirement savers aim to replace 70% to 100% of pre-retirement income.
Between 2007 and 2010, members of Gen X saw their median net worth sink 45% from $75,077 to $41,600. That's compared to a drop of around 25% for both younger Baby Boomers and older Boomers, between the ages 58 and 67.
By the end of the recession, Gen X held investments, retirement plans and savings with a median value of just $14,500, down from $19,382 in 2007. Younger Boomers had median savings of $32,135 and older Boomers had $55,850, according to the report.
And while only two-thirds of Gen Xers owned homes in 2010, those who did saw their median home equity plummet by 27% during the past three years, Pew said. In comparison, the home equity of younger Baby Boomers fell 14%, and older Boomers saw a 22% drop.
Gen Xers were also plagued by significantly higher debt levels, including mortgages, auto loans, credit card and student loan debt -- much of which was accumulated in the years leading up to the recession. In 2010, Gen X had a median debt level of more than $80,000, while younger Baby Boomers carried about $60,000 and older Boomers had less than $40,000.
Younger Boomers, between 48 and 57 years old, are slightly better off with a median expected income replacement rate of about 60%, although it pales in comparison to the roughly 80% projected for their older counterparts.
"Unless this path is altered, younger Baby Boomers and Gen Xers may face a real possibility of downward mobility in their Golden Years," said Diana Elliott, research manager for Pew's economic mobility project.
Pew's study did not look at retirement security for anyone born after 1975, which leaves out the youngest Gen Xers and Generation Y, also commonly dubbed the "Millennials," who were born between the early 1980s and early 2000s. The country's youngest workers, who are saddled with historic levels of student loan debt and are starting their careers in an unfriendly job market, likely face similar levels of retirement insecurity.
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