A report released Thursday by the Pew Charitable Trust suggests that the impact of the Great Recession of 2008-09 will lurk in the shadows for generations to come.
According to "Retirement Security Across Generations: Are Americans Prepared for Their Golden Years?," a study by Pew Charitable Trusts, during the Great Recession, early baby boomers lost 28 percent of their median net worth, while late boomers lost 25 percent from 2007 to 2010. Baby boomers are Americans born between 1946 and 1964.
However, Gen-Xers, Americans born between the early 1960s and the early 1980s, lost 45 percent of their wealth – about $33,000 on average – during that same period.
While many younger Americans were already behind in saving for retirement when the recession hit, suddenly millions of them were out of work or owned homes worth far less than they had been just a few years earlier, in many cases worth less than the mortgages on those homes.
Continue Reading Below
"Gen-X is the first generation that's unlikely to exceed the wealth of the group that came before it and face downward mobility in retirement," said Erin Currier, director of Pew's Economic Mobility Project. "They have lower financial net worth than previous groups had at this same age and they lost nearly half of their wealth in the recession."
The study further reveals that Gen-X wasn't in very good shape before the recession hit. Their net worth was less than other age groups that came before them. They also had lowest rates of home ownership of all the groups studied. But the recession only made things worse. They experienced the largest percentage decline in median net worth, losing nearly half of their wealth, according to Pew.
The Pew study found that the average Gen-Xer has already accumulated $80,000 in debt, which is a significantly higher level of debt than those in the other groups had at the same age. Pew's Erin Currier believes there is a clear takeaway message for America's policymakers from this data. "As they focus attention on America's retirement security, particular consideration should be paid to helping the youngest groups change course to make up for these losses in order to prevent downward mobility in the long-term," Currier said.