Pew: Early boomers will be last ones to catch retirement worm

Early baby boomers might be the last generation to enjoy a secure retirement, according to a report released on Thursday by the Pew Charitable Trust.

The report, “Retirement Security Across Generations: Are Americans Prepared for Their Golden Years?” studies the total net worth, financial net worth and home equity of five generational cohorts, as well as the impact of the Great Recession on those groups.

The five cohorts are: Depression babies, those born between 1926 and 1935; war babies, 1936 to 1945; early baby boomers, 1946 and 1955; late boomers, 1956 and 1965; and Gen-Xers, 1966 to 1975.

The report examines the cohorts at three points in their lives: in their 30s and 40s, in their 40s and 50s, and in their 50s and 60s, and compares how each cohort performed in relation in terms of net worth to each other.

The median net wealth of all cohorts increased between 1989 and 2007, but the Great Recession depleted all cohorts between 2007 and 2010, with Gen-Xers faring the worst, with a 45% loss in median net worth, due in part to a lower asset-to-debt ratio than other cohorts.

Early boomers in their 50s and 60s are ahead of where Depression babies and war babies were in terms of financial net worth in that same age range, but late boomers and Gen X-ers are far behind. Early boomers had enough savings and wealth to replace 70% to 80% of preretirement income, while late boomers will only be able to replace about 60% and Gen X-ers will only be able to replace half.

The report uses data from the Survey of Consumer Finances, collected by the Federal Reserve Board every three years, and the Panel Study of Income Dynamics conducted by the Survey Research Center at the University of Michigan, Ann Arbor, as well as “a host of analytic approaches to best understand wealth trends and projected retirement replacement rates for different birth cohorts,” according to the report.