Retirement insecurity worrying younger Americans


Talk about your trickle down economics ...

Which would be your guess for the age group most concerned about financial security in their retirement years? People nearing retirement age (or what it used to be)? Those nearing the big 5-0? Folks in their mid-40s?

Well, if you were asking the question just three years ago and guessed boomers in their early 50s, you would have been dead on. As it stands today, though, the age range of Americans most concerned about retirement living has trickled down to those ages 35-44, according to the Pew Research Center.

In its report released Monday, the Pew Center said that nearly half — 49 percent — of those in the 35-44 age bracket had little or no confidence that they will be able to amass enough wealth during their working years to fund their retirement years. In 2009, only 20 percent of those surveyed in that age bracket had that concern.

Drilling deeper, the most concern was felt by those ages 36-40, where 53 percent had serious doubts about the ability to generate viable retirement nest eggs. Incredibly, only 18 percent of those in that age group had similar concerns in 2009.

That’s not to say older Americans aren’t concerned. About 43 percent of those ages 45-54 have little or no confidence in their retirement funding, up 10 percentage points in the three-year period, and 39 percent of Americans ages 55-64 had no faith in their retirement security, up 13 points from 2009.

Overall, nearly four out of every 10 American adults — 38 percent — see retirement insecurity in their future.

So why the change?

Our guess is that it comes from a sobering combination of observation and experience. When the Great Recession hit, it did serious damage to older Americans’ retirement security. They saw the values of their stocks slide, jobs evaporate like shallow ponds during a hot Georgia drought, banks suddenly become anything but a sure thing, and housing values drop precipitously.

The idea that everything would always appreciate in value came to a screeching halt.

The median household wealth of Americans ages 35-44 in 2001, $99,727, was 56 percent higher than that of the same age group in 2010, when the number fell to $43,698. That was two-and-a-half times steeper than the rate of loss for those 55-64 during the same 10-year span, when their median wealth declined about $50,000. Median wealth for those under 35 fell by an average of only $5,270 — 35 percent of the age group’s 2001 level, which Pew analysts attribute to the fact that people in that age group have fewer assets to begin with. Meanwhile, those 65 and older actually saw a 2 percent increase over the 10 years — the only group that saw improvement.

Pew officials suggested that the 35-44 group was hit hardest because those in that age bracket had more of their personal wealth tied up in their homes and had not been able to build up as much equity in those homes as their older counterparts had. When the stock market rebounded, they had less invested in it than the older age groups.

The only positive that comes out of all this is that it has younger Americans looking well beyond what they want today, next month and even next year. They’ve seen how fast assets can disappear and should have a keener sense of the necessity of preparing wisely for retirement than older Americans did back when they were in those younger age brackets. Experience can be a bitter, harsh teacher, but its lessons, if taken to heart, can be invaluable down the road.