Via LearnVest By Libby Kane ~
It’s not exactly news that younger generations will likely never make up for the financial setback that was the Great Recession.
Mostly, we hear about its impact on Generation Y: How their massive student loans hinder their ability to get mortgages, how they’re woefully behind on savings, and how they’re postponing major financial and life milestones due to lack of funds.
But today, we’re talking about Generation X. A Pew Research study, “Retirement Security Across Generations,” looked into replacement rates, which estimate the amount of savings and income a person needs to maintain an acceptable lifestyle in retirement. The study found that younger generations are the most likely to experience downward social mobility as a result of their financial losses in the past few years. (That’s no surprise to us.)
Specifically, members of Gen X, which Pew defines as being born anywhere between 1966 and 1975, lost 45% of their accumulated wealth between 2007 and 2010. Baby Boomers fared better, losing less than 30% of their wealth.
Pew also found that members of Gen X who retire at age 65 will likely be able to replace only half of their pre-retirement income. That’s discouraging when you remember that 60% is the minimum needed for “budget living,” or a lower standard of living than you’re used to. Ideally, one would be able to replace at least 70% to 80% of today’s income.
This seems like a great time to mention the secret of retirement savings: You can’t make up for lost time. Sure, you can triple your savings rate and make a difference, but because retirement accounts are investments, the best thing you can do is start early and leave that money alone. Start today. Start now.