When the Great Recession hit in 2007, the oldest baby boomers were nearly eligible for Social Security. Many of them recalled stories of the Great Depression and feared that their own nest eggs would vanish with too little time to make up the losses. Having lived most of their lives in an expanding economy, these Americans faced the real possibility of downward mobility just as they were entering their golden years.
The downturn also heightened concerns about retirement planning -- or lack of planning -- by younger generations. 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.
This report explores how the Great Recession affected the wealth and retirement security of baby boomers relative to younger and older cohorts of Americans. The analysis compares their wealth to that of other cohorts at similar ages to understand how boomers are faring in relative terms. It also tracks the wealth of each cohort over the last two decades to assess the recession's impact on each group's financial security.
Wealth is measured three ways:
* Net worth is a comprehensive measure of wealth that includes all financial assets (such as savings and retirement accounts), nonfinancial assets (such as business property), and home equity, less debt.
* Financial net worth is a subset of net worth that includes just financial assets: savings accounts, 401(k)s, pensions, and individual retirement accounts.
* Home equity is a homeowner's estimate of the difference between what the home could be sold for and what is owed on the mortgage
.Additionally, the report explores the retirement security of each cohort by calculating replacement rates, or the extent to which retirees can use their accumulated wealth and savings to replace preretirement income. Surprisingly, this research reveals that younger cohorts are the ones who face a greater prospect of downward mobility in their golden years