The Economic Recovery Hasn't Been Kind to Boomers
The Federal Reserve has released its triennial peek into the financial lives of Americans and, as was widely reported, median income fell for all but the richest. That’s not the whole story, though. When you slice up the data by age, a different picture emerges, one that’s more disturbing for older workers.
First the troubling part: Over a period when stock and housing markets were rising, both wealth and income fell for Americans aged 45 to 64. That’s not supposed to happen. Wealth and income normally increase over people’s lifetimes, and late middle age represents peak earning and accumulation years. All things being equal, older people should have more wealth (they’ve had more time to build it) and income (they’re more advanced in their careers) than young people. The figure below is median wealth over the last 20 years for each age group.
Several years into the the recovery, wealth is at a 20-year-low for the two oldest age groups. It dropped 16 percent and 14 percent, respectively, since 2010. The oldest age group is still the wealthiest, but its lead isn’t as big as it was the last time the Fed did this survey.
The survey gives snapshots only of age groups at different points in time, so it’s hard to know precisely what’s at play here. It’s possible that older households fell upon disproportionately hard times during the recession and have continued to deplete their savings during the recovery. Or it could be that the recession permanently scarred everyone—that the average 60-year-old in 2010 was richer than a 60-year-old in 2013.
The recovery wasn’t much kinder to the richest older Americans, either. The figure below shows the net worth of the top 5 percent in all age groups.
Among the richest, the only ones who gained in wealth during the recovery seem to be wealthy Gen Xers. People aged 36 to 45 have more money than ever. Everyone else, even the wealthier ones, got poorer. One thing that undeniably had an effect: During the period more older Americans left the labor force. From 2010 to 2013 the share of 55-year-olds to 64-year-olds who were disabled or retired increased from 27 percent to 29 percent. That’s of concern because the labor market supposedly improved during these years.
The Fed data suggest that the recovery has been harder on older workers than we thought. Meanwhile, more older Americans left the labor force and many experienced large declines in income and wealth. Since they are at the end of their careers and in prime saving years, this means that a comfortable retirement may be even farther out of reach.
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