Young adults fear they'll be broke in retirement

WASHINGTON Younger Americans in their late 30s are now the group most likely to doubt they will be financially secure after retirement, a major shift from three years ago when baby boomers nearing retirement age expressed the greatest worry.

The survey findings by the Pew Research Center, released Monday, reflect the impact of a weak economic recovery beginning in 2009 that has shown stock market gains while housing values remain decimated.

As a whole, retirement worries rose across all age groups roughly 38 percent of U.S. adults say they are "not too" or "not at all" confident that they will have sufficiently sized financial nest eggs, according to the independent research group. That's up from 25 percent in 2009.

But the concerns are increasing the greatest among younger approaching middle age and middle-aged Americans, whose equity in their homes represents most of their net worth. About 49 percent of those ages 35-44 said they had little or no confidence that they will have enough money for retirement, more than double the 20 percent share in that age group who said so in 2009.

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Baby boomers born between 1946 and 1964 also reported having more retirement anxieties than before, but now to a lesser degree compared to their younger counterparts. About 43 percent of Americans ages 45-54 expressed little or no trust in their retirement security, up from 33 percent in 2009. Among Americans ages 55-64, the share expressing little or no confidence was 39 percent, up from 26 percent.

Pew Research Center

Over the past 10 years, the median net worth of people in this category has fallen much faster than for any other group, Pew found. With home prices plunging following the housing crash, the median wealth of adults ages 35 to 44 was 56 percent lower in 2010 that it had been for their cohorts in 2001. That represents the sharpest fall for any age group during that decade and was more than double the rate of loss for people ages 55 to 64.

Broken down by smaller groups, the Pew analysis found that retirement worries peaked among adults in their late 30s; a majority, or 53 percent, of Americans ages 36 to 40 lacked confidence that they will have large enough nest eggs. Just three years ago, it was baby boomers ages 51 to 55 who had the most anxiety over whether their income and assets would be sufficient.

Richard Morin, a senior editor at Pew who co-authored the report, said the shift in attitudes was somewhat surprising.

"Most people would expect those on the cusp of retirement ages 55 to 64 would be the most concerned about financing their retirement, (so) the finding that the peak is now occurring among adults roughly 20 years younger is notable," he said. "Moreover, the wealth data showing those approaching or in early middle age had lost the most in the past decade suggests that their concerns are not misplaced."

Morin said that it is hard to predict whether 30-somethings will continue to express the most retirement worries in the years to come, but said it was a "real possibility" given that housing values aren't expected to fully recover anytime soon.

The latest findings come as the presidential campaigns focus most often on retirement issues such as Social Security and Medicare when appealing to older voters. In recent weeks, President Barack Obama has pounded Republican challenger Mitt Romney and his running mate, Rep. Paul Ryan, saying their plan to replace Medicare with vouchers won't keep up with health care costs. Ryan has sought to reassure seniors by saying that he and Romney won't alter Medicare for those in or near retirement.

An Associated Press-LifeGoesStrong.com poll in late 2011 also found that concerns about retirement were increasing across all age groups.

According to the Pew report, the inflation-adjusted net worth of Americans ages 35 to 44 fell roughly 56 percent from 2001 to 2010, the sharpest decline for any age group and more than double the 22 percent rate of decline for boomers ages 55 to 64. Net worth, also referred to as wealth, is the sum of all assets such as a house, car, stocks and 401(k)s, minus the sum of all debts including mortgage, credit card debt, car and tuition loans.

In dollars, the median wealth of Americans ages 35 to 44 fell by $56,029 to $43,698 over the past decade. In contrast, those ages 45 to 54 and 55 to 64 lost about $50,000. The median wealth of those 65 and older over the past decade increased slightly the only age group to experience a gain.

The 35 to 44 age group has been hit the hardest in terms of wealth because they were the ones most likely to have purchased a home at bubble prices during the housing boom, only to see values shrivel in the housing bust. This younger to middle-aged group also largely stayed out of the stock market from 2001 to 2010 and as a result missed out on the stock run-up that began in 2009, according to Pew's analysis of Federal Reserve data.

The S&P 500 index peaked at 1,549 in October 2007 but then fell to a low of 735 in February 2009. It has risen significantly since then, reaching 1,257 in December 2010 and is now back above 1,400.

Broken down by education and income, adults holding a high school diploma or less were less likely to express confidence in their retirement finances than college graduates, 53 percent vs. 71 percent. Those with family incomes of less than $50,000 also were less confident compared to those making $100,000 or more, 51 percent vs. 79 percent.

The Pew study is based on interviews with 2,508 adults by cell phone or landline from July 16 to 26, as well as an analysis of the Survey of Consumer Finances, which is sponsored by the Federal Reserve. The Pew poll has a margin of error of plus or minus 2.8 percentage points, larger for subgroups. The AP-LifeGoesStrong.com poll was conducted Oct. 5-12, 2011, by Knowledge Networks of Palo Alto, Calif.

AP Deputy Director of Polling Jennifer Agiesta contributed to this report.

[RuinedbyBush]

Retirement: Simple. Live below your means.REPEAT. Live below your means. Save and invest first before you spend. If your current salary does not provide enough income, get a second job. You are healthy and capable.

Contrary to popular culture, you do not need to drive a 12mgh huge SUV, or have the latest cell phone with unlimited everything.

"Decide what you want out of life, and pay the price if the price is right." Rod Steward and the Faces.


I am blessed indeed. My wife and I did not have children by choice [a huge expense and a decision you will have to make], my car is a 2002 Accord with 140k miles, our home is modest by salary comparison, and was paid off in 11 years, not 30. I will retire at 58, my wife at 55. Children would have drastically changed this picture, to the better or worse.....who knows. You decide.

I have tons of friends living large, Lexus, big house, jacuzzis, trips and for all practical purposes at mid 50s, nothing in retirement savings. They missed the memo. If you are past your 30s and have not started savings for retirement in a substantial way, you are making a huge mistake.

Finally: your health is of primary importance. If I had thought I would have lived this long I would have taken better care of myself. Educate yourself on nutrition and exercise. Being 60 with a great retirement is useless if you are diabetic, heart disease or walking dead.

[jeannutson]

Aside the various numerous factors already posing serious threats and capable of having depreciating effects on working class wealth, income and investments, the very uncertain future and the current scarce jobs market justifies the fears surrounding retirements and other employee benefits.

[cattiej]

We know some folks of this age and they don't save money but manage to buy a new car either every year or every other year. They go to the casino's almost every weekend. They live in homes that they can't afford but they want to pretend for their "friends and family" that they have more money than they really do..
I used to work for a bank...I have seen people max out their bank accounts and much of the money was taken out at the ATM's at casino's. Now Illinois has Video gambling at many restaurants and bars.. All because the state of Illinois is broke and needs money so they are going to get it from video gambling. Now mothers and fathers will spend the rent, mortgage money the kids lunch money at the restaurants or pizza parlor. This will only lead to more forclosure's of homes because they spent their money on gambling. Then they will lose their car because they can't afford to pay for it, then they will lose their job because they don't have a car to get to work. I think we should all refuse to do business with places that have installed video gambling. I have seen marriages break up because of gambling. Are you next?

[Lerianis4]

CattieJ, that is rare and what do you want them to do? X out everything fun in their lives?

Yes, some people have gambling problems (if you are gambling with real cash every weekend, you do have a problem unless you are making 500 dollars a week and gambling less than 1/10th of that) but it's not at all common today.

Secondly, marriages that break up because of gambling could have broken up because of numerous other things and addictions.
Not to MENTION that many times the partner of the addicted person makes the problem WORSE by being on the addicted person's case 24/7 so they go to the gambling/other things to forget their current troubles.

[NormalCanadian]

There is nothing to be worried about...yet. 1. Understand that your best investment is paying down debt. It pays the highest after tax return. 2. Understand that what you want is not what you need. There is nothing wrong with indulging a want (new furniture/clothes/vacations) so long as you have saved up the cash to do it. 3. Saving is not optional. You have to adjust your lifestyle so that savings happens regularly.

I come from a large working class family. I invested in my education which got me a good profession. I may not drive the flashiest car or live in the fanciest house but a lack of money problems has contributed to a happy 25 year marriage, a couple of well adjusted kids and a net worth of over a million dollars. The money buys me time to some of the things I want and not worry what kind of car my neighbours drive.

[167irishboy]

The super rich who don't want to pay any taxes will be doing just fine though.

[askagain]

Why should they be penalized for their success?

[ludvig1-2009]

Reagan said to "Tax the man behind the tree" and us old folks ( I didn't buy into it but most did) bought it hook line and sinker. I'd be worried to if I were in their shoes. I'm retired now and I'm worried as when I was working I thought the Cost of Living adjustments actually covered the cost of living but now I realize they don't come anywhere close to even covering the increase in medical premiums.

[Lerianis4]

Many older people are having problems with the cost of living increases not even covering the increase in their medical premiums, even if they are using Medicare.

Only way to fix that would be with a totally nationalized, U.K.-esque system where EVERYONE is required to have health insurance and pay into the system, with the young and healthy who are making lots of money paying the most for said health insurance.

Though nowhere near what they are wanting to charge for health insurance right now. My health insurance went up to 500 dollars a month this past month and me and my parents were scratching our heads saying "***!" considering that I very rarely use my health insurance.

Now, to divulge some things: it is what might be called a 'platinum plan' with no deductible, 10 and 20 dollar copays for primary and secondary care, 50 dollars for emergency room care unless referred to the emergency room by a doctor or taken by an ambulance (in those cases, it's the 10 dollar deductible), and dental coverage.

However, the galling thing is that the same plan under another name from the same company is 380 dollars? I asked them what was going on here and they didn't have a reasonable explanation for it.

[shipwrecked54]

'Younger Americans in their late 30s are now the group most likely to doubt they will be financially secure after retirement' - AND WHAT ARE THEY GOING TO DO ABOUT IT?? NOTHING!! They are going to continue to let AARP and Public Sector Unions do whatever they want....The 'Greatest Generation' is spending all of the money..and they will continue to do so if you let them...Government workers have nothing to worry about in their retirement years and these 30 somethings need their own AARP!!!

[askagain]

That is not accurate. Social Security became law in 1935. My father contributed to Social Security for 47 years. My mother contributed to Social Security for 44 years but died at age 64 and never collected a penny of Social Security. For years, Social Security had surpluses. For years, politicians raided the surplusses to pay for other programs with the empty promise of repaying Social Security. Although Social Security has been around for 77 years, it is essentially a Ponzi Scheme and the money may run out before those currently contributing to Social Security collect what they have been promised.

[treehgr07]

Seriously, the 1st thing you need to do is remember that at one time it was honorable and the right thing for Mom or Dad or both to move in with an adult child. Then we were sold a bill of goods so that mutual investors could get their hands on our retirement savings and gamble. You need to rethink all of your options, including living with family.

[skeezix06]

And you need to rethink all the implications of what you're saying. As in trying to cope not only with your growing family but with indigent and not always pleasant parents who are trying desperately to maintain whatever shreds of independence they can. I predict an eventual sharp rise in suicide among the elderly.

[redbeachvn]

The answer is real simple: save more and stop spending. And if you smoke you are responsible for your lung cancer; if you drink, you are responsible for liver related diseases. Don't expect the tax payers to pay for your stupidity and bad choices.

[jtdev1]

and if you eat red meat you're responsible for your colon cancer, and if you allow someone to pinch your n!pples, then your responsible for your breast cancer, and if you.....

Just save the money..... LLLOOOLLL you're really out of touch aren't you.

the funny thing is that I do save the money and each month i put some away by not going out to eat, buying something, paying for cell phones, etc instead I find a bill has more than doubled like my car insurance, or my mortgage went up from property taxes or my health insurance skyrocketed, or they just wont pay for something as it's a deductable, co-insuance etc....

Just this month I broke a tooth, the crown was $1,000 and boom, there goes my savings.

so, the moral of this story, You can't really save anything with a modest middle class income of $107K, it's not possible cause I am the one paying for your welfare, SS, Medicare, Medicaid, Retirement from the state, city or other... I am the one nickled and dimed to death. I am the one having to pay FULL PRICE for my child's college at a community college while your welfare brat goes to a state university. I'm the one paying for that corporate welfare, I'm the only paying...


and that sir is why I will never retire.

[waygone]

With no middle class to pay into the system, with all the good paying union jobs gone, no tax revenue. This is exactly what the Republicans want.