Retirement worries: 30-somethings uneasy

HOPE YEN

Asso­ci­ated Press

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 adults approach­ing mid­dle age, 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.

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.

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.

“I think 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, a reflec­tion of the con­tin­u­ing hard eco­nomic times.

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 above 1,500 in Octo­ber 2007 but then fell to a clos­ing low of 676.53 in March 2009. It has risen sig­nif­i­cantly since then, clos­ing above 1,200 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.

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