Despite a slowly improving economy and a three-year-old stock market rebound, Americans today are more worried about their retirement finances than they were at the end of the Great Recession in 2009, according to a nationally representative survey of 2,508 adults conducted by the Pew Research Center.
About four-in-ten adults (38%) say they are “not too” or “not at all” confident that they will have enough income and assets for their retirement,1 up from 25% in a Pew Research survey conducted in late February and March of 2009.
An analysis of these surveys also shows that concerns about retirement financing are now more heavily concentrated among younger and middle-aged adults than among those closer to retirement age—a major shift in the pattern that had prevailed at the end of the recession.
In 2009 it was “Gloomy Boomers” in their mid-50s who were the most worried that they would outlive their retirement nest eggs. Today, retirement worries peak among adults in their late 30s—many of whom are the older sons and daughters of the Baby Boom generation. According to a Pew Research analysis of Federal Reserve Board data, this is also the age group that has suffered the steepest losses in household wealth in recent years.
The new Pew Research survey finds that among adults between the ages of 36 and 40, 53% say they are either “not too” or “not at all” confident that their income and assets will last through retirement. In contrast, only about a third (34%) of those ages 60 to 64 express similar concerns, as do a somewhat smaller share (27%) of those 18 to 22 years old.
These findings stand in sharp contrast to the age pattern that emerged when the same question was asked in a Pew Research survey conducted in 2009. In that poll it was Baby Boomers between the ages of 51 and 55 who were the most concerned that their money would not last through their retirement years. Only 18% of those 36 to 40 years old were similarly worried they would fall short financially after they retire—a third of the share who express a similar concern today.
A companion Pew Research analysis of data collected by the Federal Reserve Board in its Survey of Consumer Finances suggests a reason that retirement concerns have surged among adults in their late 30s and early 40s.
The median net worth of this group has fallen at a far greater rate than for any other age group both in the past 10 years and since the beginning of the Great Recession.
Led by declines in home value, the median wealth2 of adults ages 35 to 44 was 56% lower (in inflation-adjusted dollars) in 2010 that it had been for their same-aged counterparts in 2001— the steepest decline for any age group during that decade and more than double the rate of loss among those ages 55 to 64 (22%). (Household wealth is the sum of all assets, such as property cars, stocks and retirement accounts, minus the sum of all debts, such as mortgage, credit card debt and car loans.)
Expressed in dollars, the median wealth of those in the 35-to-44 age group in 2010 was $56,029 less than the median wealth that their same-aged counterparts had in 2000. In contrast, those ages 45 to 54 and 55 to 64 have lost about $50,000. With fewer assets to begin with, the median wealth of adults younger than 35 fell by a total of $5,270 between 2001 and 2010. The median wealth of those 65 and older increased slightly—making them the only age group whose net worth grew over what it had been for their same-aged counterparts a decade ago.
Retirement Worries Increase
Overall, a larger proportion of Americans are worried about their retirement finances now than in the final months of the Great Recession in 2009. The share of adults saying they are “not too” or “not at all” confident that they will have enough income and assets to last through their retirement years has grown from 25% in 2009 to 38% in the latest Pew Research poll.
In addition, surveys conducted by the Gallup Organization over a longer time period suggest that these concerns have grown steadily in the past decade, a trend that began before the housing market collapsed or the economy fell into recession.
According to Gallup, the percentage of adults who fear they will not have enough money to live “comfortably” in retirement has grown from 32% in 2002 to 66% last year. During that same period. the share who worry that they do not have enough money to retire increased by 12 percentage points, from 54% to 66%.
The Demographics of Retirement Anxiety
While many Americans worry about retirement finances, there are some differences among demographic groups.
For example, college graduates are much more likely than those who have a high school diploma or less to express confidence in their retirement finances (71% vs. 53%). Among those who attended college but do not have a bachelor’s degree, six-in-ten are sure that they will be financially prepared for retirement.
Those with household incomes of $100,000 or more also are significantly more confident than those earning less than $50,000 that they will have the financial resources to live on in retirement (79% vs. 51%).
Change Since 2009
Across most demographic groups, Americans are less confident now than just three years ago that they will have enough financial resources to last through their retirement years.
The decline in confidence is greatest among Americans with less education, those with annual family incomes between $30,000 and $74,999, and adults in their late 30s and early 40s.
Among those with a high school education or less schooling, the proportion confident about retirement finances declined by 14 percentage points to 53% between 2009 and 2012 . In contrast, concern fell by 9 percentage points among college graduates and 10 points among those who attended college but did not graduate with a bachelor’s degree.
The pattern was less uniform among income groups. Confidence dropped the least among adults with the highest and lowest incomes, while the pattern is mixed among those in the middle-income ranges.
Confidence about retirement finances declined by 9 percentage points among adults in families making at least $100,000 a year and by the same share among those earning less than $30,000.
In contrast, confidence fell the most (19 percentage points, to 51%) among those earning $30,000 to $49,999 and by 14 points in families with incomes of $75,000 to $99,999. At the same time, the proportion of those making $50,000 to $74,999 who are confident about their retirement nest eggs declined by 11 points.
Retirement Worries and Age
Concerns about retirement finances increased in every age group in the past three years but grew the most among adults 35 to 44, the latest Pew Research survey found. Older and younger adults express the most confidence that they will have enough financial resources in retirement, while middle-aged adults expressed the least confidence.
But in a marked change from the 2009 survey, adults in their late 30s and early 40s are now the least confident that they will outlive their money.
Among this younger age group, the proportion who are “not too” or “not at all” confident they will have enough to live on in retirement has more than doubled, from 20% in 2009 to 49% in the latest poll. Three years ago, adults in this age group were the least likely, along with retirement-age adults (19%), to express doubts about their retirement finances. Now adults ages 35 to 44 rank ahead of every other age group in terms of their concern about retirement finances.
A Pew Research survey conducted in September 2011 produced results that closely mirrored those in the latest poll. In that survey, 51% of respondents ages 35 to 44 were concerned about retirement finances, compared with 41% of 45- to 54-year-olds and 37% of those ages 55 to 64.
Again, the oldest and youngest respondents were the least concerned. Only about a quarter of those older than 65 (25%) and younger than 35 (27%) were worried.
The Late-30s Spike
To better understand the relationship between age and retirement worries, Pew analysts created a moving average indicator to more precisely track changes in retirement confidence over the age range.3
Since the results of the 2012 and 2011 polls were so similar, data on the retirement confidence question were combined to produce a sample of 4,511 cases.
The graph on the preceding page tracks the rise and fall of retirement worries from ages 18 to 75 in the 2011-2012 surveys. The second trend line plots retirement concerns over the age range from the 2009 Pew survey.
Overall, worries about retirement finances in the 2011-2012 surveys are comparatively low among those in their early 20s. For example, only about 27% of those ages 18 to 22 say they are not too or not at all confident they will have enough to live on in retirement.
But concerns begin to rise among adults in their early 30s and spike among those a few years older. Among adults 36 to 40, about half—53%—are not confident about their retirement finances. These worries slowly ebb among individuals closer to retirement age, dropping to about a third (34%) of those 60 to 64 and falling even further among older adults well into retirement age.
A very different pattern emerges when the moving average is plotted using 2009 data. Retirement concerns peak among those ages 51 to 55; among this group, about four-in-ten (42%) lack confidence that they have enough money for retirement.
In a further departure from the most recent pattern, adults 34 to 38 years old were the least likely of any age group in 2009 (13%) to express concerns about their retirement finances—roughly the same age group that expressed the most anxiety three years later.
Declines in Wealth
Why are thirty-somethings suddenly the most worried about their retirement finances? Federal data on changes in household wealth suggest one answer. In the past decade, households headed by adults ages 35 to 44 have lost the most wealth of any age group, and nearly all of those losses have occurred since the Great Recession began in 2007.
In the past 10 years, median wealth of households headed by adults 35 to 44 years old has dropped from $99,727 in 2001 to $43,698 in 2010, a 56% decline.
In contrast median wealth fell by 29% among households headed by adults ages 45 to 54 and declined by 22% among those 55 to 64 years old.
Households headed by adults 35 and younger lost 35% of their wealth, though their initial holdings—and subsequent losses—are significantly smaller than those in other age groups, dropping from $14,864 in 2001 to $9,594 in 2010.
Wealth increased in only one group in the past decade. Among households headed by adults 65 and older, wealth increased by 2%.
Not only did adults in their mid-30s and early 40s lose the largest percentage of their wealth in the past ten years, but they also lost the most money.
In actual dollars, the median wealth of those 35 to 44 fell by $56,029 from 2001 to 2010. Among those 55 to 64, wealth declined by slightly more than $50,000, while adults ages 45 t0 54 lost slightly less.