Don't Worry About Today's Retirees: Boomers Are Fine, (but Gen X Isn't)

Retirement golf course

When the nation's financial system almost crashed back in 2008, it's easy to see why anyone approaching retirement would have panicked. They saw their lifelong savings plummet as home and stock prices spiraled. For 60-somethings, it seemed there wouldn't be enough time to make up all their losses.

As it turns out, today's retirees have it better than generations before them, according to a new report. Baby boomers lost big when the housing bubble went bust, but they also gained big during the dotcom and housing bubbles of the early to mid 2000s. And so oddly enough, this gave them a decent cushion to comfortably kiss their days working full-time goodbye.

These boomers, or those born between 1946 and 1955, may be the last group on track with enough retirement savings to last them through their golden years, according to a report released Thursday by Pew Charitable Trusts, a Washington D.C.-based public policy think tank.

They are retiring with a bigger nest egg than those born around the Great Depression between 1926 and 1935, as well as the generation born around World War II between 1936 and 1945, according to Pew. What's more, they are better off today than Gen-Xers or today's 40-somethings born between 1966 and 1975.

Pew's study looked at how the Great Recession affected the wealth and retirement plans of baby boomers, compared with Americans younger and older than them. It divided the baby-boom generation into two groups: early boomers, who were born between 1946 and 1955 and late boomers, who were born between 1956 and 1965. While early boomers may be retiring comfortably, late boomers will struggle.

Before the economic downturn in December 2007, early boomers had more savings than generations before them. By the time they approached retirement in their late fifties and sixties, their median wealth was just over $241,000. By contrast, war babies when they were at those ages had $170,604, and Depression babies had $162,222.

What's interesting is that boomers weren't always on track to retire with more savings. In their forties and fifties, war babies had higher median wealth, $156,521, than boomers with $131,761. The difference is that during the dotcom and housing expansions, boomers between their forties and sixties saw their assets grow by 83%. By contrast, war babies saw only 9% growth between the same ages a decade earlier.

While that's good news for today's retirees, the next generations face less certain futures.

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Over the past two decades, Depression and war babies have been shedding debt while boomers and Gen-Xers have been accumulating it. Everyone lost money during the Great Recession, but Gen-X took the hardest hit. Boomers may have lost 28% of their median net worth, but Gen-Xers, who had less time to build their savings, lost nearly half (45%) of their wealth or about $33,000.

True, this generation has a few more years to rebuild their savings, but they likely won't be able to replace their income as well as as boomers have. Going by the theory that people should have enough savings and wealth to replace at least 70% of their income in retirement, Gen-Xers are in a rough spot. Late boomers are on track to replace nearly 70% to 80% of their income in retirement. By contrast, Gen-Xers, at the median, are expected to replace only about half of their income in retirement.

As Pew notes, all this gives policymakers more reason to pay special attention to the obstacles that today's 40-somethings face as they head into retirement.

What's also worth noting is that if Gen X faces so much uncertainty in their golden years, millennials born in the 1980s and 1990s may have it worse if the job market doesn't turn around soon. Many started their careers after the bust of the dotcom and housing bubbles and barely, if at all, benefited from those good old days. Many also entered the early part of their working years during one of history's deepest recessions. True they have many more working years ahead of them, but studies have shown that spells of joblessness early on could have lasting negative impacts on future earnings and employment.

In recent years, ownership of homes and stocks, which have historically made up the bulk of American wealth, has steadily declined. If the trend continues years from now, it's worth watching how millennials will fare as they approach retirement, particularly as the future of social security becomes even less certain.

More from CNNMoney:

Best States for Retirement Aren't the Ones You Might Think
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Don't Worry About Today's Retirees: Boomers Are Fine, (but Gen X Isn't)
Not only does it have a Florida-like climate, but Tennessee also boasts the second lowest cost of living in the country. Combined with a low tax burden and great access to medical care, Tennessee is ideal for retirees living on fixed incomes, Kahn said. The only downside: the state has one of the country's highest crime rates.

One of the state's oldest towns, Sevierville, Tenn. (pictured above), provides close access to a national park where retirees can picnic, hike and fish, and it's an easy drive to Knoxville.
Another balmy locale, the state has an average temperature of 66.7 degrees -- behind only Hawaii and Florida for warmest average climate. Louisiana residents also enjoy low taxes, above-average access to medical care and a relatively cheap cost of living. Like Tennessee, though, it suffers from a crime rate that is among the nation's highest.

It may not be a retirement hot spot, but Bankrate says it should be. The state has the country's lowest crime rate, and an estimated state and local tax burden of just 7.6% -- lower than every state but Alaska. The downside: with an average temperature of 46 degrees over the past 30 years, it's pretty darn cold there.

For small town lovers, Aberdeen, S.D., holds a renowned film festival and has a historic downtown that plays host to farmers markets, haunted walking tours and holiday parades.

Photo: Conspiracy of Happiness,

The Bluegrass State is one of many Appalachian states to dominate Bankrate's top 10. While it may not have Florida's sunny beaches, it does boast an extremely low cost of living, warmer-than-average temperatures and a below-average crime rate.

In Louisville, retirees can stay active by walking or biking on the Louisville Loop, a pedestrian path set to eventually cover more than 100 miles. The smaller town of Danville, Ky., meanwhile, is ideal for horse lovers.

Beyond its warm weather, Mississippi also provides cheap living costs and a lower tax burden. But retirees may want to choose where they live carefully: the state has a high crime rate and subpar access to medical care. It has only 178 doctors per every 100,000 residents -- almost 100 less than the national average.

Photo: Natalie Maynor,

This coastal state came in above average for most factors that Bankrate analyzed, including climate, access to healthcare and cost of living. Its crime rate is one of the lowest in the country, with only 2,446 property and violent crimes per 100,000 people.

An affordable college town, Lynchburg, Va. offers the beauty of the foothills of the Blue Ridge Mountains, as well as historic Civil War sites.

Another Appalachian state, West Virginia is boosted onto the list by low crime, a cheaper cost of living and above-average access to medical care. Still, it has a colder climate than some of the other states.
Warm temperatures, low state and local taxes and a relatively low cost of living all pushed Alabama into the top 10. Yet it suffers from below-average access to medical care and a relatively high crime rate, with 4,026 crimes per 100,000 people -- almost double that of Virginia.

Home to a campus of the University of Alabama, Huntsville, Ala. offers botanical gardens and nature preserves and 19th century architecture. Near the Georgia border, Fort Payne, Ala. is a quintessential small town with activities that include an annual fiddling convention and a stop at the "world's largest yard sale."

Beyond its cornfields, Nebraska offers excellent access to hospital care, a below-average crime rate and living costs among the country's cheapest. But with a lower than average temperature, it's another state for retirees who don't mind the cold.
Like neighboring South Dakota, this state is not for retirees looking for warm weather. But it does have the second lowest crime rate in the nation, a mild estimated tax burden of 8.9% and 5 hospital beds available for every 1,000 residents.
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