Despite Economic Recovery, Retirement Worries Grow

People in their late 30s and early 40s are the least confident in their retirement savings.

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Maybe retirement just looks less scary the closer you get to it. A new study suggests that while older Americans are concerned about retirement, some Generation Xers are having the most retirement anxiety.

According to a new study from the Pew Research Center's project on Social and Demographic Trends, only 28 percent of Americans 65 and older say they are either "not too confident" or "not at all confident" they will have enough assets and income to last through retirement. That share jumps to 39 percent for people who are 55 to 64, and 43 percent for those 45 to 54, topping out at 49 percent for people age 35 to 44, making them the group most worried about retirement. Only 35 percent of their younger peers, age 18 to 34, share these worries.

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"I think that's the most surprising survey finding," says Richard Fry, a senior economist at the Pew Research Center. "It wasn't either the earlier or the late Baby Boomers. [Lack of confidence] is markedly up, particularly among 35-to-44[-year-olds]."

Since 2009, confidence about retirement has declined across age groups, education levels, and income levels. Currently, 38 percent of Americans say they are not confident they will have enough funds to last through retirement — up significantly from 25 percent in 2009, according to the study. However, the share of people age 35 to 44 who say they are not confident has grown by 29 percentage points. That's more than double the growth for any other group studied.

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What has spooked the 35-to-44-year-old crowd? A massive slide in wealth has certainly played a role. From 2007 to 2010, median wealth for households headed by adults age 35 to 44 fell by 55 percent, according to a Pew examination of federal data. That's the most wealth lost out of any age group examined in the study. The next closest group was households headed by people 45 to 54, whose median wealth fell by 40 percent.

Those declines are due in part to a loss in housing wealth. American households lost 32 percent of their housing wealth from 2007 to 2010 as housing prices tanked. For households headed by people 35 to 44, housing wealth fell by much more: 52 percent. While this was a major setback, Fry says, there is time to make up those losses.

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"For them, what matters is how the U.S. housing market goes forward from here," he says. "It's not a matter of five years. It's a matter of 20 years, 30 years."

However, home ownership is just one part of wealth building. Retirement accounts are another major part of many people's net worth, meaning that people of all ages can also regain some lost wealth in these accounts The share of households headed by someone age 35 to 44 with retirement accounts fell by 9 percentage points from 2001 to 2010, compared to a 2 percentage point decline for all households.

That means that many Americans have not realized the gains from the stock market's post-recession recovery.

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"You can't benefit from it if you don't own it," Fry says.

Though they all have decades to spare, people in their late 30s and early 40s are still less confident about saving for retirement than the under-35 set. That youthful confidence, however, may be ill founded.

"On any number of conventional measures, you're going to see that households headed by under-35s are clearly not better off than the 35 to 44[-year-olds]," says Fry. "That would be true, for example, if we looked at household income. It's also true of wealth levels."

He points to the fact that younger workers have faced a particularly tough job market. However, these young people also have lost far less wealth than older Americans. While median wealth for households headed by people age 35 to 44 fell by more than $56,000 from 2001 to 2010, the median fell only by around $5,300 for people under 35. That's largely because the younger set hadn't had as much time to accrue wealth.