In fact, the General Accounting Office (GAO) says that Boomers and Gen X households headed by an individual aged 25 to 34 appear to have significantly more assets on an inflation-adjusted basis than current retirees did at the same age. On the other hand, they also appear to have more debt.
Housing, Pension Impact
Most of the large increase in assets between current retirees and the Baby Boom generation is due to increased ownership and equity in housing. The GAO report, done at the request of Representative Rob Andrews (D-New Jersey), ranking minority member, Subcommittee on Employer-Employee Relations, Committee on Education and the Workforce, notes that contributions to DC pension plans play a role in explaining what the report characterized as a “modest increase in assets” between the Baby Boom and Generation X, in part because data utilized in its analysis did not reflect the value of future benefits from DB pension plans.
Perhaps not surprisingly, of the three generational groups, members of Generation X carry the most debt. Still, for Baby Boom and Generation X households with positive net worth – that is, where assets exceed debt – at age 25 to 34, net worth is 60% greater than that of current retirees when they were the same age.
The report cautioned, however, that particularly for Generation X, greater life expectancy may require more assets to cover more years in retirement and greater assets may also be required to support higher standards of living. They may also not have the resources currently available to retirees, or projected to be there for Boomers – notably Social Security.
The GAO report notes that while Generation X workers will likely have similar levels of retirement income in real terms (adjusted for inflation) at age 62 as their counterparts in the Baby Boom generation, the former may only be able to replace a smaller percentage of their preretirement income. Possible contributors to this impact are reduced Social Security benefits for Gen Xers compared with current levels and/or higher taxes and delayed eligibility, according to the report.
The report acknowledges that worker income and education levels will have an impact on retirement income, noting that retirement income is lower for the less educated and for single women.