First Person: I'm Not Letting the Recession Haunt My Retirement

Yahoo Contributor Network

Although the Great Recession changed how I feel about money, I'm not going to let it haunt me into retirement. Based on a new report by Pew Charitable Trusts, some experts are saying Gen-X won't retire with enough savings because of the recession. Meanwhile, early baby boomers born between 1946 and 1955 are expected to be the last group that will retire financially plump.

According to a recent CNBC article, early boomers lost 28 percent of their wealth while late boomers lost 25 percent of their median wealth. Gen-Xers lost 45 percent of their wealth during the recession extending from 2007 to 2010.

I don't buy into the idea that my retirement will be severely impacted by a financial crisis that occurred a quarter of a century before I even reach retirement age. In the next 20 to 30 years, members of my generation will have ample opportunity to close any savings gap.

Exceeding wealth expectations

Experts say Gen-X will be the first generation that won't exceed the wealth of the prior generation. They say Gen-Xers have a lower financial net worth than previous generations at the same age. When most baby boomers were in their late 30s and early 40s, the country was in the middle of a vastly different economic cycle. Just because Gen-Xers aren't hitting periods of economic prosperity or job growth at the age e as other generations, doesn't mean anything. If anything, Strauss-Howe generational theory suggests Gen-X should actually enjoy a high or post-Crisis era during their "elderhood." In contrast, baby boomers retire during the actual Crisis period.

Fighting downward mobility

While it's true most people in my generation saw their net worth plummet during the Great Recession, we also gained some of it back. I lost half of my wealth on paper when the value of my home went from about $200,000 at the height of the housing bubble to $100,000 at the bottom of the housing bust. However, I didn't sell my home or go into foreclosure. Unlike baby boomers I know who are already retired with 15 to 30 years left on their mortgages; I can still pay off my mortgage by the time I retire. Also, the value of my home is slowly recovering as the economy, in general, recovers.

Replacing my pre-retirement income

Pew's study indicated the average Gen-Xer will only be able to replace 50 percent of his or her pre-retirement income even though experts recommend retirees replace 70 to 100 percent. It seems foolish to expect my generation to have more saved for retirement when most of us have been saving and investing during bear markets. In another 20 years, our money will have had enough time to grow.

If anything, I think Gen-Xers will look back at the Great Recession as one of the reasons for their financial success. Some of my peers were able to buy homes at rock bottom prices. Many of us took advantage of the bear market to "buy low" so we can "sell high" in retirement. Moreover, we stopped taking job security for granted and became more ambitious. One of the greatest lessons the Great Recession taught me was to live a debt-free life. Although I'm not completely free of debt yet, I'll most certainly make it by the time I retire. Even if I do have less retirement money, that doesn't bother me because I'm not materialistic.


More from this contributor:

Retiring Too Early is Act of Sheer Idiocy

Gen X Doesn't Need as Much Wealth

Will Gen X Live Near Poverty in Retirement?


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