A report for Congress has found that the recent recession, while hurting virtually all sectors of society, had the greatest impact on middle age and middle income persons, who especially felt the effects of loss of home values and erosion of retirement account balances.
“The recession’s impact on retirement security will persist even as the economy continues to recover. Older workers may delay retirement, while many prime-aged workers face the daunting prospect of rebuilding lost home equity and saving for retirement despite persistently slow wage growth,” said the report from the Joint Economic Committee.
While the loss of net worth affected all age groups, the percentage loss was most significant for families headed by individuals aged 35 to 44, many of whom purchased their homes at the height of the housing bubble and, thus, were most adversely affected by the drop in home values, it said.
Families headed by 35- to 44-year-olds also saw the largest declines in retirement account participation rates and account balances, compared with other age groups.
The results can be seen in the studies showing increasing pessimism about retirement security—by one measure, more than twice as many people in that age group expressed that pessimism in 2012 compared with before the recession, 49 to 20 percent. The effect also shows in the increased participation in the labor force by persons age 65 and older, it said.
Steps the report recommended included automatic enrollment in individual retirement accounts, promoting the purchase of annuities that provide an income stream for life, preserving favorable tax treatment for retirement savings for middle and lower income persons and strengthening Social Security.
