Older Americans lost far more wealth in the housing and financial market collapse of 2007-2009 than younger people did, but generally had a lot more to lose in the first place, a new study by the Federal Reserve bank has found.
The median loss of wealth of households headed by people ages 55 to 64 was $13,700, while households led by people younger than 35 were down $4,900. The older group started out with wealth of about $258,000, while the younger had just a bit over $14,200.
The impact was big on both groups, but younger people have many years of work ahead of them in which losses can be made back, financial analysts point out. For older Americans, with retirement already begun or close at hand, money that vanished during those two years may never be recovered, forcing them to work longer or retire on incomes smaller than they had planned.
Of families headed by people 50 to 61, what the Federal Reserve calls the preretirement years, almost 50 percent lost wealth equivalent to six months of income or more, the Fed found in a related examination.
Concerning change in income levels between 2007 and 2009, it was better to be younger than older, the study found. For the 34 and under group, median income rose by about $3,000 to $43,000; for the 55 to 64 cohort, it was down $2,000 to about $55,000.
Recession's effect on ordinary household
These and other findings were reported last week by researchers from the Federal Reserve who sought to detail how the recession had played out in the accounts of ordinary households.
In detailed interviews with the researchers in 2007, respondents dug up records on financial assets, home equity and mortgages, car value and more. In an unusual step, the researchers went back to most of those same households in 2009 to find out how those sums had changed in two of the worst years in American economic history.