Thursday, July 10, 2008

HOUSING CRASH DISASTROUS FOR MANY PEOPLE'S RETIREMENT

Center for Economic and Policy Research A new report from the Center for Economic and Policy Research shows that, due to the collapse of the housing bubble, the vast majority of Americans have accumulated little or no wealth. This means that they will be almost completely reliant on Social Security and Medicare to support them in their retirement years.

The study analyzed the wealth holdings of families in 2004 and projected their wealth in 2009. The report projects that if house prices stay the same through 2009, the median household headed by a person between the ages of 45 and 54, those in their prime earning years, will have 25 percent less wealth than did the median household in this age group in 2004. These households will have accumulated just $113,268 in net worth in 2009, barely $15,000 more than their counterparts in 1989, whose net worth totaled $97,600.

If real house prices fall 10 percent, the median household in the 45 to 54 cohort will see a 35 percent loss in wealth compared with the median in 2004 while families in the 18 to 34 cohort will lose of 68 percent. If prices fall by 20 percent, the most pessimistic scenario, families in the 55 to 64 cohort will experience a loss of 50 percent of their wealth compared to the same cohort in 2004

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