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Today's retirees face declining standard of living, study says

The retirement crisis is deepening, with recent generations of Americans less financially prepared for their golden years than their parents or grandparents, according to a new study.

The study by the Pew Charitable Trusts suggests that people who retire over the next quarter-century could suffer declining standards of living compared with earlier generations, a rare and troubling phenomenon in modern-day history.

The retirement math is most vexing for Generation X, those people born between 1966 to 1975, and for so-called late boomers, who were born after 1956, according to the study by the Pew Charitable Trusts.

Gen-Xers are on track to generate or “replace” only half their pre-retirement income after they stop working, according to the study. Late boomers fare only slightly better at 59%.

By contrast, the replacement rate for people born during World War II is 99%, according to the study. It’s 82% for early boomers born from 1946 to 1955.

The replacement rate compares annual income in retirement -- through sources such as Social Security, pensions and personal savings -- to annual income before retirement.

Retirees are thought to need at least 70% of their pre-retirement income to live comfortably and maintain their standard of living. Thus, a couple who earned $100,000 a year during their working lives would need $70,000 annually in retirement.

The generational chasm is caused in significant part by the high levels of debt carried by late boomers and Gen-Xers.

Low savings and high debt are a particular drag on Gen-Xers, a sign that soaring student-loan debt and sluggish career prospects are weighing on people in their prime earning years.

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