Crash Diets? The Lingering Effects of the Financial Crisis

More than six years have passed since the market crash of 2008, and a significant number of both Gen Xers and Baby Boomers say that they’re still reeling from the effects today.

Indeed, 41% of post-crash skeptics said they’d stopped saving for retirement since the crash — more than three times that of Gen Xers and Boomers as a group.

When asked about the crash, more than two-thirds (67%) of Gen X and boomer respondents said they still feel the impact in how they live, work, save and spend, according to “Generations Apart,” a new study from Allianz Life Insurance Company of North America.

An overwhelming 93% of what are termed post-crash skeptics — which includes a cross-section of Gen Xers and Boomers who experienced six or more major effects of the crash — said the 2008 crash still “haunts them” today. Accordingly, more than 9 in 10 (93%) believe that the traditional definition of retirement is now a “romantic fantasy of the past” (versus 84% of the total respondents).

And while the majority of both Gen Xers and Boomers (58%) said the crash had fundamentally made them more cautious and altered their thinking about risk and investments, the impact on post-crash skeptics was even greater. A full 83% of post-crash skeptics said the crash made them more cautious in their financial strategy — a fact that may adversely impact their ability to effectively save for retirement.

More than two-thirds of post-crash skeptics (67%) said they changed their view of the market to risky (versus 32% of the total respondents) and 43% said they switched to more conservative investing or financial products (versus 22% of the total respondents).

Perhaps more significant was the reported behavioral differences in post-crash skeptics compared to the total group of Gen X and Boomer respondents. Half of the post-crash skeptics reported taking on more debt after the crash (compared to 23% of the total respondents) and 41% reported that they or a partner had lost a job — almost three times as many as the total respondents (15%). Of even greater concern, 41% of post-crash skeptics said they’d stopped saving for retirement since the crash — more than three times that of Gen Xers and Boomers as a group.

As a likely result of these actions, post-crash skeptics have a much more pessimistic view of their chances for a successful retirement with more than half (52%) saying they don’t believe they’ll have the lifestyle they want in retirement (versus only 39% of the total group).

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