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Widening Income Gap Threatens Retirement

NEW YORK (MainStreet) — The income gap in America is growing fastest among 35 to 44-year-olds, according to a new report.

"These years can either build a bridge to a successful retirement or leave people well short of their goals," said Chris Kahn, research and statistics analyst with Bankrate.com. "We're seeing a tale of two retirements."

The Bankrate study found that within this age group, the divide grew the highest at 21% from 1992 to 2012.

"Some of the reasons why the income gap is growing so rapidly within this age group are persistently high unemployment as well as stagnant wages," Kahn said. "This stagnation in income combined with rising prices is making it more challenging for people to stay in the middle class or move up."

The bottom fifth of American households earn $11,490 annually on average, the next fifth up earn $29,696, the middle tier earn $51,179 while the next tier up earns $82,098 and the top tier earns $181,905.

"At the higher end of the earnings spectrum, it is much easier to save for retirement, because people can more readily sacrifice luxuries than necessities," said Jeff Gorton, a CPA and financial planner.

The 65-plus age group has long exhibited the widest income gap although it only rose 3% from 1992 to 2012. The income gap among 45- to 54-year-olds rose by 18% or second to the 35- to 44-year-old age group.

"These are the financially bridging years, so if wages remain low and jobs continue to be scarce, it may mean a higher disparity between those who have and those who have not at retirement," said Kimberly Foss, certified financial planner with Empyrion Wealth Management.

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