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10% of retirees have $1M+ in savings

finance.yahoo.com

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Re: 10% of retirees have $1M+ in savings

#11

Post by jebarker »

dtech wrote: post #6
ryandrake wrote: post #4

$1M in investments, drawing down at a moderate rate of 4% per year, gives you $40k/year income. Not poverty level in the USA (unless you’re in a high COL city), but not fabulously comfortable either. And only 10% of retirees have even that? Ouch. Back in the ‘80s, “retiring a millionaire” was awesome: you won. Not so much, today. People are living longer now, too. $1M is not going to stretch as far as many would beli…

4% is the rule of thumb for indefinite withdrawal including correcting for inflation right? That's not necessary for a pensioner

It's also based on having the money continually invested in the stock market, which becomes more nerve-wracking in retirement I'd imagine since you can't easily weather the storm of a half-decade downturn.

Re: 10% of retirees have $1M+ in savings

#12

Post by frankbreetz »

I have always heard you should have 10x your salary (starting salary or ending salary, I am not sure).

This makes the average retirement "426,000 for those aged 65 to 74" seem less bleak, but the median(164,000) makes it sound pretty bad.

There is so much conflicting advice on this topic. It makes it difficult to plan. Are we getting Social Security? Will it be reduced? Is the safe withdraw rate of 4% a safe assumption? The article uses 7% for rate of return, is this inflation adjusted? Do These calculators make assumptions, like your house will be paid off, or you have reduction in spending from kids moving out?

I am assuming if you pay SS tax and put 15% of you income into the S&P for 30 years, you should be able to retire at 65. Hopefully it works out!

Re: 10% of retirees have $1M+ in savings

#13

Post by danbruc »

jSully24 wrote: post #10

The title is misleading, they are referring to "Retirement Savings" just counting 401k and IRA dollars only. Personally my "retirement savings" are over 60% in non-IRA or 401k dollars, and I'm retired. Later in the article they begin to talk about overall net worth including regular savings and investments and the numbers are better but could still be problematic: >> In terms of the average retiree’s net worth, the F…

In the context of finance, any number starting with average is meaningless more often than not. It neither characterizes the situation of most people living well below average nor of the few people living well above average.

Re: 10% of retirees have $1M+ in savings

#14

Post by jSully24 »

frankbreetz wrote: post #12

I have always heard you should have 10x your salary (starting salary or ending salary, I am not sure). This makes the average retirement "426,000 for those aged 65 to 74" seem less bleak, but the median(164,000) makes it sound pretty bad. There is so much conflicting advice on this topic. It makes it difficult to plan. Are we getting Social Security? Will it be reduced? Is the safe withdraw rate of 4% a safe assumpti…

It is VERY worth talking to a professional about this. It's possible to build your savings in a manner they will produce income via dividends, bonds and other methods that give you a pretty great tax advantage and you don't have to sell as many assets during retirement. This is a huge advantage overall, especially in the years the market is bad.

I am not a financial professional but rely on one to guide me.

Re: 10% of retirees have $1M+ in savings

#15

Post by frankbreetz »

ryandrake wrote: post #4

$1M in investments, drawing down at a moderate rate of 4% per year, gives you $40k/year income. Not poverty level in the USA (unless you’re in a high COL city), but not fabulously comfortable either. And only 10% of retirees have even that? Ouch. Back in the ‘80s, “retiring a millionaire” was awesome: you won. Not so much, today. People are living longer now, too. $1M is not going to stretch as far as many would beli…

40k/year + SS income. So probably closer to 60k a year and most retirees have a paid off house. So, the biggest monthly expense is gone.

Re: 10% of retirees have $1M+ in savings

#16

Post by ryandrake »

jebarker wrote: post #11
dtech wrote: post #6

Earlier quoted context omitted.

4% is the rule of thumb for indefinite withdrawal including correcting for inflation right? That's not necessary for a pensioner

It's also based on having the money continually invested in the stock market, which becomes more nerve-wracking in retirement I'd imagine since you can't easily weather the storm of a half-decade downturn.

Yea, I don’t think 4% is all that conservative, either. Unless you have some reliable insider knowledge about when you’re going to die, you kind of have to plan for indefinite withdrawal, or at least until age 120 or something. Ideally, we are at exactly zero when we kick the bucket. Having money left over when you die is fine and let’s you leave a little bit to kin. Running out before you die is kind of catastrophic, no?

Re: 10% of retirees have $1M+ in savings

#17

Post by jSully24 »

danbruc wrote: post #13
jSully24 wrote: post #10

The title is misleading, they are referring to "Retirement Savings" just counting 401k and IRA dollars only. Personally my "retirement savings" are over 60% in non-IRA or 401k dollars, and I'm retired. Later in the article they begin to talk about overall net worth including regular savings and investments and the numbers are better but could still be problematic: >> In terms of the average retiree’s net worth, the F…

In the context of finance, any number starting with average is meaningless more often than not. It neither characterizes the situation of most people living well below average nor of the few people living well above average.

Agree.

Re: 10% of retirees have $1M+ in savings

#18

Post by frankbreetz »

cma wrote: post #7
ryandrake wrote: post #4

$1M in investments, drawing down at a moderate rate of 4% per year, gives you $40k/year income. Not poverty level in the USA (unless you’re in a high COL city), but not fabulously comfortable either. And only 10% of retirees have even that? Ouch. Back in the ‘80s, “retiring a millionaire” was awesome: you won. Not so much, today. People are living longer now, too. $1M is not going to stretch as far as many would beli…

Money markets and CDs are paying ~5% so that would only be if you want to not draw down.

If you want you income to increase with inflation you can't spend the entire rate of return. So If you are using a 5% return you should really only spend 2%, if you go with the current inflation rate.

Re: 10% of retirees have $1M+ in savings

#19

Post by cma »

frankbreetz wrote: post #18
cma wrote: post #7

Earlier quoted context omitted.

Money markets and CDs are paying ~5% so that would only be if you want to not draw down.

If you want you income to increase with inflation you can't spend the entire rate of return. So If you are using a 5% return you should really only spend 2%, if you go with the current inflation rate.

Sure but that too is to die with a million inflation adjusted, not to draw down. Are you saying retirees should need to be able to live only on ongoing gains?

Re: 10% of retirees have $1M+ in savings

#20

Post by frankbreetz »

cma wrote: post #19
frankbreetz wrote: post #18

Earlier quoted context omitted.

If you want you income to increase with inflation you can't spend the entire rate of return. So If you are using a 5% return you should really only spend 2%, if you go with the current inflation rate.

Sure but that too is to die with a million inflation adjusted, not to draw down. Are you saying retirees should need to be able to live only on ongoing gains?

Seems like a better plan then deciding when I am going to die. What if I plan on living to my 80s, but make it to my 100s?
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