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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

#21

Post by david-gpu »

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…

There is a ton of poorly thought advice on this subject online. I recommend looking at some of what more reputable authors have published, such as Wade Pfau.

Even among experts there is not going to be a complete agreement on what is the best strategy, but there is broad agreement on some key points. I will briefly mention the two most important ones in my opinion.

First, realize that since investments compound, the (random) returns you get for the first few years of your retirement will have a disproportionate effect on whether you will have enough long-term. This is called the sequence of returns risk, and there are some things you can do to reduce that risk somewhat.

Second, and as a consequence of the (random) variability of the value of your investments over time, it is very beneficial to be able and willing to cut down on your expenses when your investments have lost value, particularly if it happens during those crucial first years.

Lastly, consider the possibility of purchasing an annuity. It provides you with some insurance in the event that you live longer than you expected.

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

#22

Post by alephnerd »

altacc wrote: post #9

Finance news is for rich people and this article proves it, talking like it's a choice whether you retire with $1 million or not. If you're thinking you're not rich but still interested in finance, then you're probably rich! ;) The article breezes past that the median retirement saving is actually $164,000, which makes sense as the median salary is ~$60,000.

> median retirement saving is actually $164,000, which makes sense as the median salary is ~$60,000

That includes ALL retirements accounts - ranging from those of people who are early career to those who are at retirement age.

I haven't seen data about median retirement savings for those at retirement age.

Edit: I'm wrong!

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

#23

Post by altacc »

alephnerd wrote: post #22
altacc wrote: post #9

Finance news is for rich people and this article proves it, talking like it's a choice whether you retire with $1 million or not. If you're thinking you're not rich but still interested in finance, then you're probably rich! ;) The article breezes past that the median retirement saving is actually $164,000, which makes sense as the median salary is ~$60,000.

> median retirement saving is actually $164,000, which makes sense as the median salary is ~$60,000 That includes ALL retirements accounts - ranging from those of people who are early career to those who are at retirement age. I haven't seen data about median retirement savings for those at retirement age. Edit: I'm wrong!

That number is retirement age and I gave the mid-late career median for salary.

> The Federal Reserve data shows that 65 to 74-year-olds have a median of $164,000 in their retirement accounts while those 75 and older have $83,000 saved for retirement.

Retirement age is not a fixed number. Quick search says about 10-19% of over 65s are still working. Some through choice, others not.

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

#24

Post by thehoff »

jSully24 wrote: post #14
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.

Where does one find or learn about how to find a good person to work with US on this. I always worry its the finance professional's wallet first then maybe us.

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

#25

Post by alephnerd »

altacc wrote: post #23
alephnerd wrote: post #22

Earlier quoted context omitted.

> median retirement saving is actually $164,000, which makes sense as the median salary is ~$60,000 That includes ALL retirements accounts - ranging from those of people who are early career to those who are at retirement age. I haven't seen data about median retirement savings for those at retirement age. Edit: I'm wrong!

That number is retirement age and I gave the mid-late career median for salary. > The Federal Reserve data shows that 65 to 74-year-olds have a median of $164,000 in their retirement accounts while those 75 and older have $83,000 saved for retirement. Retirement age is not a fixed number. Quick search says about 10-19% of over 65s are still working. Some through choice, others not.

Thanks for the heads up!

A bit pedantic but it looks like it's $204k now based on the Fed Reserve survey.

But by and large I think your argument still holds.

> Retirement age is not a fixed number. Quick search says about 10-19% of over 65s are still working. Some through choice, others not.

Agree with ya on that!

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

#26

Post by cma »

frankbreetz wrote: post #20
cma wrote: post #19

Earlier quoted context omitted.

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?

Plan on 100s or buy an annuity

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

#27

Post by chrisdhal »

thehoff wrote: post #24
jSully24 wrote: post #14

Earlier quoted context omitted.

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.

Where does one find or learn about how to find a good person to work with US on this. I always worry its the finance professional's wallet first then maybe us.

Look for a fiduciary or a for fee planner (not a commission based one). They don't have a stake in selling you specific things, they just charge a flat rate. Whether they're any good or not is a different story, but they aren't in the business to sell you anything other than their services.

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

#28

Post by jebarker »

For those in the US trying to do retirement planning I highly recommend trying: https://projectionlab.com/

I first saw it shared on HN and I've been a happy customer for the past year and the ability to compare the impact of different scenarios has helped me make a few big financial decisions. Good community around it for asking questions too.

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

#29

Post by halJordan »

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's 10x the salary you need for the lifestyle you want to maintain.

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

#30

Post by lucaspm98 »

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

The 4% rule is from the Trinity Study, which was based on a 15-30 year retirement:

https://en.wikipedia.org/wiki/Trinity_study

For an indefinite time period you'd need a 3-3.5% inflation-adjusted withdrawal rate depending on how many 9s you want in the portfolio survival rate.

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