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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

#31

Post by hedora »

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…

Most of the increased average life expectancy during the 20th century came from lower mortality rates for kids. Life expectancies for the over-20 crowd hardly budged (and might even be decreasing in the US).

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

#32

Post by frankbreetz »

halJordan wrote: post #29
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.

Why is it base off salary and not spend?

does this assume I contribute 15% to 401k or do I take 15% off my salary?

Does this assume my house is gonna be paid off?

What are the SS assumptions?

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

#33

Post by nradov »

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?

If you have accurate records for several ancestors who died of natural causes then you can put a reasonable upper bound on your lifespan. Do you have anyone in the previous few generations who lived to near 100? Lifespans haven't increased much for people who make it to adulthood.

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

#34

Post by claudiulodro »

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…

I think the tricky part about basing it off overall net worth is that for the average retiree their house is a big part of their net worth. Many could downsize to get some cash out of it, but people do still need to live somewhere.

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

#35

Post by naniwaduni »

ryandrake wrote: post #16
jebarker wrote: post #11

Earlier quoted context omitted.

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…

Then you leech off kin if you have any? We invented old people long before we discovered pensions and tax-advantaged retirement savings accounts.

The range of plausible return rates is hilariously wide, so nearly any withdrawal scheme that can provide a reasonable baseline standard of living with a low chance of going bust is extremely likely to grow faster than you spend it down and leave you with large amounts of money left over. Portfolio survival rate is a very artificial metric that does not accord with how people actually concretely plan their retirements outside a particular band of upper-middles who are weirdly allergic to the fact that they have social ties (and rich enough to avoid them).

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

#36

Post by silverquiet »

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.

Speaking as someone who's not there but can also see it (I recently learned that I'm in the "mass affluent" - those with $100K to $1M in net worth), I don't think it's "a" choice, but many of them. I've never made anything like some of the developer salaries I see bandied about on this site, but I do OK and live modestly; small house, beater car, only eat out on special occasions, etc... But I think the biggest thing is not having children. The estimates of their costs sans college is already in Lambo territory just for one. I often wonder how much that sort of thing has to do with the decline in fertility.

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

#37

Post by snakeyjake »

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.

A McDonald’s worker who starts today aged 18 who makes $15/hr and joins the McDonald’s 401k plan and contributes 4% of their income to it and works at McDonald’s for 50 years never receiving a raise should expect to have very close to $1 million by the age of 68.

And that’s just 4%. McDonald’s has a 6% match.

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

#38

Post by foogazi »

snakeyjake wrote: post #37
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.

A McDonald’s worker who starts today aged 18 who makes $15/hr and joins the McDonald’s 401k plan and contributes 4% of their income to it and works at McDonald’s for 50 years never receiving a raise should expect to have very close to $1 million by the age of 68. And that’s just 4%. McDonald’s has a 6% match.

I’m not if they don’t take out any funds out of the 401k for health, housing, education

because there’s not a lot left over on $15/hour

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

#39

Post by peteradio »

snakeyjake wrote: post #37
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.

A McDonald’s worker who starts today aged 18 who makes $15/hr and joins the McDonald’s 401k plan and contributes 4% of their income to it and works at McDonald’s for 50 years never receiving a raise should expect to have very close to $1 million by the age of 68. And that’s just 4%. McDonald’s has a 6% match.

1M is the target today. What does that have to do with 50 years from now?

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

#40

Post by frenchman_in_ny »

jebarker wrote: post #28

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.

Thanks for this link. Super valuable! I'm not clear on how it's considering 529s (for you, or for kid[s]?). I wish the "about you" allowed you to add kids and their projected college years into the financial plan.
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