Top 1% of Retirees Have 16.7M

[Anonymous]

Anonymous wrote:

Anonymous wrote:The media generally lacks perspective and context and likes to talk about "the never-before-seen transfer of wealth between the boomers and their kids".

What they fail to mention is that people have higher standards of living than in past generations and we are on our way to a multipolar world, leaving behind post-WWII American supremacy.

So yes, we'd better have money saved.

“Higher standard of living” is an exceedingly polite way of saying people spend too much on stupid shit

No but it does mean someone used to living in a nice home with luxury kitchen and bathrooms will still want that in their retirement home/condo/th.
Sure I can find a 1 bedroom to rent that is basic but I’d prefer a luxury 2bed/2 bath condo. Didn’t work all my life to retire to a dump/basic level of living. So I will work until 55-60 if needed to provide that, along with funds for travel as I deem needed

[Anonymous]

This is kind of uninformative? Somebody just retiring will be at their peak of their assets while somebody decades into their retirement will appear relatively worse off

[Anonymous]

Anonymous wrote:This is kind of uninformative? Somebody just retiring will be at their peak of their assets while somebody decades into their retirement will appear relatively worse off

Not always.

Between my 401k, SS and IRA, I put aside more money into retirement than I spend to live, not including my mortgage. In theory I will have more disposable income in retirement than I do now, assuming mortgage paid off.

My parents are also in a similar position in their mid 70s. Their retirement income is higher than their working income ever was thanks to investments, pensions and the generous social security increases.

[Anonymous]

Anonymous wrote:

Anonymous wrote:This is kind of uninformative? Somebody just retiring will be at their peak of their assets while somebody decades into their retirement will appear relatively worse off

Not always.

Between my 401k, SS and IRA, I put aside more money into retirement than I spend to live, not including my mortgage. In theory I will have more disposable income in retirement than I do now, assuming mortgage paid off.

My parents are also in a similar position in their mid 70s. Their retirement income is higher than their working income ever was thanks to investments, pensions and the generous social security increases.

Yeah. The boomers are sitting pretty but that doesn’t mean we will be. At least not until we die and inherit.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:99th percentile of retirees have $16.7M of wealth.

95th percentile of retirees have $3.2M of wealth.

90th percentile of retirees have $1.9M of wealth.

https://finance.yahoo.com/news/super-wealthy-retirement-looks-savings-095900179.html

Does this change the way you think in terms of how much you need to save to retire?

Thanks for posting this. It points out how ridiculous was the recent thread asking if $10M is enough to retire.

If you are already in the 1%, which many in dcum are, $10m is not that crazy if you want to continue with the same lifestyle.

This 1000%. If you are living in a 5k Sq ft home with your 2-3 kids, spending $400K/year now on life and the kids, you are most likely planning to maintain a similar standard of living in retirement, most likely with 1 condo/TH and a second home as well. To do that you need more $$. Sure you could retire on much less, but most people want to continue a similar standard of living

So if you are no longer paying for your kids day-to-day and no longer saving or paying for college and your house is paid off…seems like $200k per year keeps you in the same lifestyle.

Yes that is a given. But you may increase travel, want to travel in higher level of service, etc. But technically, yes you could live same lifestyle for less.
You can also live for less if you downsize. Take that paid off 5k sq ft home, net $1.5M and buy a condo for that or less and reduce overall costs. Also reducing items you have to manage. In a condo, your HOA fees cover the roof/exterior/landscaping/snow shoveling/etc. So you don't have to actively manage things, which is nice in retirement

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:99th percentile of retirees have $16.7M of wealth.

95th percentile of retirees have $3.2M of wealth.

90th percentile of retirees have $1.9M of wealth.

https://finance.yahoo.com/news/super-wealthy-retirement-looks-savings-095900179.html

Does this change the way you think in terms of how much you need to save to retire?

Thanks for posting this. It points out how ridiculous was the recent thread asking if $10M is enough to retire.

If you are already in the 1%, which many in dcum are, $10m is not that crazy if you want to continue with the same lifestyle.

This 1000%. If you are living in a 5k Sq ft home with your 2-3 kids, spending $400K/year now on life and the kids, you are most likely planning to maintain a similar standard of living in retirement, most likely with 1 condo/TH and a second home as well. To do that you need more $$. Sure you could retire on much less, but most people want to continue a similar standard of living

So if you are no longer paying for your kids day-to-day and no longer saving or paying for college and your house is paid off…seems like $200k per year keeps you in the same lifestyle.

Yes that is a given. But you may increase travel, want to travel in higher level of service, etc. But technically, yes you could live same lifestyle for less.
You can also live for less if you downsize. Take that paid off 5k sq ft home, net $1.5M and buy a condo for that or less and reduce overall costs. Also reducing items you have to manage. In a condo, your HOA fees cover the roof/exterior/landscaping/snow shoveling/etc. So you don't have to actively manage things, which is nice in retirement

Condos are a path to poverty. Better off staying in your previous house.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:99th percentile of retirees have $16.7M of wealth.

95th percentile of retirees have $3.2M of wealth.

90th percentile of retirees have $1.9M of wealth.

https://finance.yahoo.com/news/super-wealthy-retirement-looks-savings-095900179.html

Does this change the way you think in terms of how much you need to save to retire?

Thanks for posting this. It points out how ridiculous was the recent thread asking if $10M is enough to retire.

If you are already in the 1%, which many in dcum are, $10m is not that crazy if you want to continue with the same lifestyle.

This 1000%. If you are living in a 5k Sq ft home with your 2-3 kids, spending $400K/year now on life and the kids, you are most likely planning to maintain a similar standard of living in retirement, most likely with 1 condo/TH and a second home as well. To do that you need more $$. Sure you could retire on much less, but most people want to continue a similar standard of living

So if you are no longer paying for your kids day-to-day and no longer saving or paying for college and your house is paid off…seems like $200k per year keeps you in the same lifestyle.

Yes that is a given. But you may increase travel, want to travel in higher level of service, etc. But technically, yes you could live same lifestyle for less.
You can also live for less if you downsize. Take that paid off 5k sq ft home, net $1.5M and buy a condo for that or less and reduce overall costs. Also reducing items you have to manage. In a condo, your HOA fees cover the roof/exterior/landscaping/snow shoveling/etc. So you don't have to actively manage things, which is nice in retirement

Condos are a path to poverty. Better off staying in your previous house.

Not if the condo is in a city

Took our 18 yo condo (purchased 7 years ago and rented out), renovated it/gutted it. Now living in it as empty nesters. It's in one of the top 3 condo buildings in our major city. It will increase in value over time. Maybe not as much as a house. But I no longer wish to live in a suburb. I want to live in the city, not worry about anything on the exterior of my "home". My packages are delivered to my door (with no chance of being stolen, as it's in the condo building), my wine deliveries are always signed for, my dry-cleaning is picked up from the concierge desk and returned there 1-2 days later. I'm only responsible for the inside of my unit. No exterior painting or roof to worry about, windows are washed every 3 months, Hot water is central to the building, etc. That's what we want for our retirement.....we don't want to have to manage a home or deal with a large place. 1500 sq ft condo is perfect for 2 people.

Also, I don't need my condo to appreciate drastically. I own it fully, and real estate is only 5% of my Net worth. So it's something we own for both living and enjoyment. My other investments grow 10%+/year so if my condo only grows 2-3% I'm fine with that. It's about quality of living.

[Anonymous]

The number in the 99th percentile is going to be skewed because it includes all the billionaires whose net worth is going to make the average artificially high.

The typical top 1% retiree is probably closer to $10M.

[Anonymous]

Anonymous wrote:The number in the 99th percentile is going to be skewed because it includes all the billionaires whose net worth is going to make the average artificially high.

The typical top 1% retiree is probably closer to $10M.

You are right. To me more useful, they should split out the top 1% into multiple buckets - 0.1%, 0.1-0.5% and 0.5-1% as well as a consolidated value for the top 0.9%. That would separate out the super-rich (0.1%) from their enablers (the 0.9%).

[Anonymous]

Anonymous wrote:The number in the 99th percentile is going to be skewed because it includes all the billionaires whose net worth is going to make the average artificially high.

The typical top 1% retiree is probably closer to $10M.

The article does not source or describe the numbers well. The Federal Reserve survey on which it is based is accompanied by downloadable data, which is where I assume the numbers came from. But unless you are good at that sort of thing, it is difficult to trace back.

Many articles of this type describe the entry threshold for a particular percentile. This article put in numbers without describing them. Are they entry thresholds, medians, or averages? I suspect they are medians for a particular percentile, but hard to tell for sure. I don't think they are entry thresholds because the numbers are much higher for that than what you normally see.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:How do you calculate a pension for total retirement assets?

There are several ways and it depends on the type of pension. This is a good, if dense, explanation: https://andrewmarshallfinancial.com/what-is-a-pension-worth/

It gets easier to value a pension as you get closer to age of retirement to earn the full pension. I am 5 years out now, so I have a good idea of what my initial pension payment will be (mine is 60% of the average of the top three years of earnings, so I can extrapolate fairly easily based on current salary). My pension is inflation adjusted as well, so I follow the calculations at the link for inflation adjusted pensions.

I do not think it makes sense to add pensions to net worth calculations. The income stream disappears when you die and usually cannot be cashed out for upfront if you are short on funds. You can use the pension to reduce the amount assets needed for your desired retirement lifestyle, but this “asset” cannot be passed on to heirs so it shouldn’t be included as part of net worth.

If your goal is retirement planning, (versus passing money along to heirs) then it does make sense to factor it in because it does have value—you just have to estimate your lifespan. For retirement planning, I look at our one pension as equating to having $1 million in a conservative fund.

+1, I assumed this thread was about retirement planning, not leaving assets to heirs.

Ignoring a pension in that context makes no sense. You see people in here talking about how their assets are illiquid -- tied up in real estate or stocks. Or how counting a home towards retirement is tricky because you have to live somewhere, and while downsizing is an option, sometimes the state of the real estate market does not make it the best way to maximize value.

But a pension is guaranteed income in retirement. It can also be enormously helpful with end-of-life care planning, something I know a lot of people stress about with regards to retirement because they fear spending down retirement knowing those costs are down the road. A pension smooths that out in a way no other asset can (except I guess an annuity).

Also, as someone for whom a pension plays heavily into my retirement plans, it makes it easier to plan on leaving assets to heirs. We made the central tenants of our retirement a paid off home and living in a place where we *could* live off the pension alone if we had to. That's not our plan and we have a lot of other investment vehicles. But it means that if we wanted to, we could live in our paid off home and live off the pension, and leave everything else to heirs (we only have one heir so this is really not necessary, but if something changed, we could).

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:99th percentile of retirees have $16.7M of wealth.

95th percentile of retirees have $3.2M of wealth.

90th percentile of retirees have $1.9M of wealth.

https://finance.yahoo.com/news/super-wealthy-retirement-looks-savings-095900179.html

Does this change the way you think in terms of how much you need to save to retire?

Thanks for posting this. It points out how ridiculous was the recent thread asking if $10M is enough to retire.

If you are already in the 1%, which many in dcum are, $10m is not that crazy if you want to continue with the same lifestyle.

This 1000%. If you are living in a 5k Sq ft home with your 2-3 kids, spending $400K/year now on life and the kids, you are most likely planning to maintain a similar standard of living in retirement, most likely with 1 condo/TH and a second home as well. To do that you need more $$. Sure you could retire on much less, but most people want to continue a similar standard of living

So if you are no longer paying for your kids day-to-day and no longer saving or paying for college and your house is paid off…seems like $200k per year keeps you in the same lifestyle.

Yes that is a given. But you may increase travel, want to travel in higher level of service, etc. But technically, yes you could live same lifestyle for less.
You can also live for less if you downsize. Take that paid off 5k sq ft home, net $1.5M and buy a condo for that or less and reduce overall costs. Also reducing items you have to manage. In a condo, your HOA fees cover the roof/exterior/landscaping/snow shoveling/etc. So you don't have to actively manage things, which is nice in retirement

Condos are a path to poverty. Better off staying in your previous house.

Not if the condo is in a city

Took our 18 yo condo (purchased 7 years ago and rented out), renovated it/gutted it. Now living in it as empty nesters. It's in one of the top 3 condo buildings in our major city. It will increase in value over time. Maybe not as much as a house. But I no longer wish to live in a suburb. I want to live in the city, not worry about anything on the exterior of my "home". My packages are delivered to my door (with no chance of being stolen, as it's in the condo building), my wine deliveries are always signed for, my dry-cleaning is picked up from the concierge desk and returned there 1-2 days later. I'm only responsible for the inside of my unit. No exterior painting or roof to worry about, windows are washed every 3 months, Hot water is central to the building, etc. That's what we want for our retirement.....we don't want to have to manage a home or deal with a large place. 1500 sq ft condo is perfect for 2 people.

Also, I don't need my condo to appreciate drastically. I own it fully, and real estate is only 5% of my Net worth. So it's something we own for both living and enjoyment. My other investments grow 10%+/year so if my condo only grows 2-3% I'm fine with that. It's about quality of living.

Agree with this. We have a condo we bought 10 years ago and while it has not appreciated aggressively, it's in a desirable central neighborhood walkable to lots of amenities and close to public transportation. Our original plan was to sell it this year, but given the current state of the market, we've decided to keep it and rent it out. Yes it would be nice to get a few hundred thousand in equity out of it now, but it's not totally necessary, and instead our plan is to finish paying it off and hold onto it as an investment property until retirement, at which point we'll either move back into it (allowing us to sell our house) or sell it for the proceeds and invest them. It's actually pretty great to have an investment that also serves as an alternative housing option down the road, in case we realize we really want to be back in the city. This way we won't have to buy or rent a condo at whatever the market rate is at that point. We already have one (and got it pretty cheaply because of when we bought).

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:99th percentile of retirees have $16.7M of wealth.

95th percentile of retirees have $3.2M of wealth.

90th percentile of retirees have $1.9M of wealth.

https://finance.yahoo.com/news/super-wealthy-retirement-looks-savings-095900179.html

Does this change the way you think in terms of how much you need to save to retire?

Thanks for posting this. It points out how ridiculous was the recent thread asking if $10M is enough to retire.

If you are already in the 1%, which many in dcum are, $10m is not that crazy if you want to continue with the same lifestyle.

This 1000%. If you are living in a 5k Sq ft home with your 2-3 kids, spending $400K/year now on life and the kids, you are most likely planning to maintain a similar standard of living in retirement, most likely with 1 condo/TH and a second home as well. To do that you need more $$. Sure you could retire on much less, but most people want to continue a similar standard of living

Actually to maintain your same standard of living, you need far less actual income because your home is paid off, and you are no longer actively saving for college and retirement. So if (for example) your monthly mortgage is $4k, 529 savings is $2k, and retirement savings are $4k, that's 10k/month you are spending now that you won't need to spend in retirement.

+1, we've run these numbers and it's the same for us -- somewhere between 7k and 12k per month that we currently put towards mortgage, college, and retirement (I am self employed with a variable income so my retirement savings can vary with my income by month) that we will no longer need in retirement.

Also, while I don't intend to factor this into our retirement planning, I know my own parents spend less in other areas too. They are both on restrictive diets for health reasons, and this results in them spending a lot less on food. They are down to one car because my dad can no longer drive, and have discussed getting rid of the remaining car too in the next 5 years -- they could probably get alone perfectly well taking cabs and using a bus line near their home that goes straight to the central commercial district, and spend less annually on transportation while also not having to deal with maintaining a car.

They spend most of their money on travel and hobbies, plus have some supplemental health insurance costs. Even ignoring the savings issues, they probably spend less than half on food/housing/other bills/entertainment than they did when they were still working and had 3 kids at home. There's an inflation factor, but it's kind of crazy how low their expenses are. And they have serious health issues!

[Anonymous]

Anonymous wrote:

Anonymous wrote:The number in the 99th percentile is going to be skewed because it includes all the billionaires whose net worth is going to make the average artificially high.

The typical top 1% retiree is probably closer to $10M.

You are right. To me more useful, they should split out the top 1% into multiple buckets - 0.1%, 0.1-0.5% and 0.5-1% as well as a consolidated value for the top 0.9%. That would separate out the super-rich (0.1%) from their enablers (the 0.9%).

+1

[Anonymous]

Anonymous wrote:

Anonymous wrote:The number in the 99th percentile is going to be skewed because it includes all the billionaires whose net worth is going to make the average artificially high.

The typical top 1% retiree is probably closer to $10M.

You are right. To me more useful, they should split out the top 1% into multiple buckets - 0.1%, 0.1-0.5% and 0.5-1% as well as a consolidated value for the top 0.9%. That would separate out the super-rich (0.1%) from their enablers (the 0.9%).

NP. I agree. I found this for 2023: Threshold to enter the top 1% was 13.6mm.

Percentile Threshold 10% 2% 1% 0.10%
Net Worth $1,920,758 $8,464,740.20 $13,666,778 $61,827,166