Top 1% of Retirees Have 16.7M

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Why would it? We all know the baby boomers were pretty bad at saving. Most of how they did it was by lucking in to homes that increased in value exponentially. My parents in law (retired boomers) are not who I want to emulate in terms of savings. They still have to count every penny in retirement.

I don't want that.

I thought the evil boomers were all sitting on piles of cash that they refuse to give their children?

My in-laws are rich and still act as though they could be homeless tomorrow.

It’s good to think that way if you want your money to last a very long time. Better than spending without thinking about tomorrow.

Having $20M and living on $40k/year is probably a bit of mental illness. That is more than normal “frugality.”

[Anonymous]

Numbers without context aren’t very useful.

Are people happy having those amounts?

[Anonymous]

Anonymous wrote:Numbers without context aren’t very useful.

Are people happy having those amounts?

Yes

[Anonymous]

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?

Age is a big factor. $ saved at age 65 and $ saved at age 95 hit differently. Retirees can spend down.

[Anonymous]

401k has a huge flaw.

A person making 300k at a company with 6 percent match who does the minimum
to get match ends up putting in $36k a year

A person making 100k whose company match 50 cents on dollar on 6 percent is only putting in for match is putting in $7,500 a year.

People have a tendency to do the match. Plus lower income people can’t afford to ax out 401k

And some companies have zero match.

My current company has an amazing match bs prior company crappy match. It is amazing how much quicker my 401k is growing

[Anonymous]

Our goal which we are on track to make is the 95th percentile.

I’m purposely not comparing myself to the “I can’t retire with a NW of 10M” crowd. I’m running my own race.

[Anonymous]

Anonymous wrote:120k salary is 90th percentile. Makes sense they end up with a 90th percentile retirement as someone making 120k and maxing retirement and owning their own house with no mortgage should have about 2M in assets by late 60s.

A lot of inflation. You're thinking in 1990s numbers when it's 2024.

120k is only the 70th percentile for household income. The average household has more than 1 person working. Also people can’t spend most of the home value associated with their house unless they sell it and live in a tent. 2M is not a lot of money anymore especial when 500k-1M is tied up in your home. Here’s a real world example. My grandparents Net worth would be about 1.6M under this methodology and 675k of this is from social security pension, with another 500k from their paid off house. But they only have 400k of assets excluding house and pensions. One of them got a cancer recently and they will be on the hook for the remaining 20% of medical bills not covered by Medicare. If the first line treatment therapy does not work, the only option left are some very expensive gene therapies that cost 400-500k. They will be on the hook for the 80-100k not covered by Medicare. The first line therapy for this cancer has a “cure” rate around 50%. So the total cost of treating this cancer will easily reach 100k+ if they are unlucky and need gene therapy treatment. A single medical incident can easily wipe out 25%+ of their existing liquid assets. They are not that old and it is very likely that one of them will live another 15+ years.

[Anonymous]

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.

Top contender for one of the smartest comments on DCUM. Spot on. World is changing. I’d like to retire when we have 10m plus banked. Our net worth is currently 5 plus but it’s not liquid, tied up in stocks and real estate. I’m also not sure hubby is the retirement type, he loves work and “the hunt”. My dad is 85 and living off of his real estate (rented out) and 2m plus portfolio and it feels desperately stressful and low budget. Please save for your retirement folks and if possible, STOP blaming the boomers for everything affecting your sad sack lot in life!!!

[Anonymous]

Anonymous wrote:No because most retirees don't live around here. They live in small towns in LCOL areas.

Also, most don't earn 250K+ from 30s onward. They are in lcol areas and make $40-50K. Do that and your lifestyle wont require $200K+/year at retirement either

[Anonymous]

Anonymous wrote:

Anonymous wrote:Does "wealth" include equity in your primary home?

In the study cited it does.

Makes sense because many people do "downsize" to a lesser costing home around retirement (despite what the other thread might have you think).

[Anonymous]

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.

[Anonymous]

Anonymous wrote:

Anonymous wrote:120k salary is 90th percentile. Makes sense they end up with a 90th percentile retirement as someone making 120k and maxing retirement and owning their own house with no mortgage should have about 2M in assets by late 60s.

A lot of inflation. You're thinking in 1990s numbers when it's 2024.

120k is only the 70th percentile for household income. The average household has more than 1 person working. Also people can’t spend most of the home value associated with their house unless they sell it and live in a tent. 2M is not a lot of money anymore especial when 500k-1M is tied up in your home. Here’s a real world example. My grandparents Net worth would be about 1.6M under this methodology and 675k of this is from social security pension, with another 500k from their paid off house. But they only have 400k of assets excluding house and pensions. One of them got a cancer recently and they will be on the hook for the remaining 20% of medical bills not covered by Medicare. If the first line treatment therapy does not work, the only option left are some very expensive gene therapies that cost 400-500k. They will be on the hook for the 80-100k not covered by Medicare. The first line therapy for this cancer has a “cure” rate around 50%. So the total cost of treating this cancer will easily reach 100k+ if they are unlucky and need gene therapy treatment. A single medical incident can easily wipe out 25%+ of their existing liquid assets. They are not that old and it is very likely that one of them will live another 15+ years.

Why don't they have health insurance to cover the gap not covered by medicare?

My father has advanced parkinsons and sees doctors all the time and every penny is covered by health insurance + medicare. Including several major surgery bills from when he fell down the steps and broke his spine. Every single penny was paid out by the health insurance + medicare. The only thing they paid out of pocket for the last few years of treatment and appointments was parking.

[Anonymous]

The thing about retirees is that the top 1% have a ton of money and the rest less so. Kind of like the rest of the US.

[Anonymous]

Anonymous wrote:3.2M is not even close to wealthy.That is only 128k in annual income before taxes. That is not even the 75th percentile for household income. That is a solidly middle class income and it will provide you an acceptable retirement, but not a life of luxury.

Exactly and it includes equity so actual income is even lower.

[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.

Top contender for one of the smartest comments on DCUM. Spot on. World is changing. I’d like to retire when we have 10m plus banked. Our net worth is currently 5 plus but it’s not liquid, tied up in stocks and real estate. I’m also not sure hubby is the retirement type, he loves work and “the hunt”. My dad is 85 and living off of his real estate (rented out) and 2m plus portfolio and it feels desperately stressful and low budget. Please save for your retirement folks and if possible, STOP blaming the boomers for everything affecting your sad sack lot in life!!!

85 years old, collecting social security + rental income and has 2m portfolio and feels broke? Something is wrong with this picture. Even without social security he could live off rental income and a 4% draw on the 2m portfolio and have a solid 6 figure income, enough for a comfortable retirement home/assisted living for his last 10 years on this earth. And still be able to pass on a solid inheritance to you.