Posted on 06/22/2023 9:51:36 PM PDT by SeekAndFind
There's something about statistics that gets me energized, even on a weekday! I particularly enjoy comparing myself to others and understanding how I measure up. It's only natural to want to know if you're average or above average. This knowledge helps you gauge your position and serves as a valuable reminder of what the future may hold. As a financial planner, understanding retirement averages like these can truly assist both you and me in planning for the future.
So, let me share with you my thoughts on some intriguing figures I recently came across in a Wall Street Journal article titled Here’s What Retirement Looks Like in America in Six Charts (paywall).
Let's start with retirement savings balances. For individuals age 65 and above, the average balance is $407,581, according to the Employee Benefit Research Institute. Only 17.3% of this age group have balances of $700,000 or more, with 11.6% having $1 million or more. Generally, the highest balances are seen among those age 55-64.
My thoughts: To begin with, I wouldn't classify our clients as average. So, if you're reading this and feeling good about your situation, know that there's much more to it than these averages. Our clients are typically on the higher end of the spectrum since accumulating more wealth often leads to seeking professional assistance.
That being said, the right answer for you depends on your retirement needs. If you're an "average" investor in America, you can probably expect to withdraw around $20,000 per year before taxes. If your needs are greater, you'll likely require higher amounts. This statistic concerns me the most but doesn't come as a surprise. We have a savings issue in this country, so I'm not astonished to read these figures.
Considering the previous statistics, it's no surprise that a significant portion of our population heavily relies on Social Security. About 90% of individuals claim their benefits by the age of 65, and the average benefit amount is $1,825 per month, according to the Social Security Administration.
My thoughts: Social Security is a substantial resource for retirees. Even with the average benefit, assuming both individuals in a couple worked, you can expect over $40,000 of retirement income from Social Security alone. If you're at the higher end of the spectrum, these figures can roughly double.
Remember, Social Security benefits are calculated based on your highest 35 years of earnings. This statistic also emphasizes the critical importance of working with someone to optimize your Social Security benefits. There are various factors to consider, such as when to start claiming, which can make a significant difference in your retirement plan.
One of the most daunting concerns for retirees is healthcare expenses. According to the Bureau of Labor Statistics, individuals age 65 or older spend an average of $7,030 per year on healthcare. This number tends to increase as one gets older. The breakdown of this amount includes $4,974 on health insurance, $1,077 on medical services, $726 on medications and $253 on medical supplies.
My thoughts: As you can see, if you're married and retired, you're likely spending about $14,000 or more per year on healthcare expenses alone. Keep in mind that these figures represent averages, and if you anticipate having higher healthcare needs, you could easily be looking at allocating $20,000 or more annually for your health expenses.
The most important thing to acknowledge is that you shouldn't overlook these costs in your retirement planning. During our working years, we often don't pay close attention to healthcare costs since insurance coverage is typically provided through our jobs, and the rest may not be a significant concern year after year. However, in retirement, these costs become a major contributor to your budget.
This is, by far, my favorite statistic, from the U.S. Bureau of Labor Statistics American Time Use Survey, because I've never seen it broken down like this before. So, how does the average retiree spend a 24-hour day?
My thoughts: Isn't this thought-provoking? You work for 40 years, only to retire and spend over half of your days sleeping or watching TV? Now, as someone who finds that idea delightful, it may sound like an amazing day to me. However, if you were to ask the average pre-retiree about their ideal retirement, it probably wouldn't involve watching a 30-minute show followed by the epic film Lawrence of Arabia (trust me, I did a seventh-grade history report on that movie, and I wouldn't wish it on anyone).
My takeaway from this study: Before retirement, start pursuing hobbies and passions that interest you. I've written about this in my retirement dating blog, but it's important to start exploring activities today to determine how you want to spend your golden years. If you do this, your retirement years will truly be golden.
Isn't it fun? The WSJ article includes a few other statistics, like average net worth ($1,217,700 for individuals age 65-74), but I thought the four statistics I highlighted above already painted an interesting picture. I hope you found them as fascinating as I did.
Boating , but you have to be able to twist your own wrenches and have a size that you can trailer...(also have your own storage area.) I built Hinckley powerboats for a few years and grew up on Cape Cod , so to me being able to just hug the coastline and simply decompress on the water never gets old. It is affordable ONLY if you do all the work yourself . I have two vessels one a 1961 Thunderbird with twin 4 cylinders I/O’s and another tri hull that I’m turning into full electric. I pick and choose what work I do in the real world as I had mostly been self-employed barring the on and off work I did for certain companies which only encompassed 10 or so years. None of this would be possible if not for God and his blessings. * Never buy new cars or finance anything,anything you REALLY need is out there at a good price if you look hard enough .
Statistic #1: Retirement account savings
Some off us still have pensions. We gave up part of our salary so our employer would pay us a pension for life after retirement.
Some—certainly the minority—did a good job investing these funds. I’m lucky enough to be under one of these.
Very interesting! How I spend my day is definitely NOT how they say in the study. TV is the 1.86, too busy to set down plus there is nothing worth watching.
I’m a sabbath keeping Seventh day Adventist age 65. My resting heart rate is 44 bpm. I play singles tennis , keeping up with guys half my age and younger.....4.0 to 4.5 level. I play golf and work out at the gym every day. I am mostly vegetarian. I read the Bible every day. Church on Sabbath and keep the Sabbath, God’s remedy for stress.
No need to collect social security yet...will probably wait until 70. Blessed by God and follow his word and eagerly await his return to take me home.
But in the meantime, I treat my body as the temple of God. Perfect health, no medication, nothing. Lots of water and the Edenic Diet mostly. Gym every single day for 90 minutes of cardio work. It’s a lifestyle.
Just like this:
https://www.youtube.com/watch?v=dluh9YqSKXY&t=88s
I’m a sabbath keeping Seventh day Adventist age 65. My resting heart rate is 44 bpm. I play singles tennis , keeping up with guys half my age and younger.....4.0 to 4.5 level. I play golf and work out at the gym every day. I am mostly vegetarian. I read the Bible every day. Church on Sabbath and keep the Sabbath, God’s remedy for stress.
No need to collect social security yet...will probably wait until 70. Blessed by God and follow his word and eagerly await his return to take me home.
But in the meantime, I treat my body as the temple of God. Perfect health, no medication, nothing. Lots of water and the Edenic Diet mostly. Gym every single day for 90 minutes of cardio work. It’s a lifestyle.
Just like this:
https://www.youtube.com/watch?v=dluh9YqSKXY&t=88s
We had a pension plus 401K that we rolled together. Worked hard, saved and still enjoyed ourselves. Having more fun now. We retired from jobs to now doing what we want, when we want. It’s great!
Instead of calling it retirement, I prefer to call it “going Galt”. The government has been robbing me of an increasingly larger portion of my income for 45 years or so - And next year, I’m going to push back. Time for the young guys to get their chance to pay more taxes.
In a few years I plan to relocate to Thailand and live off Social Security. We own two homes there that are paid off, so that’s the plan. 401K will be gravy. Planning to retire at 62.
It’s chasing the good weather. Piraeus, Greece. Port city near Athens. Gateway to the Greek islands. Makes a great hub. 6 months there and 3-4 day ferry visits to the other islands.
If I may offer, a surprise visit by the Cancer Fairy or the Heart Disease elf can set you back 500k in a month — have great insurance and healthcare. I was told I would probably hit 90 like my dad six months before the former paid me a visit.
Secondly, it is very easy to live beyond your means in retirement and have items that should be income producing consumed by time.
That being said, living well in retirement is grand. The Santa Fe Opera, learning to paint and spoiling your spouse are right up there in the big satisfaction zone.
We went into a bill market last week. We’re going to ok for awhile until the next bear market probably in five years.
The soon to retire have a tendency to overthink retirement.
I’ve been retired for years but I’m thinking of looking for a job because I hear they come with this thing called a day off!
I got “retired” when the place I was working (part time) closed without warning. It was interesting work, I’ve always done work that I found interesting. Problem is that there’s nothing available that I could get into at my age that really interests me. So I hang out, do some small projects and read. Covid (the attendant stupidity of our governor’s edicts) was the catalyst that knocked my plan off track. Fortunately I’m financially secure and have no debts, but it still kinda sucks.
Still working here, age 70, making more than I ever thought I could there is no way I am stopping. My wife thinks I am nuts, but I have friends dropping left and right who retired.
Several years ago, I could comfortably pay my bills and travel a couple of times a year.
Now, I can barely pay the bills.
I have to clip coupons to afford to eat.
My house is cold in the winter and hot in the summer.
And travel is right out.
FUJB
10 years later. Still collect on pension and ss is 1,400 a year. Still have 86K and 23K in TSA's. I do lease a car rather then own one. May buy car at end of rent option in two years. Heath wise in pretty good shape.
preparing for retirement takes the better part of your working years.
Yup. 22 years USAF... Retirement check pretty good; and then 20 years as a university instructor. Retired with full pension under Retirement Systems of Alabama... Very well managed fund.
I’m getting 2 pensions plus Social Security. And that isn’t welfare from the government. For the military—a LOT of deferred restitution with no promise until I absolutely had 20 years. Serve 19 years plus 364 days? Sorry, sucker!
For the Alabama Teacher retirement—a big chunk of my paycheck went into the pension fund every month.
Save every penny, stiff your employees as much as possible. Die in a sub accident.
The plan works.
i’ll retire once my brain and fingers stop working.
at that point, just roll me into a box. i’m done.
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