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.
RE: i’ll retire once my brain and fingers stop working.
I gather from this that you’re self-employed ? ....
Yeah...9+hours sleeping??...4+ hrs watching TV???? Not our retirement world!
at this point, i contract as well as produce product for the internet (i design/write software). i use to run small companies but walked away from that to produce my own products and contract on my terms (too much backstabbing when the numbers got large)
Apparently we are in good shape.
retirement (days filled with tv, relaxing, self pleasures) is not of God, not something said, for anyone to try to achieve, in the Bible, which says something about people should be working until He comes.
Me too. My SS at 65, soon, is over $2k a month. I’ll wait to file at 70 ir 72.
We have 2 401K and one IRA.
Amen
"It's cheaper to keep her", as the old saying goes.
Nothing destroys a well-planned retirement faster than having to not only give half your savings up to the ex, but the house as well, forcing you to spend your remaining years in a ratty apartment that your own kids don't even want to visit you in. It's not always such a sweet deal for the ex-wife either, who usually has to find another man to take care of the house for her (and the pickings are slim indeed). Eventually she too ends up selling the house and spending her remaining years in some apartment/condo.
Men who dump a loyal wife for a trophy wife almost always end up regretting it.
I've been married mostly happily for nearly 40 years so I'm one of the lucky ones. Fingers crossed it stays that way.
People have been saying that since I was a kid. In the 1970s.
I'm not a big fan of the Social Security system but it's going to be around as long as the United States is around. Yes, we will get taxed more, the retirement age will likely get bumped up, and the FICA cap will get raised (currently capped at $160,200 in income). All of that sucks for us but Social Security is not going away, unless the country itself goes under. And if that happens, then Social Security will be the least of our concerns.
Nothing you wrote denied it is still a ponzi scheme and ponzi schemes are illegal even if a government does it.
And he was a homo.
How did you possibly lose 1/3 in ~18 months? The S&P is down 6% in the last 18 months and flat over the last two years
The company 401k plan was mostly in bonds and company stock. Can’t change the makeup of the plan.
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