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Older Americans with six-figure portfolios rely on old-fashioned programs for half their income.
Where do affluent retirees get their income? Portfolios invested in stocks and bonds, you might think—but you’d be wrong. Turns out many are living mainly on Social Security and good old pensions.
That’s the surprising finding of new research from a surprising source: Vanguard, a leading provider of retirement saving products like individual retirement accounts and 401(k)s. Vanguard studied the income sources and wealth holdings of more than 2,600 older households (ages 60-79) with at least $100,000 in retirement savings. The respondents’ median income was $69,500, with median financial assets of $395,000. (The value of housing was excluded.)
The researchers were looking for answers to a mysterious question about the behavior of wealthier retirement account owners: Why do few of them draw down their savings? They found that nearly half the aggregate wealth of these households comes from the two mothers of all guaranteed income programs, Social Security (28%) and traditional defined-benefit pensions (20%).
Interesting and I suspect there are a number of City-Data folk who would fit the profile. Pensions aren't dead and those fortunate to have them and to also have focused on their investment assets are glad they did. It isn't pension or 401/403 it is both if available, that along with SS is the good old three legged stool. So those working with pensions would be well advised to not rely just on them but to invest as if they didn't have the pensions and end up with both in your truly Golden Years.
The above is posted for informational and if desired discussion purposes.
Well I don't consider myself affluent, but we rely on our 2 pensions and we will be excited for the extra income when we are eligible for SS. We also have 6 figure investments, but we don't really touch them, so I guess we fit the profile. We don't dip into our investments because we don't need to. I mean when they are gone, they're gone. So we won't touch them until we really NEED them for something. Our NEEDS are covered by our present income, and we save a little monthly for some big purchases we will need to make soon (new heat pump, eventual bath remodel, etc). The investments can just sit and grow.
The Vanguard study also underscores the importance of smart Social Security claiming decisions, especially delayed filing. "There's been a sea change over the past year," Utkus says, with more people recognizing that delayed filing is one of the best ways to boost guaranteed income in retirement. Vanguard is "actively discussing" adding Social Security advice to the services it offers investors, he says
Interesting and I suspect there are a number of City-Data folk who would fit the profile. Pensions aren't dead and those fortunate to have them and to also have focused on their investment assets are glad they did. It isn't pension or 401/403 it is both if available, that along with SS is the good old three legged stool. So those working with pensions would be well advised to not rely just on them but to invest as if they didn't have the pensions and end up with both in your truly Golden Years.
The above is posted for informational and if desired discussion purposes.
That's us. Pensions and social security as the main income (although these don't add up to six figures), haven't had to touch the investments at this point but will be required to take some out when we reach 70.5 years old. I also bring in a small income from consulting work I do at home, and probably will continue that till I can't function anymore. We also saved money, contributing to IRAs and other retirement income over the 40 years we worked as though we didn't have pensions.
Also planning, and continuing to live within our means, eliminating debt as much as possible has helped a lot too.
Not as affluent as many, but, quite comfortable and blessed with no financial concerns and plenty of discretionary funds ... due to no debt or mortgage, plus pension and SS. Have not had to dip into 401K/403B (IRA) investments, but, RMD's will change that. Will likely activate an annuity to offset future inflation and help kids/grandkids with college/other expenses.
A lot of them own and hire people to manage fixed assets and companies they own. They become more or less like a board of director that others report to. They basically might be said to be semi retired.
That's us. Pensions and social security as the main income (although these don't add up to six figures), haven't had to touch the investments at this point but will be required to take some out when we reach 70.5 years old. I also bring in a small income from consulting work I do at home, and probably will continue that till I can't function anymore. We also saved money, contributing to IRAs and other retirement income over the 40 years we worked as though we didn't have pensions.
Also planning, and continuing to live within our means, eliminating debt as much as possible has helped a lot too.
Pensions are nice. Both my wife and I have them, plus SS and savings. I work 10 hours a week so I have been able to max out my IRA contributions every year even though I am retired. Now that 70.5 is looming, I'll probably give up working for money and just do volunteer work somewhere. The home has been paid off since 2008, we have no debt of any kind and our pensions include subsidized Medicare supplemental insurance. We don't need a six figure income to be comfortable.
Building up retirement savings required years of enforced frugality, but it's really nice to have that cushion.
I have a teacher's pension which will cost me percentage of my own PIA if I file for SS under my own claim--so I will just forgo that to claim a larger spousal benefit on my husband's account...
I managed to retire early enough to protect my spousal SS benefit from similar offset--
that loophole was closed later in year I retired.
We have Medicare A and B and supplemental insurance through my teacher retirement program--but I am concerned about that benefit in the future...
my state is notoriously reluctant to increase its share of any pension fund payment to keep up with rising costs...
For one thing, we will probably find no general agreement among us about what constitutes "affluent". I have read threads in the Economics and Personal Finance Forums where people making $150,000 a year were whining about how they are struggling financially, which makes me sick to my stomach. Granted, if they live in New York City they may have somewhat of a point.
But my point is that everyone seems to think that the point of financial comfort lies about $30,000 to $50,000 above what they make, no matter how much they make! If a person has to live in a chi-chi neighborhood and drive an upscale car and buy designer clothes, well I have zero sympathy for that person's financial "struggles".
So everything is relative, isn't it?
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