Major Sources of Retirement Income - Current & Future

[Midpack]

I just thought the graph itself was interesting...
A Shift in How Americans Plan to Fund Their Retirement

 

[ziggy29]

26% expect to fund a significant portion of their retirement with home equity? Scary.

 

[Katsmeow]

26% expect to fund a significant portion of their retirement with home equity? Scary.

Not necessarily. In some areas with high real estate costs it could be viable to sell a paid off big house and then move to a lower cost downsized house. It wouldn't be enough by itself but could easily make a big difference.

 

[FIREd]

Since the data is dated April 2008, I wonder what impact the financial crisis had on the numbers.

 

[ziggy29]

Since the data is dated April 2008, I wonder what impact the financial crisis had on the numbers.

Ah, good catch. Yeah, I can believe a much stronger reliance on "home equity" in early 2008 compared to today.

 

[plex]

Oh boy, if they were that bearish in 2008, it will be much worse now with the collapse that occurred in many pensions, and real estate prices changes.

 

[Katsmeow]

Another way to look at it that I have to think about some is how Scott Burns recently put it in a couple of articles where he advocated either renting or RVing in retirement as being options to spend more. His analysis is based upon selling a house that is presumably paid for or almost paid for so that there is plenty of equity to invest.

The original article:

Good Personal Decisions Can Be More Valuable Than Investing - Registered Investment Advisor

Look at the last paragraph regarding shelter decisions.

And, then a follow up where the house to be sold isn't as expensive:

How To Understand Required Minimum Distributions - Registered Investment Advisor

See the last question/answer

 

[traineeinvestor]

Oh boy, if they were that bearish in 2008, it will be much worse now with the collapse that occurred in many pensions, and real estate prices changes.

And the lower interest rates on bonds, CDs and bank deposits won't help either.

 

[Midpack]

Another way to look at it that I have to think about some is how Scott Burns recently put it in a couple of articles where he advocated either renting or RVing in retirement as being options to spend more. His analysis is based upon selling a house that is presumably paid for or almost paid for so that there is plenty of equity to invest.

The original article:

Good Personal Decisions Can Be More Valuable Than Investing - Registered Investment Advisor

Look at the last paragraph regarding shelter decisions.

And, then a follow up where the house to be sold isn't as expensive:

How To Understand Required Minimum Distributions - Registered Investment Advisor

See the last question/answer

A viable plan B for most people at the very least (and one of ours), thanks...

My parents are 90 and having trouble keeping house lately. They should sell and move to an apartment or facility with as needed assistance IMO, but they won't because it's 'too expensive.' Of course the proceeds from the house would pay their rent etc. until they're both 200 years old...

 

[target2019]

Our home value is probably down at least 25% from peak. Still, it is all equity, and would add about 50% on top of the retirement puddle.

Currently thinking of the "where would we live" side of the theory.

 

[Ken11]

Very little annuitiy action indicated here. Interesting.

 

[rescueme]

Very little annuitiy action indicated here. Interesting.

I would say that the older folks on the chart (regardless if it's timely) have two major annuities already - that is their pensions and SS.

For the younger folks who have retired? There's only a small portion of folks that are even ready/eligible to leave w*rk, and even smaller still that even considered or researched the annuity (e.g. SPIA) option.

DW/me are probably outliers, since we researched the option before retirement and executed our first SPIA contract a month after I retired in 2007, six years before DW's two small pensions begin, followed by her SS a year later, and finally my SS four years after that; IOW my SS won't start until 11 years after I retired.

Fast forward a couple of decades, when private company pensions (and probably a lot of public pensions) are eliminated - or under great strain to continue in their current form. At that time, the annuity option may become more in vogue...

Just my $.02.

 

[JOHNNIE36]

26% expect to fund a significant portion of their retirement with home equity? Scary.

True to a point. From what I have read recently, the trend in the country is renting vs home ownership. If you can't sell your house the equity is not doing you any good. Maybe home owners will lean more toward renting their homes rather than selling. Just a thought.

 

[Independent]

I think some of the difference between current and future is 2 parts optimism and 1 part pessimism among the future group.

The future retirees are optimistic in that
- They think they will be healthy enough to work in retirement (and jobs will be available)
- They think they will be good savers/investors and will have significant assets

The future retirees are pessimistic in that
- They think SS won't be around for them

I'd guess that the trends are in those directions, but not as much as the future retirees believe.

 

[rescueme]

The future retirees are optimistic in that
- They think they will be healthy enough to work in retirement (and jobs will be available)
- They think they will be good savers/investors and will have significant assets

I (and DW) are "blessed" in that we are current - not "future" retirees.

Both scenerios you mentioned are much more than we could ever count/depend on, if we were in that situation.