New retirees better off financially than previous generations?

[REWahoo]

Here is a totally different view of the recently retired:

Retirees may be doing better than you think

Contrary to what you may have heard, new retirees are doing better financially than previous generations, according to research being published on Wednesday by a mutual fund industry trade group.

"On average, more-recent generations of households have higher levels of resources to draw on in retirement than previous generations," said the study by the Investment Company Institute, a trade group. "Other measures also indicate improvements in retiree well-being. For example, the poverty rate among people aged 65 or older has declined from nearly 30 percent in 1966 to 9 percent in 2011."

My bold:

To be sure, the ICI findings are in the aggregate, so not every retiree will be on more solid financial footing than his or her forebears. But the study shows that the money Americans have earmarked for retirement -- now topping $18.5 trillion -- is substantially higher than at any other time in U.S. history, even when defined benefit plans are included.

And for all of us concerned a 4% withdrawal rate is too high...

There are starting to be shreds of evidence that people are withdrawing less from their retirement accounts than might be expected.

That observation comes from T. Rowe Price, an investment company that holds a substantial number of retirement accounts. Its advisory clients often tend to withdraw roughly 4 percent of their assets during their first year of retirement, said Christine Fahlund, a senior retirement adviser with the company. But they tend not to raise their withdrawals in every subsequent year, even though T. Rowe Price retirement plans typically allow for annual inflation adjustments of those withdrawals.

Moreover, Fahlund says some of her retired clients are unhappily surprised when they hit age 70-1/2 and must take required minimum distributions from their accounts. "In many cases, they don't need the RMDs and they don't want to take them," she said.

That's another surprising and nontraditional retirement story line: There's too much money.

Note this is a report compiled by the mutual fund industry - most likely to be used as a counter to the [-]buzzards[/-] folks in DC drooling over the possibility of modifying the tax-favored status of 401k's. (Aren't these mutual fund companies the same folks who have been telling us we aren't saving enough for retirement? )

Whatever, it is nice to hear some positive news about the future of retirement in the US.

 

[Purron]

Whatever, it is nice to hear some more positive news about the future of retirement in the US.

Yes it is nice to hear some positive stuff for a change. A bit of counterbalance to the tin foil hat crew. Reality is apocalyptic stories get most of the attention. But maybe we're not so bad off after all!

 

[NW-Bound]

Lemme see.

Retirees either do not have enough money in their 401k as reported by some articles linked in previous threads, or they have more money than they need.

If the first case, the gummint has to take over so that the retirees will not all become homeless.

If the second case, golly, they have too much and the gummint must relieve them of some moolah.

Did I get that right?

 

[Nords]

Here is a totally different view of the recently retired:
Retirees may be doing better than you think
My bold:
And for all of us concerned a 4% withdrawal rate is too high...
Whatever, it is nice to hear some positive news about the future of retirement in the US.

I'm going to go way out on a limb and predict that at least 95% of these retirees will finish at least 30 years of retirement with more money than they need.

But maybe I'm just making up those numbers...

 

[youbet]

Lemme see.

Retirees either do not have enough money in their 401k as reported by some articles linked in previous threads, or they have more money than they need.

If the first case, the gummint has to take over so that the retirees will not all become homeless.

If the second case, golly, they have too much and the gummint must relieve them of some moolah.

Did I get that right?

Yes, right on the button. Good job!

 

[Original Wally]

I'm going to go way out on a limb and predict that at least 95% of these retirees will finish at least 30 years of retirement with more money than they need....

THAT has been MY contention. Your earlier retirement years ARE your younger years, where you are more likely to travel and enjoy your time... spend down! "At some point" we will most likely slow down, and the spending will slow down too. Now, THAT SAID, there are other things that climb with age... most notably medical costs. BUT **IF** (big little word) you have good coverage, your out of pocket may still not be THAT bad. The other cost would be nursing home care.

My own draw down plan, however, does the conservative route and is NOT front end loaded for fun. (Tho my DW **DID** get a retirement gift of a BMW Z-4 when I retired. Hey.... where is MY 'Vette How did THAT happen..... )

 

[mathjak107]

after reading the data came from t-rowe i liken it to alians landing on earth ,walking into a hospital as the first place they go and reporting back earthlings seem to be very sick.

the data in this case is coming from only those who saved .

 

[cjacks]

I also think retires today are better informed and have become more creative in their approach to retirement. We are retiring in March and my plan includes three sources of income (SS, 401k, and a good paying hobby). Also we have eliminated debt. I also think things aren't as bad as a lot of people say they are. Doom and gloom seem to sell well. I am happy in Ohio.
Cjacks

 

[Midpack]

But the study shows that the money Americans have earmarked for retirement -- now topping $18.5 trillion -- is substantially higher than at any other time in U.S. history, even when defined benefit plans are included.

At least until the next time someone proclaims "Wh____!!!" Then we'll all be staring at 8% WRs, so both POVs referenced above are correct in due time...

 

[anethum]

after reading the data came from t-rowe i liken it to alians landing on earth ,walking into a hospital as the first place they go and reporting back earthlings seem to be very sick.

the data in this case is coming from only those who saved .

+1

 

[nun]

"Retirees may be doing better than you think"

Shouldn't that be "might" rather than "may"

There's a lack of definitions and data in the article.....it looks more like a PR piece than rigorous research having "culled" the numbers and conclusions from other papers. It reads like a response to the gloom and doom of the far more numerous papers that come out of places like the Boston College Center for Retirement Research.

Center for Retirement Research

It might be that current US retirees have far more retirement assets than previous generations, but no mention is made of other factors like health care costs or negative home equity and quoting an average retirement asset of $153k/per household is not useful without seeing the distribution with age and income.

 

[GrayHare]

In that article it's tough to tell which data is coming from which sources. An "observation" from T. Rowe Price, a decidely second-tier operation, doesn't add to the confidence in the information.

 

[Chuckanut]

We are being setup for higher taxes on what had been tax deferred or tax free retirement accounts.

 

[gerntz]

after reading the data came from t-rowe i liken it to alians landing on earth ,walking into a hospital as the first place they go and reporting back earthlings seem to be very sick.

the data in this case is coming from only those who saved .

I think that's right. And those that haven't saved keep working if they can until they do have enough.

 

[Nords]

THAT has been MY contention. Your earlier retirement years ARE your younger years, where you are more likely to travel and enjoy your time... spend down! "At some point" we will most likely slow down, and the spending will slow down too. Now, THAT SAID, there are other things that climb with age... most notably medical costs. BUT **IF** (big little word) you have good coverage, your out of pocket may still not be THAT bad. The other cost would be nursing home care.
My own draw down plan, however, does the conservative route and is NOT front end loaded for fun. (Tho my DW **DID** get a retirement gift of a BMW Z-4 when I retired. Hey.... where is MY 'Vette How did THAT happen..... )

Um, I was just quoting the statistical conclusions of the Trinity Study.