Study: typical wealth at retirement

[Htown Harry]

I came across this estimation of the $361,000 net present value of the assets held by an "average" retiree:

file:[URL]http://www.urban.org/images/411618_typical_wealth.jpg[/URL]

"This wealth snapshot highlights the extraordinary importance of Social Security, traditional pensions, and owner-occupied housing for typical near-retiree households today. Together, these assets comprise nearly four-fifths of wealth for middle quintile households on the verge of retirement."

The graph shows individual assets, not household assets. The full report, unfortunately only a page long, is at: [URL]http://www.urban.org/UploadedPDF/411618_typical_wealth.pdf[/URL]

Observation / extrapolation: roughly 60% of current retirees will need to get by on a monthly income derived almost exclusively from SS and a relatively small pension.

Question: other than for comparative purposes, is there value in using the author's NPV calculation on a pension and SS to assess one's own financial readiness to retire?

BTW, there's a bunch more interesting policy articles at Urban Institute's Retirement Project at: [url=http://www.urban.org/retirees/index.cfm]The Urban Institute | Retirees / Seniors[/url]

 

[chinaco]

Yes. SS is very important... so is medicare. If anyone believes otherwise, they need to study how it was before they existed. Now, people are living longer which increases the chance of poverty at an old age.

 

[FinanceDude]

Save, save, save, save............

 

[Martha]

The article gives this breakdown:

"We examine financial assets, home equity, retirement accounts, vehicles,property, and businesses as well as the present value of individuals’ future Social Security and pension benefits.We show mean per adult holdings for the middle quintile of the wealth distribution (wealth for married or partnered couples is divided by two).Social Security and traditional pension benefits comprise a substantial share of wealth for typical near-retiree households (figure 1). Middle-quintile households have $151,000 in Social Security wealth per adult and $72,000 in pension wealth per adult. Together, Social Security and pensions account for
nearly two-thirds of their $361,000 in total wealth. At $61,000 per adult, owner-occupied housing is the next largest source of wealth for middle-quintile households. Retirement accounts, including individual retirement accounts and defined-contribution (DC) pensions, such as 401(k) plans, are $33,000 per adult."

Nearly half of the wealth is the present value of SS.