A new study suggests that retired Americans are not running out of money.
The conventional wisdom is that when people retire, they will slowly spend down the money they saved for retirement. If they live long enough, they will eventually run out of retirement savings. This happens in many cases. However, a new study suggests that the opposite is actually happening.
The study found that two decades after retiring, 80% of retired Americans retained all of their pre-retirement assets and, in some cases, had more assets than when they retired. The Wills, Trusts & Estates Prof Blog discussed this study in "Today's Retirees, The Lucky Few, Are Riding High -- Why?"
One theory put forth for this phenomenon, is that Americans are increasingly afraid of running out of assets, so they are being frugal with them in retirement. That is possible in some cases, but there are other possible explanations for this data.
On average wealthier people live much longer than those who are not wealthy. This study only surveys people who have been retired for two decades. Because that is a long time to live after retiring, the study could be skewed. It may have sampled primarily wealthy people. The financial markets in which wealthy people have their savings have been on a 10-year-long rise. Wealthy retirees who still have money in stock markets, are doing quite well in those markets overall.
Whatever the reason for the phenomenon, it is good news for people who are lucky enough to grow their assets during the retirement years. Other Americans should still make plans for how much they will need for retirement. They would not be wise to count on having those assets grow after retirement.
For more information about estate planning in Orlando, FL (and throughout the rest of Central Florida), visit our estate planning website and be sure to subscribe to our complimentary estate planning e-newsletter while you are there.
Reference: Wills, Trusts & Estates Prof Blog (March 8, 2018) "Today's Retirees, The Lucky Few, Are Riding High -- Why?"