Too many people are waiting too long to start spending their savings once they retire.
That’s not just my opinion. In fact, I’m going to try to convince you of the veracity of this statement with cold, hard data. Once I’ve presented my case, I hope many of you reading will come to the same conclusion I did long ago: the Retirement Revolution is a necessary wake-up call for Baby Boomers across America.
Here we go ….
Only 12% of Americans die living only on social security with no other assets. They don’t own a home or a car or have any savings. (source)
My take on this fact: While around 10% of retirees find themselves in bad situations, and while that problem definitely needs to be addressed, a lot of you out there are going to be just fine.
The top 60% of Americans are not spending near enough money to put themselves in danger of running out in retirement. (source)
My take: This data turns conventional wisdom on its head. Why is the conventional wisdom still … conventional? Because sensationalism and doomsday forecasting sells papers and makes ratings.
Over 75% of those over the age of 44 fear outliving their money more than death. (source)
My take: It is nearly impossible to make measured, intelligent, and rational decisions about your retired financial future when it is basically scaring you to death.
In two large national studies, over the first 18 years of retirement about one-third of seniors increased their assets. (source)
My take: Do you how many Baby Boomers live in this country? 76 million. Is it possible that one-third of them (25 million) will die with more money than they ever had before in their lives? Why? Because they’ve been scared out of spending any of it.
A person with less than $500,000 in savings, on average, spends just about a quarter of it during the first 20 years of retirement. (source)
My take: Those of you with modest savings are not going to end up broke in 20 years if you have a sound financial budget and plan for retirement.
Remember, if you don’t understand the plan your advisor gives you, it isn’t really a plan.
According to the Center for Retirement Research, 48% of retirees are able to maintain their standard of living. (source)
My take: Do you mean to tell me that almost half of the country will be able to spend the same amount of money retired as when they were working? Isn’t that the ultimate goal in retirement planning? Half of the country will literally see no lifestyle change. Awesome!
According to the Employee Retirement Benefits Institute 75% of retirees only take the federally mandated minimum withdrawal (RMD) from their IRAs (starting at age 70.5). (source)
My take: Don’t let the government tell you when you should spend your money.
After Medicare premiums, the median lifetime cost for health care for a retiree from age 70 to death (95 or later) is slightly above $27,000, according to a new study by the Employee Benefit Research Institute. This is far less than conventional wisdom. (source)
My take: Anytime you hear that retirees need hundreds of thousands of dollars for medical expenses, take it with a grain of salt. That number is only true for a small part of the population.
The average spending for households headed by 55- to 64-year-olds was $65,000 in 2017, according to a Consumer Expenditure Survey. Spending dropped to $55,000 between ages 65 and 74, and after that it fell to $42,000. Spending dramatically decreases with age.
My take: So you’re going to spend 35% less fifteen years into your retirement? Maybe you can spend more now!
Here’s a breakdown of median net worth by age:
- Ages 45-54: $127,044
- Ages 55-64: $191,836
- Ages 65-74: $229,425
- Ages 75 and older: $271,162(source)
My take: Most people’s net worth increases with age. This is the most powerful and game-changing statistic I can find. Why is nobody talking about this?!
Let’s start talking about it. Tell your friends. Remind your spouse when they start to panic over a financial news story. These are the facts. Facts are empowering. They dispel fear and strengthen confidence.
Let’s stick to the facts.