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 in Cincinnati 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.
Remember: “An ounce of prevention is worth a pound of cure.” When making your estate plans or when probating an estate or administering a trust, do not go it alone. Be sure to engage a Cincinnati estate planning attorney.
For more information about estate planning, probate or trust administration in Cincinnati (and throughout the rest of Southwest Ohio) and to review free resources regarding estate planning, probate or trust administration, visit my website. If you have questions regarding this article or a particular legal matter, feel free to contact me at 513-399-PLAN (7526).
Reference: Wills, Trusts & Estates Prof Blog (March 8, 2018) "Today's Retirees, The Lucky Few, Are Riding High -- Why?"