Americans spend decades saving for retirement, not quite sure how much is enough or what kind of life that money will ultimately buy.
Some aim to build nest eggs of $1 million, $2 million or more, even though the majority of people have far less than that to work with. The recent bout of high inflation and market turmoil has made the challenge of making that money consistently even more troubling.
To compare your retirement plans — including your savings and expenses and how you spend your time — you should first look at how your numbers compare to Americans overall.
Here’s a snapshot of American retirement finances:
retirement provision
For many Americans, the greatest source of income for retirement comes from the nest egg accumulated during their careers. That usually means balances in retirement accounts like 401(k)s and IRAs.
Total household balances in retirement accounts for people age 65 and older average $407,581, according to one analysis nonprofit Employee Benefit Research Institute based on 2019 data. At the high end, 11.6% have balances of $1 million or more and 5.7% have balances of $700,000 to $999,999, according to EBRI.
Social Security Benefits
Social security is the other important source of income for many Pensioner. For 12% of men and 15% of women, social security accounts for 90% or more of retirement income.
According to the Social Security Administration, nearly 90% of Americans age 65 and older were receiving Social Security benefits by the end of 2022. The program allows people to start their pension payments anytime between the ages of 62 and 70, increasing the payment for each month of delay.
Average performance is currently around $1,825 per month, which is an 8.7% increase year-over-year. However, the benefit amounts go far, reaching as much as $3,627 per month for someone retiring at full retirement age this year. The program calculates benefits based on an employee’s highest 35 years of earnings, adjusted for average wage inflation.
How many Americans receive Social Security benefits
The average benefit is $1,825
The average benefit is $1,825
The average benefit is $1,825
The average benefit is $1,825
The average benefit is $1,825
health spending
Retirees tend to spend less on clothing, food and housing as they get older. Your healthcare expenses tend to increase.
Households headed by people age 65 and older spend an average of $7,030 per year on health care Bureau of Labor Statistics. That breaks down further to $4,974 for health coverage like supplemental Medicare plans, $1,077 for medical benefits including eye and dental care, and $726 drugs such as prescription, non-prescription drugs and vitamins, and $253 in medical supplies.
24 hour retirement
Many envision themselves traveling in retirement or pursuing interests they didn’t have time for during their careers. It pays to lay the groundwork for such activities years before retirement, say financial advisors.
On average, Americans age 65 and older spent more time watching TV in 2021 than they did a decade ago. They also spent more time relaxing and engaging in recreational activities, according to the US Bureau of Labor Statistics’ American Time Use Survey. Older adults spent less time socializing, volunteering and attending church services in 2021 compared to 2011.
This is how retirees spend their days
attending church services
participation in sports,
exercise or rest
socializing &
communicate
Cleaning, sewing and repairing
care and help
household members
attending church services
Participation in sports, exercise or recreation
socializing &
communicate
care and help
household members
Cleaning, sewing and repairing
attending church services
Participation in sports, exercise or recreation
socializing &
communicate
Cleaning, sewing and repairing
care and help
household members
Participate in
sport, exercise
or recreation
participation
religious
Services
socializing &
communicate
Cleaning, sewing and repairing
care and help
household members
socializing &
communicate
Participate in
sport, exercise
or recreation
participation
religious
Services
Cleaning, sewing and repairing
care and help
household members
net worth
Americans’ net worth tends to increase as they age toward retirement. People spend their high-income years accumulating wealth, including owning a home, and building retirement savings.
Net worth tends to be at its peak around the time that many people are starting to downsize in retirement. People between the ages of 65 and 74 have a median net worth of $266,400 and a median net worth of $1,217,700 federal reserve. People 75 and older have a median net worth of $254,800 and a median net worth of $977,600.
Write to Veronica Dagher at Veronica.Dagher@wsj.com, Anne Tergesen at anne.tergesen@wsj.com, and Rosie Ettenheim at rosie.ettenheim@wsj.com
Copyright ©2022 Dow Jones & Company, Inc. All rights reserved. 87990cbe856818d5eddac44c7b1cdeb8
Source : www.wsj.com