This topic came up recently. The article is a good discussion of how far a million dollars will get you in retirement - and how few people have what they need to retire.

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For Retirees, a Million-Dollar Illusion - [www.nytimes.com]

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Still, even $61,000 or $71,000 a year — the combined Social Security and cash flow from the $1 million portfolio — isn’t likely to be enough for most people who have grown accustomed to living on $150,000 or more a year. And $150,000 is the median income of a typical household in the top 10 percent, roughly the ranking of a family with $1 million in net assets, Professor Wolff says.

finally, on page 3, we learn who $1million in net assets the article is talking about - the top 10 percent of households. in other words, not me. and not most of us.

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If you want to fix our country, work with us in the states. statesproject.org

"Success isn't about how much money you make. It is about the difference you make in people's lives."--Michelle Obama

Thanks for posting the article Matt. I enjoyed it.

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graylocks
finally, on page 3, we learn who $1million in net assets the article is talking about - the top 10 percent of households. in other words, not me. and not most of us.

Not necessarily. I'm getting relatively close(considering my age and time in the workforce) to that point and I don't earn anywhere near $150k/year. Not even combined with my wife's salary. Yet our home is almost paid off, we have a nice stash of investments, and I've been working for less then 15 years, she less than 10. It is all about how you live and where. If I had to live in or near San Francisco, I'd probably be in a trailer, riding a bike to/from work and earning $120k/year barely scraping by. Instead, I live in eastern WA and I earn significantly less than that yet I live well in a beautiful neighborhood that I love.

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graylocks
...$1million in net assets the article is talking about - the top 10 percent of households. in other words, not me. and not most of us.

I beg to differ (but just barely, and only recently - thank you rising stock market and real estate prices)...

And if you’re not close to being a millionaire — if you’re starting, say, with $10,000 in financial assets — you’ve got very little flexibility indeed. Yet $10,890 is the median financial net worth of an American household today, according to calculations by Edward N. Wolff, an economics professor at New York University. (He bases this estimate on 2010 Federal Reserve data, which he has updated for Sunday Business according to changes in relevant market indexes.)

This is the scary part.

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Roswell, GA (Atlanta suburb)

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rgG
And if you’re not close to being a millionaire — if you’re starting, say, with $10,000 in financial assets — you’ve got very little flexibility indeed. Yet $10,890 is the median financial net worth of an American household today, according to calculations by Edward N. Wolff, an economics professor at New York University. (He bases this estimate on 2010 Federal Reserve data, which he has updated for Sunday Business according to changes in relevant market indexes.)

This is the scary part.

Just started to read the article and that statistic kinda jumped out at me. wtf?!?? is my gut reaction.

Have you never watched that nifty video that shows how incredibly lopsided wealth is in our country? They say that the median income is $10,800, but if you know how much of our country is living in poverty that makes perfect sense.

[www.youtube.com]

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i guess the 'not most of us' i'm thinking of is the people in my real life circle.

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If you want to fix our country, work with us in the states. statesproject.org

"Success isn't about how much money you make. It is about the difference you make in people's lives."--Michelle Obama

The usual asset allocation model is nonsense. It treats every dollar the same whether it's needed today or in 20 years. The best approach is to have a plan for the dollars you need tomorrow, another for those you'll need next year and another plan for each year into the future. Since the returns from the stock market always beats fixed interest investments over any five year period, the dollars needed beyond 5 to 7 years should be in stocks. That way the invested monies will grow faster than you would consume them. Then it is a matter of identifying the best fund managers. That strategy has worked for me.

I used to get these all the time...



But not so much lately?

This net worth/percentile calculator is a bit of an eye-opener...

(note - they are using data from the 2010 census, so the numbers are different than the OP article. e.g. ~$670K is the 10% mark)

Net worth could be over a million but low income.

E.g. guy sells his business after 30 years but can only get a 'safe' income stream of 4% (per above article) - should we penalize him (wealth tax)?

1/6th of the Bionic Man........???

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I reject your reality and substitute my own!

Lots of conflicting information and FUD. If I paid for that article, I'd want a refund.

For those of you that manage your funds through online resources, what are the recommended parties to go with? (E-Trade and similar? This could be a thread by itself, and probably has been).



Edited 1 time(s). Last edit at 06/10/2013 01:39PM by SKYLANE.

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For people close to retirement, the problem is acute. The conventional financial advice is that the older you get, the more you should put into bonds, which are widely considered safer than stocks. But consider this bleak picture: A typical 65-year-old couple with $1 million in tax-free municipal bonds want to retire. They plan to withdraw 4 percent of their savings a year — a common, rule-of-thumb drawdown. But under current conditions, if they spend that $40,000 a year, adjusted for inflation, there is a 72 percent probability that they will run through their bond portfolio before they die.

Maybe it's because I'm an insurance agent and I see this stuff a lot but in a situation like that I would want to put it into an annuity with a guaranteed lifetime income.

Just as an example for one of the many annuity products out there... For a joint annuitant (income continues after one of the couple dies), a one-year deferral (start the contract at age 64) would give this "typical couple" $49,608 per year guaranteed for the rest of their life (whoever lives longer).

If they started at 55 and took a 10-year deferral, at age 65 it would be $83,811 per year.

Even if they started the contract at age 65, if they could defer two years, their income would be $54,584 per year guaranteed for life.

I wouldn't recommend putting everything in one place. But I don't see bonds being the way to go.