John, One Hundred Twelve Percent, Five Percent discussed on The Kristen Hagopian Show

Automatic TRANSCRIPT

And it summarizes the health and retirement study. Now for most people, you're spending does. In fact, go down. That is a proven fact. It's not true for all people, and John, when we talk about most people, we're typically talking about those with a portfolio those that have money obviously, those that don't have much money do spend more money than they have in retirement. And this summary sort of points, this out overall what they say is fifty nine percent of the sample set here spent less than their income, forty one percents spent more than their income. This goes back to twenty. Fifteen data. For single retired individuals in twenty fifteen average spending was five percent lower than income. However, median spending was higher than median income by three thousand dollars. You see kinda have to read between the lines and you can all without, you wait where you are. On that chart. But basically, if you have money, what it says to me is an, you're single you spend about five percent less than you, actually earn. If you are in the lower income categories, you're probably spending more. And a lot of this is going to come down to healthcare. You had mentioned before the break the long-term care. We'll get into that in a second. These are older Americans are okay. These are over sixty-five types what they didn't say. Exactly. But it was an older household. All right. I'll, I'll say, all right. I suspect it's over sixty five. Okay. All right. Coupled households where both spouses were retired on average spent eighty percent of their income and twenty fifteen. So that twenty percent cushion married couples with at least one spouse in the labor force had the lowest spending, this makes sense. Spending income ratio with an average of forty five percent. So that's where maybe the husband's still working the white retired or the wife still working the husband either way retired, it'd be like your family. That'll be you. You'll be living on like fifty percent of your money. Leftover to spend on cool stuff. We'll see I gotta get through this year. And possibly next just you know, I don't need to tell you. The single retired cohort had the highest spending income ratio with an average of eighty six percent. Sure, however, the median spending income ratio was very Ida hunt hundred and twelve so half of the people spent more at one hundred twelve percent when you talk about media, and that's what we're discussing here. So it's not as rosy as it seems. Now, again, the studies that I have quoted and there are many have suggested that as you age you do. In fact, spend less money, but there is a cohort that is spending more. Those are typically on the lower income and, and that's really important, so financial advisers, beware that they're going to have a cohort of people that they've really got to work on budgeting in retirement. A lot of people don't worry so much about budgeting. Now we know what are we talking about? Let's say you're retired income would be your social security. It would be or pension, if you have one and what else. We're getting to the pension thing. I'm doing this for you. John. As many income, replacement approaches assume are finding support a reduction, they say in housing and transportation expenses for retirees relative to those in the labor force. However food costs and health expenses were higher for retirees. Now here's where they went on to talk about pensions, married and retired households with pension income on average had sixteen thousand more dollars more income than those without pension income. Total expenditure was ten thousand more largely driven by high dollar amount spending on housing, entertainment, and other gifts for single in retired individuals in two thousand fifteen average income was twenty one thousand higher for those with regular pension and. Annuity income compared to those without a pension while the average total expenditure was nine thousand greater. So we're talking serious difference. There it is. I'm trying to think let's say, I have two million dollars in my portfolio, and I get a fifty fifty thousand income from social security. And that's all I have. But I only need seventy thousand live because I'm frugal or whatever. So I'm taking twenty twenty five thousand of my portfolio is that income that does that twenty thousand considered income. Sure. So just withdrawals are considered income. Well, I mean you know, I think that might skew it a little bit. I can't imagine people being able to survive if they're at one hundred twelve percent of their income at least not for very long. Well, they can't this is why we've got a major crisis with the lower end income inequality. You hear all the time. Finally, while almost thirty four percent of households with regular pension, annuity incomes spent more than their income forty six percent of households without regular pension incomes spent more than their total income, and twenty fifteen. So again, as you obviously, folks, there's a message in all of this, and the message is, is clearly better. If you can figure out a way to pension is at least some of your income pension ising means you have a pension from work. Not very many of us, do pension ising would mean delaying taking your social security because your pension gets greater by seven or eight percent. Inflation adjusted pension ising your income is taking some of that two million dollar port. Folio or five hundred thousand dollar portfolio, and annuity ising it as we've learned from tons, and tons of academic research where partial annuities ation. If you live to life expectancy, or beyond will mean not only more secure retirement for you, but a greater inheritance for your kids. I cannot emphasize that enough because I think I wrote in one of my books years ago that, if you were willing to trade off some of the inheritance for your kids in favor of a more stable secure income for yourself, then an annuity would make sense. But what we're learning is. And this is so important, what we're learning is partial annuities ation on one hand, but then on the other hand, re tweaking, your portfolio making the rest of your portfolio more aggressive, not less aggressive actually will end up giving you more retirement income and leaving a greater inheritance.

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