Our last few posts have looked at early retirees. We looked at the early retirement age (and extreme early retirement age), as well as survey data on how common early retirement is. Before that, we looked at how the population of American retirees pay for retirement. In this post, we’ll look at early retirees again – and some of their extreme counterparts. How much do they have saved for retirement? Is there some difference in their wealth accumulation versus the general population?
Let’s go find out using the 2017 Federal Reserve Survey of Household Economics and Decisionmaking.
Savings of American Early Retirees
If you followed the last few posts, you saw that the SHED has two ways to classify adults as retired. Either the surveyors classify the respondent as such, or the respondent self-classifies. There isn’t, of course, 100% overlap in those designations.
In this post we’ll look at people who have self-selected as retired. One of the questions on the survey also asks when a respondent retired – for folks who answered, we’ll use that to classify a person as an extreme early retiree (40 or younger) or early retiree (56 or younger). We only include here people who were asked and gave an answer.
|Savings and Investments||Extreme Early Retirees||Early Retirees||All Early Retirees||All Retirees|
|$50,000 – $99,999||8.8%||12.7%||12.1%||11.1%|
|$100,000 – $249,999||13.3%||14.1%||13.9%||13.8%|
|$250,000 – $499,999||8.9%||8.3%||8.4%||12.0%|
|$500,000 – $999,999||2.7%||9.0%||8.1%||9.1%|
|$1,000,000 or more||9.0%||11.0%||10.7%||11.2%|
… We’re with you! That’s not what we were expecting from the responses… perhaps even the opposite of what we expected to see.
The exact question text is, “What is the approximate total amount of your household’s savings and investments?“.
So yes, before you ask – this wasn’t a question about strictly retirement assets. Of course, maybe they spent it down before this survey, they are already retired. Maybe the next section will shed some light on that possibility.
Savings of Current Self-Classified Retirees
In the last section, we used a person’s reported age of retirement to look at the differences in savings among retirees. It gave some strange results, to say the least…
In this section, we’ll take a snapshot of the current retiree population based on their age at the time of the survey. Again using self-classified retirees, here’s what folks have saved based on their current age.
|Savings and Investments||Extreme Early Retirees (< 41)||Early Retirees (41-56)||All Early Retirees (< 56)||All Retirees|
|$50,000 – $99,999||19.03%||12.40%||13.91%||11.15%|
|$100,000 – $249,999||9.13%||11.97%||11.32%||13.75%|
|$250,000 – $499,999||4.63%||9.12%||8.09%||12.00%|
|$500,000 – $999,999||8.50%||5.01%||5.80%||9.13%|
|$1,000,000 or more||0.00%||6.36%||4.91%||11.22%|
And once again… a head-scratcher.
The Savings of Early Retirees: Unexpected?
As you look at more expansive retirement populations and older populations, the amounts saved increase. When sitting down to research this post, we predicted early retirees and extreme early retirees would have more resources than older retirees. Key to that assumption was our earlier research showing how important Social Security is to retirement age – if people were waiting out Social Security (we figured!), their assets would be lighter in retirement since they could lean on a reliable stream of income.
That, obviously, does not show up in the data.
Are the early retirees spending their resources quickly? Have they calculated their needed savings down to the cent? Are some savings an investments misclassified? Are some early retirees – as theorized by many of you readers – mis-classified or “inappropriately” self-declaring in-retirement? Were we expecting the wrong thing going into this post?
It’s tough to say what’s happening here. We know the wealth is out there (see our net worth by age calculator, for example). As we joked in some past posts – most of them probably have a blog about their retirement though, so maybe we can ask them…
Do you have a theory based on what this data is showing?