Smart SpendingSmart Spending

Half of retirees die with little in savings

About 46% of American retirees have no more than $10,000 in savings at the end of life.

By MSN Money Partner Aug 31, 2012 2:09PM

This post comes from Andrea Coombes at partner site MarketWatch.


MarketWatch on MSN MoneyAlmost half of U.S. retirees die with savings of $10,000 or less, but that grim finding doesn't fully describe the variability and uncertainty that characterize retirement in America, according to a recent study.


Image: Close-up of a senior man looking sad © George Doyle/Stockbyte/Getty ImagesWhile some retirees struggle profoundly, living at or below the poverty line, others enjoy wealth and health -- in fact, the two are strongly linked -- while still others have little in savings but enjoy a decent income, according to the report (.pdf file), based on a survey that tracked retirees from 1993 through 2008.


While 46% of retirees have no more than $10,000 in savings when they die, "That doesn't mean their standard of living is very low -- they might have a relatively generous pension plan, (and) most of them will have Social Security," said James Poterba, a professor of economics at the Massachusetts Institute of Technology, the president of the National Bureau of Economic Research, and a co-author of the study.


But the findings "suggest something about the financial resiliency of these households," Poterba added. "They may not have much capacity to absorb a shock, such as an out-of-pocket medical expenditure. They don't have very much in the way of liquid assets they can access."


When net worth is measured -- including savings, home equity, the value of Social Security and pension benefits, and more -- retirees' financial picture around the time of death looks less bleak. Single people had average assets of about $142,000, those whose spouse had died previously had average assets of $253,000, and couples where the surveyed retiree had died but the other spouse was still living had average assets of $692,000, according to the study.


"You can't generalize that the elderly are not doing very well financially or that the elderly are doing fine. There is a lot of variation within the group," Poterba said. "There is a clear group of households that have relatively low income and also have low financial assets. At the other end is a group that has financial assets that are more than sufficient to accommodate any shocks."

Policymakers and financial advisers, take note. "One-size-fits-all solutions are unlikely to really capture the flavor of what's here," Poterba said. (Post continues below.)

Incomes in flux

Another worrisome finding: the degree to which some retirees face a steep drop in income. While single people and married couples saw their retirement income remain fairly steady, on average, that was not the case for retirees whose spouse had died.


Their income dropped almost 75% between 1993 and the last year of being surveyed. The study doesn't explain why that happens, though Poterba hazarded a guess that it might be related to a drop in pension benefits when the first spouse dies.


Get married

If you want the best retirement outcome possible, get rich. If that fails, consider getting married, staying married -- and doing your best to die before your spouse does. That last is not entirely serious, but the general take-away is that being married pays off in retirement.


For example, remember that 46% of retirees who had just $10,000 in savings when they died? That jumps to 57% for people who were single throughout the course of the survey.


Married couples are likelier to have home equity, too. Overall, in the last year before death, 57% of single-person households and 50% of surviving spouses had no housing wealth when they died. But retirees who died before their spouse did? Just 20% lacked home equity, the study said.

"The group who does the best in terms of average level of financial assets are those who are married when we first see them, remain married when the first person dies, and we're looking at the first spouse to die. They tend to have higher income levels," Poterba said. "Single individuals on average have lower levels of retirement income as well as lower financial assets."


But perhaps the study's most striking finding was a "strong and consistent" relationship between wealth and survival. If you're rich, you're much likelier to live longer.


"The relationship between wealth when first observed and subsequent mortality is striking," the study said.


More on MarketWatch and MSN Money:

Sep 5, 2012 2:33PM
Perhaps little is left because over the past 10 years savings have received almost nothing in the way of yield, i.e. interest paid by the banks holding and using our money. So many seniors have had to spend down their savings so other people could be provided with "cheap money" to invest "speculate" in the stock market & real estate. Thanks a bunch to our wonderful folks in DC & the FED.
Sep 3, 2012 1:55PM
I want the last check I write before I die to bounce!
Sep 2, 2012 10:47PM
That's the idea isn't it.  Skid into the grave the same way we came.  Naked and broke
Sep 5, 2012 2:48PM

Folks need to provide for their own retirement. That means living within your means.  My wife and I earn salaries of $125,000 and $52,000.  We both max our 401K - $17,000 each.  plus we invest montly dollar cost averaging.  We also stash a few bucks a month into savings. We drive a 2006 and a 2010 car - both are paid off.  No credit card debt - no credit cards.  No Cable TV.  No home phone.  No smart phone. No tablet.   No smoking.  No drinking at a bar.  No expensive coffees - make it at home for cents on the dollar.  Eat out one meal a week - not 2 meals a day.  We mow our own lawn.  We clean our own house.   No debts at all except for our house and that is gone in 3 years.  I work a second job to earn some additional income. 


 We are 49 and 42 years old and there is no reason folks cannot be more self sufficient.  cancel Cable - you don't need it.  Cancel the smart phone - you don't need it.  Quit drinking at the bar - expensive and dangerous.  Do you really need the tablet? Of course not.  Check out books, cd's and dvd's at the Library for FREE. Learn to differentiate between a need and a want.  Most "things" are wants.  Not needs.


I guess we are greedy as our investments approach 7 figures but guess what - you will never have to pay for my family to exist.  And I'm getting damn tired of paying for yours.


Course on the other hand - dieing with no money is pretty good planning - you will have enjoyed every dollar you ever earned.

Sep 5, 2012 2:46PM
I will have enough to retire because I worked and saved all my life. I didn't rely on the government or anyone else. Too many people in this country sit around a wait for a hand out. Get off your butts and do something about it.
Sep 2, 2012 12:01PM
I am trying to take care of my elderly mother.  Her care needs have finally elipsed her income (which is more than my own) & I am having to apply to Medicaid to help.    Because of the way it is set-up, she will not even be able to afford a perm & manicure a month even though she will be paying for more than 1/2 of her care o/o her own "pocket".   The government will make her a beggar before it helps.   The reason the elderly die without any savings is that they have to spend it all, or give it to the government.  You might as well spend it while you can enjoy it.
Sep 4, 2012 9:36AM

Way to much money in the bank when you die.

I'm taking the equity out of my house when I get older and leaving nothing to no one!!

My whole life I thought my name was "Gimmie"

Sep 5, 2012 1:53PM

I hope to die with just enough money left to pay the last of the bills.  My kids do not expect an inheritance.  I made it, I spend it.  When did kids start to expect an inheritance?  I see elderly not paying for things that they need, to be able to leave their kids and grandkids money.  They saved for the rainy day and never recognize it.


My wife and I both feel like we have been fleeced one to many times.  We have structured our retirement funds for us to meet expenses and enjoy the rest.  We both have LTC policies which are in our monthly budget.  Hopefully we will go smiling without a penny left and not have to use the LTC insurance.  Travel, have fun with friends, and do what we want.  For the first time we take care of us first and the  kids are on their own.  Will even take a reverse mortgage if we need to and spend that too!!  Will leave enough for bills and something for our Church.  Smile, enjoy each and every day, and don't worry about what to leave for who.  We made it, and saved it by the Grace of God.  Our progeny can do the same!!  Oh and for all out there - the best way to go into retirement is debt free.  If you do that you can live a heck of a lot better on less savings but do your best to have plenty in the bank too!!  Have fun we have all earned it!!
Sep 5, 2012 1:52PM
But you have to ask yourself, are you really better off than you were in 2008??? 
I 'm sure the hell not!
Sep 3, 2012 11:46AM
I can't think of a reason to leave any $$ behind when I go.
Sep 1, 2012 8:33AM
If you die with more than a dollar to your name, you didn't spend it all.
Sep 5, 2012 2:32PM
When aricles talk about "average" savings or "average" assets it misses the point. The wealthy skew the "averages" upward.....the median is what we need to focus on and it sure appears the median old person lives pretty clse to the edge...without SS & Medicare most wld fall over that edge.
Sep 5, 2012 3:46PM

I've read alot of arrogant posts on here and I think everyone needs just one reminder:

Any of us are just one disaster away from bankruptcy!  If you think you have all those bases covered, I have a piece of swampland to sell you.

Sep 5, 2012 3:42PM
I don't think us geezers are obligated to leave anything behind for the kids (other than burial expenses) but I wish 40% of my investments hadn't been wiped out a few years ago. I would like to be able to enjoy life and not end up eating cat food! 'course that's kind of expensive now, too.
Sep 5, 2012 3:23PM
My now-retired parents often worry that they won't have much of anything to leave my sister and me.  I tell them that's alright.  I'm an adult and I can take care of myself.  As long as they have enough for final expenses, who needs more?
Sep 5, 2012 3:17PM
I read about the poor people in this country, 6 kids, 5 HDTV's, cell p[hones for all the kids, Cable TV with HBO Showtime etc etc etc.. 3 cars, food stamps, housing allowances, child credits, all the kids have braces on their teeth complements of the tax payers, SSID, unemployment etc etc etc generational welfare, and Im supposed to feeel sorry for the maggots that suck the working people dry .... Not going to happen folks .....
Sep 5, 2012 6:40PM

I have spent 31 years putting ten percent of my income into a retirement account.  And now as I near a time when I should be able to retire and feel comfortable I am being demonized by the POTUS.  And now earlier in the day some young liberal says it is time to make the older people hording all the money pay up.  I am now making pennies in interest income and am losing value to inflation. I did exactly what I was told, work hard and save.  I am now not sure I will even dare retire. I wasn't asked my opinion of NAFTA.  I would have said no or even some minor amount for developmnet of some economies.  I wasn't asked to loan people making $50,000 a year $600,000 for a home.  I wasn't asked if it was okay for federally funded and insured banks to make casino mentality trading with our money. I was not a part of these decisions but I stay up late and worry about my mother and my kids let alone myself. So when I hear you folks touting your favorite politicians I wonder what the hell is the matter with you people.  They all are in this game to benefit themselves and all the power they can get to keep it. To get you people arguing back and forth to me looks senseless. These people are just our employees and need to be treated as such. You listen to them they say they will do this and they don't you vote them out.  We need to have an adult relationship with these people.

Sep 5, 2012 3:14PM
I would rather see median income used in this article instead of average income, which is skewed into meaninglessness due to the wide range of incomes.  It is difficult to reach conclusions from the data presented in this article.
Sep 5, 2012 3:10PM
It's sad that they didn't have a chance to spend the ten grand that they earned while they were alive. Scrimp and save all your life to die with money? I'll have to stop and figure the logic on that one.

Every person is different in life and what they have accomplished or not in dollars.  Pure personal interpretation in your own beliefs about retirement and how much money you should have when that time comes.

If I go out broke and all worn out.... I'd be content knowing I lived the journey of life to the fullest and not the money I left behind at the final destination. 
Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
100 character limit
Are you sure you want to delete this comment?


Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.


Smart Spending brings you the best money-saving tips from MSN Money and the rest of the Web. Join the conversation on Facebook and follow us on Twitter.