How Middle-Income Retirees Feel vs. Wealthy Retirees’ Success

During a period of over ten years of economic growth in the US, citizens were concerned about running out of money and were hesitant to spend. In 2019, Bloomberg reported many wealthy retirees were sitting on their wealth while large corporations hoarded cash. Even famed investor Warren Buffet and his multinational conglomerate holding company Berkshire Hathaway Inc. side-lined cash in excess of $122 billion. Much has changed to divide the economic classes since COVID impacted the economy.

Economic Changes for 2023 to 2027

According to the Congressional Budget Office, in 2022, the US gross domestic product (GDP) grew modestly, inflation continued to climb, interest rates increased, and the tight labor market led to more job vacancies than available workers. In 2023, economic activity is stagnating, unemployment is rising, interest rates are high, and inflation has just begun to fall. Many retirees are nervous, losing confidence in their ability to retire and live comfortably.

Wealthy Retirees

Wealth in the US is becoming more concentrated among fewer households, consolidating wealth and power. The Americans who have most benefited from the previous ten-year boom in the American economy are now spending significant amounts of money with elite financial status intact. The Federal Reserve provides a quarterly balance sheet of all individual and charitable monies and America’s combined net worth, showing the disproportionate flow to the wealthy. Retirement is not a problem for them.

The Rest of America’s Retirees

In comparison, average or middle-income retirees of Generation X and Boomer generations are cautious with money and worried about outliving their retirement funds. They plan to retire later and continue to save for basic expenses and health care needs. Currently, half of retirees rely entirely on Social Security. For coming generations, this is not a possibility. The Social Security Administration has already admitted trust fund reserves will be depleted by 2034, cutting benefits by an estimated 25%. For low-income individuals and those with disabilities, it could be catastrophic.

Will retirement investments be able to address increasing medical costs? Will seniors have enough streams of income to support themselves with increased longevity? Collectively, Americans are not saving enough to accomplish a successful retirement. Recently, the SECURE Act and SECURE Act 2.0 addressed some investment issues, but many may not have enough time to rework financial strategies.

As we age, the tendency is for most of us to become more risk-averse, according to the National Institutes of Health (NIH). The bulk of American wealth is currently in older households. A lifetime spent acquiring wealth and watching accounts and investments mature turns to asset spending and dilution of wealth. If retirees don’t outlive their assets, they will transfer to the next generation. To ensure that happens, many will live frugally rather than comfortably.

Finding an Estate Planning Attorney for Help

Planning for retirement can be stressful. Having a proper estate plan in place can eliminate much of the stress, especially when it comes to finding ways to preserve assets for loved ones. Our estate planning and elder law attorneys can help. Give us a call to discuss your wishes and how to design a plan that offers confidence in retirement.

We are dedicated to keeping you informed of issues that affect seniors facing retirement or who may be experiencing declining health. We help you and your loved ones prepare for life challenges through estate planning and elder law, including potential long-term medical expenses and the need to transition to in-home, assisted living, or nursing home care.

If you have any questions about something you have read or would like additional information, please contact our Albany office today at (518) 452-6979 and schedule a consultation.