Tom Cochrane's Blog

What the Average American Retiree Can Afford to Spend

Previous articles in this series discussed the financial profile of William--the head of the typical American household that is approaching retirement.

We concluded that it is very unlikely that William will be able to sustain a retirement spending rate that is based on 85 percent of his pre-retirement...

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Social Security

Income

Retirement Sustainability

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Retiree

Retirement

Retirement Income

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Social Security

Income

Retirement Sustainability

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Retiree

Retirement

Retirement Income

The Odds of a Successful Retirement

The odds of financial success in retirement for the typical American household are less than ten percent.

This is based on the financial profile of an American household that would be considered statistically average. We developed the financial profile of an average American retiree in a previous article (click here to read).

The summary of the financial profile of our hypothetical retiree--referred to as William--is as follows:

William needs to generate $40,038 per year in after tax

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Retirement Sustainability

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Retirement Sustainability

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Will You be Able to Retire?

Roughly 10,000 Americans will retire each day for the next nineteen years. Many millions of these retirees will have financial profiles that are considered statistically average.

What, exactly, does it mean to be financially average, and what might retirement look like for the average person or household? How might the financial aspects of retirement play-out for you, your parents, or your family and friends?

Let’s take a look at some data sources to consider the average profile and how it may apply to your situation. For simplicity, I’ll give the average American retiree a name – I’ll call him William.

Who is William?

Let’s lend some definition to William by building a...

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Retirement Sustainability

Life Expectancy

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Reverse Mortgage Data

There is a case to be made for home equity as the most important source of retirement funding in the United States, and this would seem to make the...

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Individual Retirement Account

Reverse Mortgage

Income

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Individual Retirement Account

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New Portfolio Management Technologies Could Further Commoditize Investment Advisory Services

Simple, web-based portfolio management tools have been proliferating over the past couple of years.

As reported recently by Bloomberg, companies such as Folio Investing, MarketRiders and Flat Fee Portfolios are providing subscription-based...

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Billion Prices Project Provides Real-Time Alternative to Consumer Price Index

Anyone concerned about inflation and inflation risk should take a look at the...

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Billion Prices Project

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Billion Prices Project

Guaranteed Income Solutions Take Center Stage

Putnam Investments President and CEO Robert Reynolds spoke on the need to address America’s lifetime income challenge at the recent Retirement Income Industry Association (RIIA) conference in Chicago.

While Reynolds has spent most of his career in leadership positions in the investment management industry, his...

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Sequence of Returns Risk

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Retirement Income Industry Association

Robert Reynolds

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Purple Health Plan Focuses on Entitlement Reform

Boston University Economics Professor Laurence Kotlikoff has provided a conceptual alternative to Medicare, and he is seeking support of the new health care initiative in the form of endorsements of The Purple Health Plan.

Kotlikoff provides frequent commentary on the dire state of government finances in the United States. Health care spending and Medicare are fundamental drivers of this fiscal distress, and Professor Kotlikoff is seeking consensus on viable alternatives to Medicare.

The Purple Health Plan seeks to cap the government's liability by turning the defined benefit Medicare program into a voucher-based defined contribution system.

Additional features of the proposed health plan...

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Robert Merton's Retirement Income Lecture

MIT Professor Robert Merton addresses the challenge of financing retirement income in a lecture delivered this past January.

Merton briefly discusses the financial crisis and suggests that it is unproductive to think about digressing to a financial world that preceded Glass-Steagall and financial innovation. Merton’s view is that financial engineering is indispensable in addressing the large and complex issues of pension and retirement finance.

Merton’s basic prescription for improving the general state of retirement finance includes increasing savings, working longer, taking more risk. Most would agree with the first two choices but the third—taking more risk—seems...

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