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Many Americans in their late 60s and early 70s are entering retirement with savings, Social Security income and changing expenses.
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Among those with retirement accounts, the median balance is $200,000, the highest of any age group.
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At this stage of life, financial stability depends on the coordination of income, withdrawals and long-term spending throughout retirement.
People aged 65 to 74 are at a financial crossroads: Many have reached peak net worth, even as their income begins to decline as they retire.
According to the Federal Reserve’s Consumer Finance Survey, By 2022 (the most recent year available), 51% of households in their 60s and 70s will have funds in a dedicated retirement account. This is the highest percentage for this age group since 2007, but lower than the percentages reported for most younger age groups (with the exception of those under 35).
Mindy Yu, senior director of investments at Betterment, said lower participation rates among senior households could be due to a variety of factors. It “may reflect the natural decline in assets in retirement and the possibility that older generations are more likely to rely on pension plans, which are not included in this data set.”
In contrast, younger families benefit from more retirement savings planning and more education about investing early, she said.
Americans ages 65-74 tend to be at a financial turning point, where incomes decline and savings are withdrawn as retirement begins. At this stage, flexibility and realistic expectations are important as you plan for retirement spending over an uncertain time frame.
For those in their 60s to early 70s with retirement accounts in 2022, the median balance will be $200,000. This figure is much higher than the balances reported by other age groups. (The median is used here instead of the mean to reduce the impact of unusually high or low balances.)
“For households[in this age group]who still hold retirement accounts, median wealth will rise significantly by 2022,” said Eric Ludwig, director of the Center for Retirement Income at the American College of Financial Services. Inequality, however, has widened: “Some retirees are doing very well; others have little room for error,” he said.
But at this stage, comparing yourself to your peers is less valuable than knowing whether your income sources and withdrawals will support your expenses throughout retirement. “Success is not about how much you save, but how well your assets align with the rules for spending, taxes and withdrawals,” Ludwig said.
Switching from retirement savings to retirement spending can be a challenge. “You’ve trained yourself for 30 or 40 years to save, postpone, accumulate,” Ludwig said. “Then one day, someone tells you to change direction and spend money.”
For many people in their late 60s and early 70s, spending decisions depend not only on savings levels but also on rising medical costs, longevity and uncertainty about how costs will change over time. Social Security can be one source of predictable income, but it’s not meant to cover all of your expenses. Savings in a 401(k) or IRA can provide additional flexibility to help deal with unexpected costs or market changes, Yu said.
But how much can you spend when you don’t know how many years your savings will last? Ludwig said broad retirement models show people often spend more than they expect, but no calculator can tell what “enough” is.
He offers this advice: Allow yourself to spend time on things that create memories in the years before you retire, when you might want to do something adventurous like “hiking Patagonia or biking through Vietnam.”
“You’re not going to regret traveling at 65 when you’re 85,” he said. “They’ll just regret that you didn’t travel because you were afraid of spreadsheets.”
For many families in this age group, short-term decisions—how much to spend, when to adjust, and how to balance security with meaningful experiences—will be most important to their financial health in retirement.
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