6 Surprising Statistics About Wealthy Retirees

Retirement anxiety does not discriminate based on wealth. Even multi-million-dollar portfolios are not immune to the fear of running out of money. This creates one of retirement’s greatest paradoxes: having enough but feeling like you don’t.

When clients hear they can safely spend $150,000 a year in retirement, many hesitate. They remember their first job making $30,000 and struggle to shift from a lifetime of saving to a season of spending. Research shows wealthy retirees spend 24 percent less than they safely could, simply because of this mindset.

Healthcare adds to the anxiety. Retiring before Medicare can mean $20,000 to $30,000 a year in costs for couples. Even after 65, Fidelity estimates a couple needs $315,000 saved for healthcare alone. No surprise that many retirees keep 10 to 20 percent of their portfolio in cash, even though that choice limits long-term growth.

Ironically, spending often decreases with age while income from Social Security and investments increases. This creates a cushion that may support higher equity allocations later in life, which is the opposite of what conventional wisdom suggests. Yet fear lingers. A 2023 EBRI survey found one in three high-net-worth retirees still worry about outliving their money.

If you want clarity about your retirement picture, try our free planning tool or reach out to explore how Root Financial can help you make the most of what you have worked so hard to build.

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Ari Taublieb, CFP ®, MBA is the Chief Growth Officer of Root Financial Partners and a Fiduciary Financial Planner specializing in helping clients retire early with confidence.

Episode Transcript

Speaker 1 (00:05):
A few weeks ago, I released an episode talking
about the average 401k balancesby age, as well as the medians,
and the results were surprising.
The results were probably waysmaller than you thought.
In fact, those in the range of55 to 64 have an average 401k
balance of $256,200 and a medianof $90,000.

(00:28):
Those over age 65 have anaverage balance of $280,000 and
a median of $103,000.
That's way smaller than youprobably think, and most of you
who are watching this on YouTubeor listening on the podcast app
, you have probably saved andinvested really well.
That's why you're listening tothis.

(00:50):
You are probably naturally asaver at heart or someone who
wants to make sure they're in agood spot to retire and, as you
can imagine, if you have$280,000, you're probably not
spending a whole lot or maybeenjoying your retirement to the
fullest.
Now, what I don't want you toever do is spend for the sake of
spending.
But for transparency, most ofour clients they want to spend
$100,000, $150,000, $200,000 ayear, especially because they

(01:14):
have their energy and theirhealth.
So they're in their 50s,they've saved well.
They want to make sure they cantravel and pay for healthcare
or how about a child with a downpayment when it's more
meaningful to them, and theydon't want to run out of money
in 30 or 40 potential years.
So, with that being said, I'mgoing to go over, in this
episode, six really interestingstatistics about wealthy

(01:35):
retirees.
Now, many of you are on yourtrack to being a wealthy retiree
.
How do we actually definewealthy?
How much is enough?
Well, there's the famousRockefeller quote of how much is
enough?
Just a little bit more.
Yep, once I have a million, I'mgoing to retire.
2 million, 5 million, 10million I'm finally done, and I
can't tell you how many peopledo this that we talked to.

(01:57):
It's called goalpost planning.
They just keep moving back thegoalposts.
One more project at work, andI'll ask you, even like I'm
going to do right now, if you'rebeing honest with yourself and
if you can do that.
Please ask yourself if youreally do need to ask your
spouse.
I encourage you to pause thispodcast or video that you're
watching and go ask them howmany times you've pushed back

(02:17):
your retirement.
Now, I don't know if my micjust picked up on it, but I live
right by UCLA and there's ahospital right here, and so I
just heard a large, a very loudambulance.
Not a large ambulance.
I couldn't hear the size of theambulance, as you can imagine,
but right when I asked thatquestion it went off, and so you
can see they want you to askyour spouse about this as well.

(02:38):
Now, in all seriousness, I'mgoing to go through these six
examples but ask them how long?
Or ask yourself have you toldyourself, hey, this is the year
I'm going to retire?
And then you pushed it back,and there's nothing wrong with
that, by the way, it's not a badthing.
Sometimes you'll find I don'tknow what I'm going to do in
retirement.
I know financially I'm in aposition to make it happen, but

(02:59):
I don't really know if I want to.
Other people are going to tellyou I don't know, are truly just
on the financial side, worriedthey don't have enough, but they
keep changing their definitionof what enough is, which is not
going to be effective for yourretirement Meaning.
If you want to make sure younever run out of money, the
solution is really easy.
People overcomplicate it.
Just work forever, you'll befine.

(03:20):
You probably don't want to dothat because you're going to go
eventually.
I don't want to do that.
So the better solution is toreally have a high quality
financial plan, and you can usea tool like the one I talk about
in often many of my videos,where you can go build your own
analysis, and that's availablein the description of this
episode.
Now, my name is Ari Taublieb.
I'm a certified financialplanner, host of the Early

(03:42):
Retirement Podcast and ChiefGrowth Officer here at Root root
financial.
Now here's six surprisingstatistics.
Number one wealthy retireesoften spend less than they could
.
Even retirees with a milliondollars or more in investable
assets spend cautiously due tofear of outliving money.
I can attest to this.
We have so many clients who go.

(04:03):
Yes, I know I have over amillion dollars, but it just
feels weird.
It feels weird.
I've never taken from myportfolio, I've only ever added
to it.
So here I am and I hear whatyou're saying, which is I'm in a
good spot, but it's stilldifficult.
There was a study by UnitedIncome in 2018, which found
retirees spend 24% less thanthey could safely spend.

(04:23):
Wealthy retirees often spendless in retirement than in their
working years, despitefinancial security.
The reason that's so powerful tome is think about it like this
here I will ask a client howmuch would you love to spend?
They'll tell me $150,000 a year.
Then I'll ask them what do youcurrently make per year salary?
And they'll say $200,000.

(04:44):
And I'll say, okay, what wasyour first job?
They'll say, well, it was30,000 a year.
I said, okay, well, I'm askingyou to spend 150,000, literally
five times more than what youoriginally started at when you
entered the workforce.
How does that feel?
And I'll have a lot of peoplewho go, wow, that feels weird,

(05:05):
like you're literally telling methat I can do this.
But I remember, like I stillcan't forget, the feeling of
spending.
You know, I've been making30,000 a year and I was living
off of, you know, top ramen andeggs and it was like very
difficult.
Now you're saying I can just dothis willy nilly, like that's
not who I am, so it's difficult.
So the first step is torecognize that Number two

(05:27):
average spending in retirementis way lower than expected
Across retirees.
I talked about this in the past.
It was about $57,000, dependingon the article you talk about.
The BLS Consumer ExpenditureSurvey says it's about $52,000,
but that higher income retireesso the top 20% 20%, not per pent
spend $100,000 to $150,000 onaverage, but often below

(05:50):
pre-retirement spending.
Many wealthy retirees spend 70%to 80% of their pre-retirement
income rather than the rule ofthumb, which is 85%.
In our industry.
Healthcare is a big one.
Healthcare spending before 65can be shockingly high.
Without employer coverage,which I talk about a lot,
retirees under 65 will pay threetimes more for healthcare than

(06:11):
those above 65.
That's just because of Medicare.
So average annual healthcarespending before 65, we're
looking at $10,000 to $15,000 ayear out of pocket.
That's for premiums anddeductibles.
Couples with Honestly high ACApremiums you could be at $20,000
, $30,000 a year.
So let's just say $25,000 ayear.
That's a significant expense.
So you certainly need to makesure you plan for it.

(06:32):
But you can also bring thatdown significantly if you plan
well, which I have tons ofdifferent episodes on.
If you just search REtileBleepHealthcare, I will come up
whether that's podcast, youtube,wherever Fidelity is estimating
a 65-year-old couple retiringin 2024 to need $315,000 for
healthcare.
But those retiring early oftensee annual costs at $20,000 plus

(06:55):
.
That's according to Fidelity's2024 healthcare estimate and the
KFF ACA premium analysisStatistic number four.
Wealthy retirees keep large cashreserves, sometimes too large.
Now what's the risk to having alarge cash reserve?
Sometimes too large.
Now, what's the risk to havinga large cash reserve?
The risk is that money does notoutpace inflation and then
otherwise you therefore can'tspend as much money later.

(07:16):
But does it provide peace ofmind?
That's worth it?
I find it often does, and soI'll see a lot of advisors that
talk about make sure to have asignificant amount of equities
because you want to make sureyou outpace inflation, which I
personally agree with.
At the same time, there issomething to be said about this
not so quantifiable analysis.

(07:37):
Hey, I'm just sleeping betterat night.
I have two, three hundredthousand bucks on the sidelines.
Yeah, I know it's not growinglike my Roth, but that's fine
and I don't need it to begrowing.
It's there for safety.
I'm sleeping better at night,fine, and I don't need it to be
growing.
It's there for safety.
I'm sleeping better at night.
Now, what you don't want to dois overdo it.
And there's a lot of high networth retirees, according to

(07:57):
Vanguard, who say they keep 10to 20% of their portfolio in
cash for flexibility and peaceof mind, even if not optimal
returns, and that they preferreal estate and a conservative
allocation in retirement, whichmakes a lot of sense.
Number five retiree spendingdeclines with age.
This is fascinating to me.
Most of you, if I ask you,what's your equity to fixed
income allocation?
You might say 70-30.
70% equities, 30% fixed income.

(08:19):
And I would ask you if you getolder, what do you think is
gonna happen?
Will your equities increase ordecrease?
And most people say it willdecrease because I'm getting
older.
I need to be safer in quotationmarks, more conservative.
I don't have as long for myportfolio to recover which would
be true.
But think about it like thiswhen you're in your seventies,

(08:40):
are you going to be spendingmore or less than in your
fifties?
Probably less.
Your energy and health is notthe same.
Let me ask you this Do youthink that you're going to have
more income when you're in your70s versus your 50s?
You'll probably say morebecause social security is
helping out and your portfoliohas grown because of compound
interest.
Despite you still withdrawingfrom it, it's still growing.

(09:00):
So here we are in our 70s andwe actually have more income
coming from our portfoliobecause, once again, portfolio
has grown.
So 5% of a million 50,000versus 5% of 2 million 100,000,
plus social security is comingin.
So now you don't need as muchfrom your portfolio because if
you want to spend, let's say, ahundred thousand in retirement

(09:22):
and you're taking 80 from yourportfolio and 20 from social
security.
The reality is that is a verydifferent amount from when
you're in your 50s with amillion bucks relying entirely
on your portfolio.
So you actually could, if youwanted, to increase your equity
exposure, which is a contrarianbelief, because now here we are

(09:44):
in retirement, well intoretirement in our 70s, and you
see you're in a fine spot If youwere to have 70% equities, or
let's just, let's be a little,let's be a little aggressive
here, just for fun.
Here.
Let's pretend that you have amillion dollars in your 70s,
just to keep it real simple here.
And you decide you want tospend $50,000 a month.

(10:05):
Well, you want five years ofshort term assets.
So five years times 50,000,50,000 a year, not 50,000 a
month.
Well, you want five years ofshort-term assets.
So five years times 50,000,50,000 a year, not 50,000 a
month, that's 250,000 and youhave a million dollars.
That tells me your fixed incomeportion should be 25% or
250,000.
Aka five years of livingexpenses and that you can have
75% in equities.

(10:26):
But now fast forward and youhave $2 million.
If you have $2 million andSocial Security is helping out
and your portfolio has grown,you could theoretically have a
higher equity exposure, meaningyour assets could grow even more
and you could spend more,meaning you're even in a more
comfortable position.
You don't need to do thatbecause you have ask yourself
what's going to let me sleepbest at night, but it's

(10:47):
something to consider.
The sixth statistic here wealthyretirees still worry about
outliving their money.
I can attest to this.
We have clients at Root thathave 5, 10, 15, $20 million.
Sometimes they're more stressedthan our other clients because
they're worried.
I don't want to screw this up.

(11:12):
It's a lot of money and I don'twant to mess things up.
Where could I go wrong here?
A 2023 EBRI retirementconfidence survey found one in
three high net worth retireesfear running out of money due to
the unknown of healthcare costsand market volatility.
Longevity uncertainty,potential long-term care costs
and market downturns driveunderspending.
So in our software we'll runwhat-if scenarios and go what if
you're like super unlucky andmarkets go down?
I don't know 40%?
And what if it turns out?

(11:32):
Healthcare costs are just goingthrough the roof and you wait.
You decide that you want tospend way more than you first
thought when you retired and youknow inflation rises and your
returns don't do what you expect.
Like what if you're the mostunlucky person ever?
And we'll show them.
Here's what it would look like.
And sometimes I find clientstotally shift in this moment and
they go wait.
So if I'm the most like unluckyperson ever, I'm still not

(11:54):
going to run the risk of runningout of money.
Like what am I worrying about?
And that will add a lot ofconfidence to their plan.
So here are six interestingstatistics from wealthy retirees
compared to the average or themedian, as I shared.
If this was helpful and you'rewatching on YouTube, please like
this video.
Please comment below if youfound it helpful.
If you want to play around withyour own tool, your own

(12:15):
software, you can do so in thedescription of this episode.
And if you want to work withRoot so that we can be true
partners and help you in thisnext stage of life of truly
optimizing what you've worked sohard for, this is what we