Stocks, Spending Less Beneficial for Boomers

Baby boomers started turning 65 in 2011, and the timing was good. Since then, the S&P 500 is up 91 percent, including dividends, and U.S. stocks reached record highs this summer.1

A recent study in the Journal of Financial Planning found wealthy retirees are very cautious about spending down their retirement assets. This, combined with positive market performance, has helped make baby boomers the richest generation in history.2

The study tracked spending and investing habits of 65- to 70-year-olds between 2000 and 2008. What they found was interesting: The wealthier the subjects, the less money they spent (on a relative basis). Here’s the data:

  • The poorest 40% generally spent more than they earned
  • Retirees in the middle of the income spectrum spent approximately 8% less than their retirement income
  • The wealthiest of the group spent as much as 53% less than their available income3

Despite the recession, many wealthy retirees increased their financial assets, and some may have more money than is even necessary to get them through retirement. When you think about it, it’s quite a feat to continue growing wealth after you stop earning a paycheck.4

Still, it’s important to remain prudent and create a long-term financial strategy to help you work toward your financial independence. The possibility of substantial health and long-term care expenses must be taken into consideration along with the potential impacts of inflation.

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1Ben Steverman. ThinkAdvisor. July 15, 2016. “The Richest Generation in U.S. History Keeps Getting Richer” Accessed Aug. 17, 2016.
2Ibid.
3Ibid.
4Ibid.

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