A select few retirees saved a significant amount of money for retirement. They started saving (and investing) aggressively when young, lived modest lifestyles, and avoided unnecessary expenses, say studies.

… retirees often did not anticipate reaching such financial heights. They were consistent in their savings efforts from early in their careers, yet their lifestyles remained modest. Many continue to work part-time, forego frequent new clothing purchases, and, while they do splurge on global travel, they share the same concerns about health and family as other older Americans.

Can You Guess How Many Retire With A $5 Million Nest Egg?Can You Guess How Many Retire With A $5 Million Nest Egg?

A majority of current retirees receive traditional “pension” income independent of or in conjunction with Social Security, as well as use retirement savings. However, “pension” programs have been replaced with self-directed IRA/401(k) plans; neither I nor my wife ever worked a job that provided pension or future health care benefits in retirement. We had to plan for an entirely self-funded retirement.

But those with pensions may have been able to choose a different lifestyle because of their future retirement benefits:

Whether you have a pension – or did not – influences your approach to life well before retirement. As someone without pension or health care coverage, I became an excessive saver and investor, did my own car and home repairs, did no global travel, and rarely went out to eat at a restaurant (as a few examples).

By comparison, I know some who had guaranteed future pensions who felt “money is for spending” and did not do intensive saving. Instead, they enjoyed life because their future retirement included good pensions and partially funded health care in retirement. They did not need to save for the future with the intensity of others and felt comfortable spending on luxuries (travel, going out to eat, hobbies, etc).

Retirement: Most current retirees receive “guaranteed” pension incomes, but this is changing – Coldstreams

How much money do you need to retire?

That depends on lifestyle choices before and after retirement. Also note the media presents the numbers in a misleading way:

research indicates that Americans believe they need around $1.46 million to retire comfortably. Yet, the median retirement savings account balance paints a grimmer picture, standing at only $87,000

The media looks at specifically labeled “retirement accounts” and leaves out the rest of retirees’ finances – the above story, fortunately, includes a reference to other assets and income sources:

Besides retirement accounts, many retirees also have substantial amounts held in regular savings, brokerage accounts, and investment properties. 

Many, by retirement, have debt free home ownership – and no mortgage or rental expenses.

Similarly, the media leaves out other sources of income that may include Social Security, pensions, VA and other benefit programs, self-employment and even hobby income.

The result is the retirement picture is not as bleak as the media portrays retirement. For example: Economy: Are American retirement prospects really worse than ever? – Coldstreams – about 4 out of 5 current U.S. retirees are living comfortably.

And almost none of today’s retirees have even close to one million dollars yet are doing fine: Personal finance: How much do you need to retire? – Coldstreams Most retirees have nowhere near the assets the media insists you need – yet 85% of retirees (see link) say they are doing just fine.

Past posts on Retirement Issues

Coldstreams