A multitude of resources have made retirees better off today than previous generations, according to a study from the Investment Company Institute (ICI). Reverse mortgages have proved useful assets in contributing to a secure retirement.
The U.S. retirement system has become better at providing resources over time as the poverty rate among people aged 65 or older has dropped from 30% in 1966 to 9% in 2011, reports ICI.
Social security, homeownership, employer-sponsored retirement plans and IRAs have become valuable retirement resources for a number of seniors with varying income and wealth.
Since the amount of assets for use during retirement has increased over time, generations of households have entered retirement with higher average levels of wealth than prior generations, writes ICI.
The trend that poverty rates for individuals 65 or older have fallen in the last 45 years suggests seniors have been able to maintain their standards of living when they retire.
Total retirement assets stood at $18.5 trillion and accounted for 36% of U.S. households’ financial assets in mid-2012, according to ICI’s findings. This figure is substantially higher than those of past generations.
When adjusted for both inflation and growth in the number of households, assets per household increased over time, recording $153,100 in mid-2012. In 1985, assets per household totaled $56,100, and in 1975 they summed $27,300.
ICI’s data begs the question of preparedness of future generations heading into retirement.
Only 14% of households younger than age 35 reported that retirement was their primary savings goal as the study notes that younger households typically focus on education, homes, or other large purchases rather than looking down the long-stretch.
Because households tend to focus more toward retirement when they are older, ICI notes, it is difficult to gauge preparedness for households that are not in or near retirement.
The future of the America’s retirement system remains uncertain, given the current low interest rate environment, as healthcare costs increase and the Social Security system is not in long-term balance, notes ICI.
Written by Jason Oliva