The majority of seniors have less than $10,000 in financial assets when they pass away, with more than half of the senior population not having any home equity at the end of their lives, according to a report this week by Boston College.
The study, “Were They Prepared for Retirement,” was prepared by researchers at the National Bureau of Economic Research. In conclusion, it states: “Despite the appearance of substantial assets at the median, a substantial fraction of people die with income less than $10,000 and with no financial assets and with zero housing wealth.”
While they may have been deemed “prepared” for retirement, the authors write, they would have little capacity to pay for unanticipated needs such as health or other unforeseen costs, or for entertainment, travel or other leisure activities.
Source: Financial Security Project at Boston College
According to the study, 57% of people living alone have less than $10,000 in assets when they pass away, and the same proportion have no home equity. For couples, the total having less than $10,000 is closer to one-third.
“What we take away from this is that a significant number of households have a very small cushion if they encounter any kind of financial need,” James Poterba of the Massachusetts Institute of Technology, who co-authored the study, told the Boston College project.
View the study.
Written by Elizabeth Ecker