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August 09, 2012 at 09:39 AM
A disturbing study, largely overlooked, from three Ivy League researchers finds that almost half of Americans die owning less than $10,000.
The study’s authors, James Poterba of MIT, Steven Venti of Dartmouth and David Wise of Harvard, wrote in February that they found “a substantial fraction of persons die with virtually no financial assets—46.1% with less than $10,000—and many of these households also have no housing wealth and rely almost entirely on Social Security benefits for support.”
In “Were They Prepared For Retirement?,” the authors note that, based on a replacement rate comparison, many of these households are deemed to be well-prepared for retirement, in the sense that their income in their final years was about equal to their income in their late 50s or early 60s.
“Yet with such low asset levels, they would have little capacity to pay for unanticipated needs such as health expenses or other financial shocks or to pay for entertainment, travel, or other activities. This raises a question of whether the replacement ratio is a sufficient statistic for the ‘adequacy’ of retirement preparation.”
