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Retire happy but not rich

By Jennie L. Phipps · Bankrate.com
Thursday, January 6, 2011
Posted: 9 am ET

For its February retirement planning issue, Consumer Reports surveyed 24,270 online subscribers age 55 and up about their finances and satisfaction with their lives. The results were clear: You don't have to be rich to be happily retired.

The survey found that:

  • 75 percent of retirees with more than $1 million in net worth were satisfied with their retirement, but satisfaction didn't increase among those who had saved a lot more.
  • 50 percent of those with a net worth of $250,000 also said they were satisfied with how they were living in retirement.
  • 57 percent of retirees said they had regrets about the financial decisions they had made when they were younger.
  • 39 percent said they regretted not starting to save for retirement earlier in their lives.

Another interesting part of this report was the result of an analysis by Consumer Reports Money Lab of the performance of Vanguard Managed Payout funds. Consumer Reports concluded that the savings of someone invested in a managed payout fund who withdrew his money at a rate somewhere between 3 percent and 5 percent a year between 1989 and the end of 2009, would have continued to watch his savings increase. Even if  he had taken out 7 percent every year in that time frame, his account total would have stayed about the same. The analysis suggests that whether you invest in a managed-payout fund or carefully manage your money yourself, sticking to the 4 percent withdrawal rule is a pretty safe bet.

A final tidbit I found interesting was the discussion of annuities. The article hearkened back to the '70s and '80s when inflation was devastatingly high and said that should those times come again, a retiree better be prepared. It pointed to deferred annuities as a possible solution. In one scenario, if a 65-year-old retiree puts about 11 percent of his assets into a deferred annuity and the rest into zero-coupon bonds -- which pay all their interest at maturity -- the magazine calculated that he would have "34 percent more money to spend during the subsequent two decades than if he had invested only in the bonds."

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2 Comments
Walt
March 01, 2011 at 12:28 pm

I am curious if you paid for your transportation, lodging, and food to your volunteer sites?

Thank you,

Walt

Carolyn Shawgo
February 23, 2011 at 12:18 am

I made some drastic changes in my life when I retired. I started volunteering on the National Red Cross Mental Health Team and was deployed to many disasters. I down sized my belongings, gave away my car and lived simply. Then I moved in with a daughter to help her out while her husband was deployed to Iraq. A trip to Haiti as a volunter with Global Volunteer Network was next and then a three month volunter placement in Ecuador with Geovisions. I share an apartment, have few possessions and after my granddaughter graduates from high school, I will go to South Dakota to volunteer on an Indian Reservation. I have little money, however, I have few needs. I shop at Goodwill and consignment shops, splurge on my hair and eat healthy foods. I have to be busy and I have to exercise. I feel I have made retirement interesting and could be a role model for others. Carolym
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