A study from Vanguard, a leading provider of Individual Retirement Accounts (IRAs) and 401(k)s, concluded that even retirees with significant retirement savings rely more on Social Security and traditional pensions than on tax-deferred retirement accounts for their retirement income.
Researchers studied the wealth and income of 2,600 older households with $100,000 or more in retirement savings. Even for those households with significant assets, Social Security, the bedrock of American retirement, accounted for the largest portion of income: a median of $22,000 per year. Perhaps surprisingly, traditional pensions were the next highest source of annual income, with a median of $20,000. Tax-deferred retirement accounts provided a median $13,000 per year in retirement income.
What does the future hold? Researchers say the portion of private-sector workers with traditional pensions has dropped from 88 percent in 1975 to about 33 percent today. That means that tax-deferred retirement accounts and other private savings will become an even more important supplement to Social Security retirement benefits in the future.
Talk to a New York estate planning attorney at Littman Krooks to learn more.