Shouldn’t this Be the Goal of Financial Planning?
We find that a substantial fraction of persons die with virtually no financial assets — 46.1 percent 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 addition this group is disproportionately in poor health. Based on a replacement rate comparison, many of these households may be deemed to have been well-prepared for retirement, in the sense that their income in their final years was not substantially lower than their income in their late 50s or early 60s.
So, did these people plan poorly? Or did they plan perfectly?
“…a substantial fraction of persons die with virtually no financial assets… and many of these households also have no housing wealth …”
This is an interesting question. To answer this, however, you would need to compare whether or not people made large gifts in the years prior to death, which could include selling (or reverse mortgaging) their house.
Unless they died in squalor or with significant unmet needs, it sounds like they planned perfectly!
The study suggests a very strong correlation between their health and financial assets. It also says that this group relied entirely on Social Security benefits for support in retirement, and that it simply wasn’t enough to cover unanticipated health problems.
Whether they planned for retirement poorly or perfectly, it has become harder and harder for people to plan for retirement, prepare for retirement, and actually retire.
There was probably very little “planning” involved.
The lack of assets meant they could not pay for any unanticipated costs or leisure activities. Because it is very unlikely that they predicted their healthcare costs correctly I doubt they enjoyed their last years.
I would assume that most people would anticipate having some assets remaining to leave behind for their children (or in the case they lived longer than expected).
It depends on if they were planning to leave anything to their children or charity or whomever.