The Golden Age of Retirement Savings: Pensions, Real Estate, Stock Gains


Some retirees are now taking advantage of a golden age of retirement saving, when benefits were more generous and investing in real estate and stocks was booming.
Getty Images; Alyssa Powell/BI

  • Amid the widespread retirement crisis in the US, some boomers are entering their golden years with plenty of savings.
  • They are now benefiting from scarce pensions, rising real estate values, and gains in the stock market.
  • But lower-income families face challenges related to retirement savings and dwindling pension plans.

If you're looking for 75-year-old Michael, try looking up at the sky.

The retiree has a unique post-retirement job: He's a corporate airplane pilot.

He only does contract jobs because he likes it; this is normal for Michael at this stage of his life. He is living the retirement dream, and He splits his time between Florida and Denver. After a career spent in the Navy and then working in geology, he has a net worth of a little over $6 million, according to documents reviewed by Business Insider.

“It's perfectly comfortable. We have all the money we need to live,” he said. And that savings has made a big emotional difference: They have no financial stress.

It's a similar story for Connie, 79, who said she didn't really start planning for retirement until she was 30, recently divorced and working a state government job in Oregon. After working about 20 years in the public sector, she was able to retire with a nice pension — one That's the kind of benefit that's rare these days. When her former spouse's survivor benefits began accruing, her Social Security checks also increased. After her retirement, she earns more than her previous salary.

“It gives me a lot of peace of mind,” Connie said. It also makes her proud: Her research and frugality served her well.

“I definitely fall into the category of people who had a pretty average career and never made a lot of money, yet my retirement income now is probably one-and-a-half times what I ever made working,” she said.

The three retirees Business Insider spoke to for this story are a bright spot amid a retirement crisis in which more than half of Americans age 65 and older live on just $30,000 a year, and without legislative intervention, Social Security funds are expected to run out in 2035. All of their full names are known to BI, but their last names are being withheld due to privacy concerns.

As the way we save for retirement continues to change, few people are now enjoying the benefits of the golden age of retirement savings — when benefits were more generous and investing in real estate and stocks boomed. Although it's still possible to achieve, a fat retirement account has become rarer. And those retirees who are living that dream are grateful.

“It’s a great place to be after retirement, not having any financial stress, helping my kids, traveling to visit them, etc.,” Michael said.

A confluence of factors led to a massive drawdown in retirement accounts

A stable retirement based on a lifetime of savings and smart decisions is possible—Michael and Connie are exemplary examples of that. But it's also a reality that's becoming increasingly rare, especially for lower-income Americans.

The Government Accountability Office found in its 2023 report that low-income households of people ages 51 to 64 — whose median income is about $19,100 — are becoming less likely to have anything in a retirement account.

In 2007, about 21% of lower-income households had a retirement account balance, according to calculations from the Survey of Consumer Finances by the GAO. By 2019, that had dropped to 10%. While the losses were not as deep for middle-income people, their retirement account balances declined slightly from 2007 to 2019. As the GAO found: ,For all except the highest income group, there was no detectable difference between average balances in 2019 and 2007.”

The decline of one type of account in particular can be blamed for this. In recent decades, the U.S. has moved away from pensions, in which employers provide their former employees with continued payments in their post-working years. Now, more American workers have defined contribution plans like 401(k), which rely on workers to contribute money to grow their coffers.

The share of low-income households with a defined benefit pension also halved from 2007 to 2019.

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Michael admits that some people have probably worked hard all their lives, but haven’t found a high-paying job – which means they’ve been able to save less money.

“The decision to retire could have been the opposite for us. I would have made some wrong decisions and we could have lost a lot of money and the situation would have been different in terms of comfort,” he said.

“We got lucky with some investments and it just took off and grew,” Michael said.

The assets held by today's retirees are also getting richer; 401(k) investments have been bolstered by a rising stock market, which means that Those who are currently making money from retirement investments A winning finish to historic S&P 500 highs.

“If we look at anyone who had a 401(k) a long time ago, between about 1982 and 2002, we had a much higher return than the stock market,” David John, AARP's senior strategic policy advisor, told BI. He added: “They were able to build retirement savings at a time when the stock market returns were high but inflation was also very low.”

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Connie opted for a variable account for her pension – her employers' contributions went into investments rather than promising a fixed return each year. While the money in her account decreased some years due to the market, overall, her income still far exceeded what she would have received from a simple fixed amount.

“Pension payments are very low these days. That's true,” Connie said.

And for the group of current retirees benefiting from these perks, one more thing could be boosting their income: Boomers own highly valued real estate. Thirty years ago, when today's retirees might have started buying real estate, homes were selling for an average of $130,000. Today, they're selling for nearly $300,000 more.

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Today's retirees still receive full Social Security benefits, which are increasingly under threat from the next generation of workers who are giving up. All of this happens when retirement savings become a personal obligation.

“In fact, the people who need it most are the least likely to have a retirement savings plan or pension,” John said.

Some people are still able to achieve this consistency, but it's an uphill battle

Valerie, 46, is one of those Generation Xers trying to follow in the footsteps of prosperous boomers. Valerie, who lives in Seattle, has already retired. According to documents viewed by BI, she has more than a million in her 401(k), but it's been an uphill struggle. Valerie — a former retail worker — tried investing in real estate, but ended up on the other end of a tough market: She said her properties were foreclosed on during the mortgage crisis, and she “barely had $20 to survive.”

“I kept thinking of all these other ideas of, OK, how do I build wealth again? Should I just give up? Is this the end of my life?” she said. For Valerie, the answer depends on her 401(k) — she said she'll borrow against it to invest back in the market, and then pay back those loans. Now that he has a retirement plan secured, he is willing to take risks to earn more money.

“When I was 18-19, I remember predicting that if I didn't touch my retirement account and didn't disturb it, I would be in this position financially. And of course, my calculations were correct,” she said.

Valerie is one data point that shows it's not all bad news for future retirees, but instead, it's probably an uphill battle.

“Our economy is changing rapidly and there will be opportunities for investment growth, savings and new products. I mean there's a lot of innovation out there,” John said. He added that it's likely it won't be as easy as it was for someone “who started investing in the 1980s or 1990s and is now coming to the end of their career.”

“But yes, moving forward, it’s still possible.”

Are you doing well in retirement, or worried you won't be able to retire? Contact this reporter [email protected],

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