From The WSJ over the weekend:
Older Americans, flush with housing and stock portfolio wealth, poised to revive spending this year. Consumers are 65 and older are boosting their spending as Omicron fades.
If you link to this article, two things:
- age 65 is an important milestone, an important demographic, but 72 is a much more important milestone, a much more important demographic than 65 when it comes to personal finances; and,
- the majority of folks responding to this article do not buy the thesis of this article.
Why 72?
This article targets the very wealthy, based on the comments the article received.
But there's a subset just below the very wealthy: the new wealthy or new wealthy with a FOMO, a YOLO, and a nothing-to-lose attitude.
Two things not mentioned in the article:
- by age 72, everyone who is eligible for social security will be taking it; the wealthy generally wait until social security benefits max out and that's at age 70 for most, not age 65; and,
- RMDs: this is the "killer." I don't think the "new wealthy" or "near wealthy" really understand how much money they will be withdrawing from their traditional IRAs every year once they reach age 72;
- most interesting and I think this is a bigger story than most folks realize: inherited IRAs after 2020 have no annual RMDs but the traditional IRAs must be completely depleted within ten years.
- many beneficiaries will not withdraw any of that money until the last moment
Yes, much of that money that is withdrawn will be re-invested, but a lot of folks are going to spend a bit of that money on traveling or hobbies.
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