Retirement's bleak end

Almost half of senior citizens in the United States have less than $10,000 in financial assets when they die, according to a recent study from the National Bureau of Economic Research. Because many depend almost entirely on Social Security payments, they can be left with a thin financial cushion, unable to handle financial shocks such as car repairs or medical treatments. In most cases, the elderly may have few assets at the end of their lives because they enter retirement with little saved, their retirement benefits lose value or financial shocks have occurred during retirement. “[Many] who end up in the bottom [tier] in terms of income when they are very old are folks who were probably not covered by defined-benefit plans during their working lives,” said James Poterba, who co-wrote the study. He is president of the National Bureau of Economic Research and an economist at the Massachusetts Institute of Technology. He and co-authors Steven Venti of Dartmouth College and David Wise of Harvard University collected data from the University of Michigan's Health and Retirement Study, which surveys retirees every two years. The team focused on those 70 and older in 1993 and looked at data through 2008, allowing them to track levels of wealth at least one year before respondents' deaths. Married retirees are less likely to go nearly broke before they die, they found. Among respondents, 52% who were single had less than $20,000 in annual income and less than $10,000 in financial assets. By contrast, just 26% of those in two-person households fit that category. Mr. Poterba theorized that households with married couples have two earners and can receive more in Social Security benefits, and noted that it is cheaper per capita for two people to live together. “It is important for financial advisers to speak with and identify for clients whether they need a cushion to fall back on,” Mr. Poterba said.