The retirement stage holds immense significance in everyone’s life because the winners in the race of life are crowned during this stage. Most people get a lifetime to stockpile resources so that they can lead a relaxed life during their retirement years. As per reports, some of the seniors’ income outshines the entire gross domestic product of small nations. There are a number of dramatic stories that portray a broadening inequality of income. Therefore, there are various things that need to be considered while studying the huge wealth gap that stretches into the retirement income of the rich and the poor.
The key facts related to the difference between retirement income and wealth are:
- The difference between wealth and family income reflects the disparity in a big way. It shows how hard each member of the family actually works or has worked.
- Wealth is about as closely distributed nowadays as at any particular time in the history of the country.
- People in the United States of America have prospered in all industries and the gains by the upper-income citizens have actually come at the cost of the lower or middle income citizens, which is a huge trend.
On the other side, about 9 percent of people who are 65 years and above lived below the poverty line as recently as the year 2012. In the year 2014, living below the poverty line implies that the annual income is $11,670 or less for an individual and about $15,370 for a bigger household. As compared to all the other prominent age groups, the 65 year and older group also has the uncertain distinction of possessing the most pronounced gap of wealth, according to experts.
The good news though is that since the year 2002, the population of the seniors in the lower income group has declined. However, the group of high earners has swelled in the recent times. What’s actually behind the huge retirement income and wealth gap between the rich and the poor? Well, conventional wisdom is what puts the entire blame for all kinds of fiscal shortcomings squarely on an individual. However, several researches have shown that the retirement income inequality is more than just a normal function of the excitement with which an individual saves money.
Along with the sole exception of social safety, retirement income is primarily the result of the key savings an individual has been able to gather during his/her early years. A number of workers are still known to receive pensions from their respective employers.
Richer individuals tend to save more
It isn’t a surprising fact that richer people tend to save more money than poor people. People living in wealthy households are aware of the various investment models that can help them multiply their income significantly over a period of time. Individuals who get better salaries also tend to save more money, which is a recent growing trend.
One of the major reasons behind the income disparity is that our entire progressive taxation system is known to impose a higher amount of taxes on high-income groups and lower amount of taxes for other individuals. All the individuals who pay a high rate of taxes enjoy an incentive to stockpile as much income as they can into their tax-deferred account. All the withdrawals here can be made during the retirement.
By studying and implementing various strategies, this difference can easily be reduced. The most significant thing to do here is to see how exactly the gap can be shortened. A little bit of online research can be of great help when it comes to planning your retirement according to your lifestyle and budget. Or you can also contact Professional Retirement Planner for stress free retirement.