Last week MA sent me this piece which says 1 in 10 pensioners are millionaires. I think the number is much, much higher than that. Keep in mind that the article is referring to the UK, so being a millionaire there involves more than just $1m US or Cdn.
One in ten pensionable households can lay claim to a million pounds in assets, official figures indicate. ...
This rise is in part attributed to rising property values. Prices for houses owned by the typical retired couple have climbed by £10,000 since 2006, the data showed.
A significant increase in the value of pension pots has also left retirees better off, with private pension assets increasing from £60,000 to £82,300 over the period.
There is one huge category missing from these calculations: gubmnt pensions and other programmes for seniors. What is the present value of all the gubmnt pensions and other old-age assistance programmes such as social security, Canada Pension, Old-Age Assistance, medicaid, medicare, drug plans, etc.?
Here's an indication of what I mean: suppose someone retires at age 60 with an expected lifetime of 87 years; suppose further that the effective real interest rate is 2%. In this case, the present value of an annuity paying $48K/year is just over $1m. See this. [Present value tells how much you'd have to invest at that interest rate to generate that income stream], making this person de facto a millionaire at age 60.
In Canada, just the Canadian Pension Plan plus Old-Age Assistance alone probably pay about $15K/year.
Add in the present value of health coverage and drug subsidies. Given that health plans for seniors in the US regularly cost at least $5K/year, we're already up over $20K/year. Then throw in a bit of retirement savings, perhaps a small pension and maybe the value of a house, and before you know it, the person has wealth of over $1million.
Being a millionaire isn't nearly so uncommon as it used to be.