Which of the following has the biggest impact on your ability to sustain your preretirement standard of living?
Consider a worker whose preretirement income is at the 50th percentile of the nationwide income distribution. Given how much this median worker has saved and invested for retirement, and assuming that stocks, bonds and inflation are as good or bad as in the past, and the worker relies on traditional sources of retirement financing s, IRAs, pensions, and Social Security), his sustainable replacement rate is 50%.
Accessing home equity. Vanguard next estimated the impact of allowing the retiree to supplement his retirement income by accessing home equity, either via using a reverse mortgage or by selling and moving to a lower-cost housing market. This increased the SRR for the median worker by just 4 percentage points.
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