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Low income retirees often “saving” more than the rich
Well, maybe not in terms of actual dollars of retirement savings, but in terms of the percentage of pre-retirement income your Social Security represents, low income people usually fare better than those with higher earnings. This is because Social Security’s formula for determining each person’s benefit is weighted much more favorably to the lower segment of one’s Average Indexed Monthly Earnings, meaning you get a bigger percentage of the lower portion of your average career income. How all of this translates to a better savings rate for the poorer folks among us is explained in this American Enterprise Institute article by Andrew G. Biggs. Click here to read more.
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