Real Power Accounts

[SystemTrader]

I don't want to bring back the thread that Spaf (wisely, IMO) shut down, but since there was some talk of "power accounts" and moving markets and such, I thought we should put TSP accounts of less than $1M in a little perpective...

http://detachedtrader.com/2006/02/detached-traders-list-of-5-traders.html

 

[Master]

SystemTrader,

Surprise! We're not Gates, Buffet, Soros, or any of the Detached Trader list. o/w we wouldn't be in this mb. We're trying to live the American Dream by working hard, earning middle class wages, and aiming to retire better than o/w expected.

Let's look at reports:
http://www.taxpolicycenter.org/publications/template.cfm?PubID=8713
http://www.rand.org/labor/DRU/DRU3002.pdf (big file)

According to:
http://www.google.com/search?q=cache:7khju8Zci3oJ:www.ici.org/new/fm-v15n1.pdf+average+IRA+account+size+US+2005&hl=en&gl=us&ct=clnk&cd=15 (you can see it better if after clicking the link, you then click on the PDF file).

Out of the 113.1 million households in the US, "about 70 percent of all U.S. households have some type of formal, tax-advantaged retirement savings (Figure 1). More than 60 percent have employer sponsored retirement plans. Only 41 percent, or 46.8 million U.S. households, own IRAs (Figure 2)." .... The median account for those owning an IRA for 20 years or longer was $35,300, with a mean of $100,700.

If you look at the 2004 RAND report, net worth assets in the US at the 90% percentile group were $491,600 at time of retirement (table 7). I am uncertain as to that includes home residence value; it appears that it is so. Thus, IRA account would be considerably smaller. Nevertheless, in my view, that would suggest that IRA accounts over that amount (indexed to inflation) would be considered POWER accounts.

Finally, look at the categories for brokerage accounts that Fidelity has: Bronze 0-$49K; Silver $50-999K; and Gold 1000K or more.
http://personal.fidelity.com/accounts/services/content/brokeragecommission.shtml.tvsr This is a successful business. The categories are not arbitrary, but there is rationale. Essentially, they consider a 50K account or more as worth having, and 1000K or more as drooling for it.

To conclude, in my view, accounts over 400K as of today could be called Power Accounts. They represent less than the TOP 10% of US retirement accounts. Let's hope that the majority of us will get there if they are not there already.