35% of millionaires say they won’t have enough to retire, report finds

Why Americans Are Having a Hard Time Retiring

A cool $1 million ain’t what it used to be.

According to Credit Suisse Research Institute’s latest Global Wealth Report, there are more millionaires than ever in the U.S. and globally, with nearly 24.5 million millionaires nationwide by 2022. Still, having seven figures in the bank offers less protection than it used to in the face of inflation and extreme market swings.

“It’s easy to get that mark but it doesn’t deliver what we expect,” said Dave Goodsell, executive director of the Natixis Center for Investor Insight.

These days, fewer Americans, including millionaires, feel confident about their financial status.

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Even among high-net-worth individuals, 58% admit they should continue working longer and 36% worry retirement may not even be an option, according to the latest data from Natixis Investment Managers.

In fact, 35% of millionaires are “going to wonder” about their ability to be financially secure in retirement, a survey of more than 8,500 individual investors found.

Americans now expect they’ll need $1.25 million to retire comfortably as higher costs strain household budgets, a separate study by Northwestern Mutual found — a 20% jump from the $1.05 million respondents cited last year.

People are surprised when they do the math and realize that 4% of $1 million is only $40,000 a year.

Dave Goodsell

Executive Director of the Natixis Center for Investor Insights

“A million may sound like a lot, but many people are surprised when they do the math and realize that 4% of $1 million is only $40,000 a year,” Goodsell said. “It’s usually a little less than what these people are used to living.”

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The 4% rule is a popular guideline for retirees to determine how much money they can live on each year without fear of running out.

However, given current market expectations, the 4% rule “may no longer be feasible,” Morningstar researchers wrote in a recent paper.

Retirement Rules ‘Old’

“A lot of the rules of thumb we’ve been using are outdated,” Goodsell said.

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At the same time, the average 401(k) balance is now down 23% from a year ago to $97,200, according to Fidelity Investments, the nation’s largest provider of 401(k) plans.

“Maybe you have that $1 million but you’ve taken a 20% hit on it,” Goodsell said. “On top of that, prices are high.”

Another Bankrate.com survey also found that 55% of working Americans now feel behind in their retirement savings amid persistently high inflation and market volatility.

“People need to look at how much they have and take the time to do the math to see how long it will last,” Goodsell said. “The name of the game is conservation.”

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