While retiring with $2 million in savings may seem rare, it’s closer to what many Americans now think they need to retire comfortably.
A survey from Northwestern Mutual found that Americans feel they need $1.46 million for a comfortable retirement, a number that has increased 53% since 2020. This dramatic increase, influenced by inflation and mounting financial pressures, suggests that a $2 million target may not be achievable. As far-fetched as it may seem, especially to someone who is 60 and planning to retire in five years.
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According to recent data from LIMRA, only a small share of U.S. households, particularly those headed by someone age 60 or older, report investable assets of at least $2 million. This figure represents just 7% of these households, indicating a significant gap between the richest retirees and the majority.
Despite its rarity, those who achieve this financial milestone enter their later years with great confidence. LIMRA’s research shows that 80% to 90% of these wealthy households believe their savings will last comfortably until they are 90 years old. This is in stark contrast to households with less savings, where confidence levels drop significantly. For example, among those with $1 million to $2 million, confidence is noticeably lower and continues to decline as asset levels decline.
The research also sheds light on broader economic concerns that impact retirement planning. Many Americans are increasingly relying on lifelong guaranteed income sources such as annuities to ensure financial stability in retirement. This trend reflects concerns about the adequacy of Social Security and traditional retirement plans, which fewer future retirees believe will cover their basic living expenses.
Trending: 82% of Americans don’t use it this government secured a passive income stream of 5%are you one of them?
To help bridge the gap toward a substantial retirement nest egg, here are some practical tips:
1. Start Early and Save Consistently: The power of compound interest grows over time, so starting to save early can have a significant impact on your retirement funds.
2. Diversify your investments: Don’t put all your eggs in one basket. By diversifying your investments, you can manage risks and increase your chances of achieving your financial goals.
3. Maximize contributions to retirement accounts: Take full advantage of retirement accounts, such as 401(k)s and IRAs, especially if they offer employer matches.
4. Consider annuities for guaranteed income: Annuities can provide a stable income stream after retirement, which can be extremely valuable as a supplement to Social Security.
5. Plan for Healthcare Costs: Healthcare can be a significant expense in retirement. Consider long-term care insurance and other ways to limit these costs.
6. Work with a financial advisor: A professional can provide personalized advice based on your financial situation and retirement goals.
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*This information is not financial advice and personal guidance from a financial advisor is recommended to make informed decisions.
Jeannine Mancini has written about personal finance and investing for the past thirteen years in various publications, including Zacks, The Nest, and eHow. She is not a qualified financial advisor and the contents of this document are for informational purposes only and do not and do not constitute investment advice or any investment service. Although Mancini believes that the information contained herein is reliable and from reliable sources, no representation, warranty or undertaking, express or implied, is made as to the accuracy or completeness of the information.
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This article Can you guess how many Americans have $2 million saved for retirement? It’s Probably Less Than You’d Expect originally appeared on Benzinga.com
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