While retiring with a $2 million nest egg might seem rare, it’s closer to what many Americans now believe they need to retire comfortably.
A survey from Northwestern Mutual reveals that Americans feel they need $1.46 million for a comfortable retirement, a number that has surged by 53% since 2020. This dramatic increase, influenced by inflation and growing financial pressures, suggests that a $2 million target may not be as far-fetched as it appears, especially for someone who is 60 and plans to retire in five years.
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According to recent data from LIMRA, only a small fraction of American households, specifically those headed by someone aged 60 or older, report having investable assets of at least $2 million. This figure represents just 7% of such households, indicating a significant gap between the wealthiest retirees and the majority.
Despite the rarity, those who do achieve this financial milestone enter their later years with considerable confidence. LIMRA’s research found that 80% to 90% of these wealthy households believe their savings will comfortably last them until they are 90 years old. This contrasts sharply with households that have less savings, where confidence levels dip considerably. For instance, among those with $1 million to $2 million, confidence is noticeably lower, continuing to decrease as asset levels drop.
The research also sheds light on broader economic concerns influencing retirement planning. Many Americans are increasingly relying on lifetime-guaranteed income sources like annuities to ensure financial stability in retirement. This trend reflects concerns over the sufficiency of Social Security and traditional pension plans, which fewer future retirees believe will cover their basic living expenses.
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To help bridge the gap toward achieving 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 your savings early can have a significant impact on your retirement funds.
2. Diversify Your Investments: Don’t put all your eggs in one basket. Diversifying your investments can help manage risk and increase your chances of achieving your financial goals.
3. Maximize Retirement Account Contributions: 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 steady income stream in retirement, which can be particularly 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 mitigate 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 personalized guidance from a financial adviser is recommended for making well-informed decisions.
Jeannine Mancini has written about personal finance and investment for the past 13 years in a variety of publications including Zacks, The Nest, and eHow. She is not a licensed financial adviser, and the content herein is for information purposes only and is not, and does not constitute or intend to constitute, investment advice or any investment service. While Mancini believes the information contained herein is reliable and derived from reliable sources, there is no representation, warranty, or undertaking, stated or implied, 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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