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

Why Americans are finding it harder to retire

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

There are more millionaires in America and around the world than ever before, with nearly 24.5 million millionaires nationwide by 2022, according to the Global Wealth Report from Credit Swiss Research Institute. Even so, having seven figures in the bank provides less security than it used to in dealing with the economic climate and the many changes of market.

“That index is more accessible but may not deliver what we expect,” said Dave Goodsell, executive director of the Natixis Center for Investor Insight.

These days, few Americans, including millionaires, feel confident about their financial situation.

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Even among high-income individuals, 58% said they accept that they should work longer and 36% worry that retirement is not an option, according to recent data from Natixis Investment Managers.

In fact, 35% of millionaires say that their ability to secure money in retirement “will do a miracle,” the study of more than 8,500 business people found.

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

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

Dave Goodsell

executive director of the Natixi Center for Investor Insight

“A million may seem like a lot, but most people are surprised when they do the math and find out that 4% of $1 million is only $40,000 annually,” he said. said Goodsell. “It’s usually a little bit smaller than what these people are used to living.”

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The 4% rule is a popular guide 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 possible,” analysts at Morningstar wrote in a recent paper.

Retirement rules of thumb ‘outdated’

“A lot of the rules of thumb we’ve been using are outdated,” Goodsell said.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 last year to $97,200, according to Fidelity Investments, the nation’s largest 401 provider. (k) plans.

“You might have that $1 million but you’ve got 20% on it,” Goodsell said. “On top of that, the prices are higher.”

Another study from Bankrate.com also found that 55% of American workers now feel they are behind on their retirement savings amid high inflation and market volatility.

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

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