The cool $1 million is no longer what it used to be.
According to the latest data, there are more millionaires in the US and worldwide than ever before, with almost 24.5 million millionaires in the country as of 2022. Global Wealth Report from Credit Suisse Research Institute. However, having seven figures in the bank provides less security than before in the face of inflation and wild market fluctuations.
“This badge is easier to get, but it may not deliver what we expect,” said Dave Goodsell, executive director of the Natixis Center for Investor Insight.
Fewer Americans these days, including millionaires, are confident about their financial situation.
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Even among the wealthy, 58% agree they will have to keep working longer, and 36% fear that retirement might not even be an option, according to the latest data from Natixis Investment Managers.
In fact, 35% of millionaires said their ability to be financially secure in retirement would “do a miracle,” a survey of over 8,500 individual investors found.
Americans are now expecting to need $1.25 million to comfortably retire as higher costs fall on household budgets, a separate study by Northwestern Mutual found.
“A million might seem like a lot, but a lot of people are surprised when they do the math and realize that 4% of $1 million is just $40,000 a year,” Goodsell said. “It’s usually a little less than what these people are probably used to living in.”
The 4% rule is a popular benchmark for retirees to determine how much money they can live on each year without fear of running out later.
However, given current market expectations, the 4% rule “might not be feasible,” researchers at Morningstar wrote in a recent report. paper.
Rules of thumb for retirement are ‘obsolete’
“A lot of the rules of thumb we used are outdated,” Goodsell said.
“You may have that million dollars, but you lost 20% on it,” Goodsell said. “Besides, the prices are higher.”
Another study by Bankrate.com also found that 55% of working Americans now believe their retirement savings are underperforming amid continued high inflation and market volatility.
“People need to look at how much they have and take their time to figure out how long it will last,” Goodsell said. “The name of the game is save.”