Saving $1 million for retirement used to represent financial stability, but today, even billionaires are concerned that they will not have enough money for their golden years.
According to Natixis Financial Advisors’ 2022 poll, more than one-third of millionaires believe it would “take a miracle” for them to retire comfortably.
How Much Do You Need For Your Retirement?
A recent Bloomberg MLIV Pulse poll may provide an answer for what it would take to retire well: more than 7 in 10 investors said they would require between $3 million and $5 million to retire comfortably.
The data highlight that retirement fears are on the rise, especially following a year of brutally high inflation and poor investment returns. Workers are increasing their estimates of how much they will need to save in reaction to rising economic uncertainty, despite the fact that the average American has saved far less than $1 million for retirement.
This uncertainty is expected to reflect the economic outlook, with corporate profits declining and a recession looming later this year.
It’s unclear whether the predicted increase in 401(k) balances would come from investments or contributions. A large portion of retirement savings is invested in index funds that track the S&P 500, as well as actively managed equity funds that are strongly weighted in the top stocks in the benchmark index.
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How To Plan For Your Future?
According to Bob Shea, chief investment strategist at Dynasty Financial Partners, 2023 will be the year when non-US assets, notably those in Asia, begin to outperform. Asia was picked by the greatest number of MLIV survey respondents as the region outside of the United States with the best dollar-denominated returns in 2023.
Despite the uncertain economic future and recent losses in their accounts, most investors aren’t changing their retirement plans. 56% of those polled stated they were sticking to their retirement plans. Almost 8% are considering never retiring.
The financial strain of ensuring your nest egg lasts for 20 or 30 years of retirement may feel onerous, but Goodsell notes that many Americans may wind up refashioning their concept of retirement by establishing new financial methods.
Some employees may wish to continue working part-time, start a small business, or invest in real estate for rental income. While younger employees are more hopeful about retiring than older Americans, Goodsell suggests that they examine the experiences of baby boomers to help them plan.
According to a Natixis survey, millennials expect they will retire at 60, whereas baby boomers — many of whom are already retired — predict they will retire at 65.
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