A cool $1 million is not what it used to be.
There are more millionaires in the U.S. and globally than ever before, with nearly 24.5 million millionaires nationwide as of 2022, according to the latest Global Wealth Report from the Credit Suisse Research Institute. Even so, having seven figures in the bank offers less security than it used to in the face of inflation and extreme market swings.
These days, fewer Americans, including millionaires, feel confident about their financial standing.
Even among high net worth individuals, 58% said they accept that they will have to keep working longer and 36% worry that retirement may 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 is “going to take a miracle,” the survey of more than 8,500 individual investors found.
People are surprised when they do the math and realize that 4% of $1 million is only $40,000 yearly. – Dave Goodsell, Executive Director of the Natixis Center for Investor Insight
However, given current market expectations, the 4% rule “may no longer be feasible,” researchers at Morningstar wrote in a recent paper.
Retirement rules of thumb are ‘outdated’
“A lot of the rules of thumb we’ve been using are outdated,” Goodsell said.
At the same time, the average 401(k) balance is now down 23% from a year ago to $97,200, according to Fidelity Investments, the nation’s largest provider of 401(k) plans.
“Maybe you have that $1 million but you’ve taken a 20% hit on it,” Goodsell said. “On top of that, prices are higher.”
“People need to look at how much they have and take the time to do the math to see how long that will last,” Goodsell said. “The name of the game is preservation.”
CNBC, posted on SouthFloridaReporter.com
This article originally appeared here and was republished with permission.
