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According to a new study, the number of millionaires in the U.S. is on the rise, but a growing number of seven-digit earners are not confident they will be able to afford retirement.
A report by Natixis Investment Managers released in October surveyed 8,550 people in 24 countries and found that in the United States, 35% of people with over a million dollars, over a third of American millionaires, believe it will “take a miracle” for them to be prepared for retirement.
The Global Wealth Report from Credit Suisse said that in 2022 the U.S. recorded 24.4 million millionaires nationwide. However, the growing number of millionaires and their increased concern about retirement preparedness shows the impact of inflation and increased living costs, determining that a million dollars do not go as far as it used to.
“A decade of historically low rates impeded investors’ ability to annuitize assets, leaving many retirees with a less-than-ideal income,” Natixis Investment Managers Executive Vice President and Head of Retirement and Institutional in the US Liana Magner said of the report’s findings.
It’s true that the overall level is still low from a historical perspective, but rates are now rising on higher government debt. Together with persistent fears of a global recession, we’re seeing new risks emerge,” Manger said, urging the public to prepare for an oncoming “retirement crisis.”
A study from financial services company Northwestern Mutual released in October said Americans now expect they will need at least $1.25 million to retire, up from $1.05 million the previous year. The report also found that the average expected retirement age increased to 64 from 62.6 the previous year.
“A million may seem like a lot, but many 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, said. “This is usually quite a bit less than these individuals are likely used to living on.”
The Natixis Investment Managers survey found among high net-worth individuals, about 58% have accepted that they will need to work longer than initially planned, and over 35% are not sure retirement is an option.
Natixis recommends that individuals planning for retirement focus on five key points; remember inflation, consider how long you will live, set realistic income goals, be mindful of risks, and set realistic expectations for investment returns.
