As of 2004, there were 9 million households in the United States with a net worth of $1 million or more, including the value of their primary residences.
This figure has more than doubled since 1995, as has the number of households worth more than $5 million, $10 million, and $25 million.
For baby boomers, 8,000 of whom are turning 60 every day, $1 million may have seemed an unattainable goal for much of their lives. Yet more and more people are reaching the million–dollar threshold, which puts them in the top 10% of all U.S. households.
It Ain’t What It Used to Be
Yet according to many financial experts, retiring with a cool million may not provide the kind of lifestyle many boomers are envisioning. To match the purchasing power of $1 million in 1957, when many boomers were children, someone would need $7.3 million today.5
Unlike the previous generation, many American workers today can’t count on traditional pension plans, generous retiree health benefits, and Social Security entitlements to help fund their retirement. The burden of funding retirement rests squarely on the shoulders of workers, many of whom are finding that they may need much more than $1 million to provide a comfortable retirement lifestyle that could last three decades.
You can make strong headway in your retirement preparations by utilizing a clearly defined strategy. Take the time to estimate how much you will need to fund your desired retirement lifestyle. Consider your life expectancy, future health risks, and spending habits. Then factor in your current savings and determine how much more you will need to pursue your objectives.
Although $1 million is a nice, round, alluring figure, it may be too high or low for your future plans. Now is the time to honestly size up your retirement situation and set realistic savings goals.