This group’s wealth ‘may not make a difference in how they feel about their chances of achieving a secure retirement,’ a survey says.
If you’re worried about retirement, you can take solace that you aren’t alone, regardless of your wealth bracket.
When it comes to people with $1 million or more of investable assets, things look good on the surface, according to a survey by wealth management firm Natixis. A total of 79% of millionaires say they will be financially secure in retirement.
But scratch that surface and the fears come out. Almost as many millionaires say it will take a miracle to achieve a secure retirement (35%), as do investors overall (40%).
“One key reason may be that the million-dollar mark may not be as significant as it once was,” Natixis’ said in its commentary accompanying the survey.
“The millionaire handle has always held a certain mystique. But over time, the picture of wealth it paints has changed dramatically.
“Where our grandparents may have envisioned the Monopoly guy – Uncle Pennybags – as a millionaire, we’re more likely to think of our neighbors. Gone are the top hat, morning suit and spats and in their place are a pair of jeans, running shoes, and a comfortable sweater.”
Almost 7 Million Millionaires
Being a millionaire still means something. “It’s not that a million dollars isn’t a lot – it’s still the qualifier for most definitions of high-net-worth individuals,” Natixis said. “It’s just that there are a lot more millionaires.”
Indeed, there are 6.98 million of them in North America, according to consulting firm Capgemini.
Of course, “the rich are different from you and me,” Natixis points out. “They have more money. But that may not make a difference in how they feel about their chances of achieving a secure retirement.”
In the survey, high-net-worth individuals said they have more than four times the median assets of the overall population ($2 million versus $450,000). “But when it comes to their retirement savings, they are not as far ahead,” Natixis said.
“The millionaires report median retirement savings of $625,000, which, while good, comes out to just 2.5 times the $250,000 median retirement savings of the overall survey population.”
Also, “while an average retirement savings rate of 19.4% is impressive,” it’s not much higher than the overall average of 16.6%, Natixis said.
“As a result, it appears that while the numbers look good, the difference is not great enough to merit any substantial difference in sentiment.” In other words, millionaires have little reason to feel more prepared for retirement than us regular folks.
Meanwhile, retirement timing is a tricky issue for the millionaires. “Even though they plan on retiring at the relatively early age of 63, 58% say they accept the fact that they may have to work longer than they plan,” Natixis said.
“This underscores one of the key problems of retirement planning, the unpredictability.”
Among the factors that could necessitate a longer career: unanticipated healthcare spending, the need to care for an elderly parent or support an adult child.
So if you aren’t a millionaire, don’t sweat it, though there’s no harm in trying to become one (just don’t rob a bank).