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35% of millionaires say retirement is 'going to take a miracle,' report finds

CNBC logo CNBC 2/6/2023 Jessica Dickler
  • Fewer Americans feel confident about their financial well-being and retirement plans amid persistent high inflation and market volatility.
  • Even high net worth individuals say their savings won’t cut it anymore, according to a report from Natixis Investment Managers.

These days, fewer Americans — including millionaires — feel confident about their financial standing.

Although the rich are getting richer, 58% of high net worth individuals said they accept that they will have to keep working longer and 36% worry that retirement may not even be an option, according to 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 found. Natixis surveyed more than 8,500 individual investors, including 1,617 who have accumulated $1 million or more in investable assets.

Americans now expect they will need $1.25 million to retire comfortably as higher costs strain household budgets, a separate study from Northwestern Mutual found — a jump of about 20% from the $1.05 million respondents cited a year earlier.

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Why $1 million may not feel like enough

The 4% rule is a popular guideline for retirees to determine how much money they can live on each year without fear of running out later. It suggests that retirees can safely withdraw 4% of their investments (adjusted for inflation) each year in retirement.

"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," said Dave Goodsell, executive director of the Natixis Center for Investor Insight. "This is usually quite a bit less than these individuals are likely used to living on."

Given current market expectations, the 4% rule "may no longer be feasible," researchers at Morningstar wrote in a recent paper.

"A lot of the rules of thumb we've been using are outdated," Goodsell said. 

'The name of the game is preservation'

At the same time, the average 401(k) balance is down 23% from a year ago to $97,200, according to the latest data from 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."

To get an accurate picture of where you stand, "there's no shortage of calculators online," said certified financial planner Douglas Boneparth, president of Bone Fide Wealth in New York. "Or meet with a financial advisor who can hopefully put you at ease or provide you with a plan to get you feeling better."

"You can remove the guesswork," said Boneparth, who is also a member of the CNBC Advisor Council.

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.

"That mark is easier to obtain but it may not deliver what we expect," Goodsell said.

"People need to look at how much they have and take the time to do the math to see how long that will last," he added. "The name of the game is preservation."

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