For as long as I can remember as a youngster, I had a fantasy of becoming a millionaire one day. Can you recall the days when you might see one of the “wealthiest” people in your hometown and people would refer to him or her as “the rich millionaire”? It was a big deal, and being a millionaire carried a lot of clout.
Now please don’t think for a second I am trying to bring down or belittle millionaires. I fully realize they make up a very small portion of our society. However, it definitely isn’t as big of a deal to be a millionaire today as it was 30 or 40 years ago. When you have secretaries of companies that go through an IPO become millionaires overnight, it takes a little prestige away of working hard for your money. These days you could just as easily be in the right place at the right time.
Well the real reason I wanted to write this blog was that I came across a very interesting article on CNN Money that discussed this matter of having millions in retirement. The article was based upon a question by a 30 something year old who asked the author the question, if the 30 year old had $4 million saved up thirty years from now, would it be enough to retire? Most people these days would say absolutely yes without batting an eye. I mean, if $4 million isn’t enough to retire, then perhaps it is time to change your lifestyle. However, the author makes some great points in the article such as $4million in 30 years from now will only be equivalent to $1.2million today assuming inflation at 4%. Furthermore, if something isn’t done about our health system, who knows how much that will eat up of your retirement savings.
The best advice is to focus on the amount of income you will need (monthly or annually) to live on. Although that is clearly an estimate as well, it takes the focus off the big nest egg number and breaks it down to easier numbers to digest. And for all of you who don’t have $4million saved for your retirement, don’t fret. You aren’t alone, and for most Americans $4million will do just fine. Regardless of your situation, always protect a portion of your retirement savings including an option for lifetime income.