Mar 25, 2010 0 Comment
For many years, $1 million seems to be the standard when it comes to the amount of money you should set aside for retirement. However, even if it seems impossible to achieve for some, the truth is that it might not actually be enough to cater to your care during retirement. Inflation, the uncertainty of Social Security benefits, and longer life span all contribute to make the long-touted savings target inadequate.
Recently, there was a survey conducted among 226 investment advisers. Around 71% stated that $1 million is no longer sufficient for the needs of a regular American family. Many advisers recommend doubling or even tripling the amount. Younger generations are seen to be most vulnerable to the economic problems. When they grow older, they will inherit the problems caused today. The recommended savings (based on generation) are as follows:
- Generation Y (18-26 years old): should have to save at least $2 million. Some advisers even stated the figure at $3 million to remain on the safe side.
- Generation X (27-42 years old): should set a goal of $1 million. Around forty percent of the respondents believe that they should save $3 million.
- Boomers (43-64 years old): the recommendations for baby boomers seem to be mixed. 35% said $2-$3 million is important. Meanwhile, 30% said $1.5-$2 million may be enough.
Based on the survey, it seems that the only generation that comes close to living comfortably for $1 million are seniors. Experts say that $500,000 to $1.5 million is enough for many families under that age bracket.
It is true that in general, people tend to spend less during retirement. However, unforeseen circumstances like inflation or illness can easily wipe out savings. It is important to get appropriate financial protection against these risks.