Here's How Many People Actually Hit $1M in Retirement Savings
Thumb through just about any retirement guide, and you’ll often see the same bottom line: For a successful retirement, you need at least $1 million set aside in savings. While that certainly makes sense — a retirement can last decades, necessitating a good deal of money over time — earning and saving $1 million is far easier said than done.
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So much so that the number of Americans actually retiring with that amount in the bank is shockingly low.
Why It’s So Hard To Retire With $1M
There are a number of reasons why saving $1 million is so difficult for the average American. The most obvious and primary reason? The average middle-class household simply doesn’t earn enough income to save $1 million; rather, the average middle-class household is able to save $79,500 instead.
Elsewhere, the dizzying inflation of the last decade has made modern American living extraordinarily expensive. Grocery costs, gas prices and high rent all make saving $1 million all but impossible.
Just How Many People Are Retiring With $1M?
According to Investopedia, the U.S. Federal Reserve’s Survey of Consumer Finances reports that only 2.5% of all Americans actually have $1 million set aside for their upcoming retirements. Moreover, only 3.2% of actual retirees have $1 million or more in their bank accounts.
That’s an almost frightening series of numbers, both of which indicate that more than 95% of all Americans will likely retire without the savings necessary to last their full retirement.
Given that American life is only becoming more expensive over time, is $1 million even a realistic retirement goal for younger generations, such as millennials and Gen Z? Should they aim for something else, or is $1 million now more important than ever?
Is $1M Still Attainable?
“While $1 million remains a widely recognized retirement goal, the right number typically depends on your individual lifestyle, timeline and income needs,” Daniel Gleich, board member and shareholder at Madison Trust Company, told MoneyLion. “For many Americans, reaching $1 million can feel overwhelming; however, that goal is still achievable with long-term planning, consistency and diversification.”
That said, Gleich suggested focusing less on that daunting dollar amount specifically and instead focusing on healthy and reliable savings.
“The retirement savings conversation generally shouldn’t be centered around hitting a dollar amount,” he said. “But rather on building a sustainable retirement income and creating a portfolio that aligns with your individual goals and risk tolerance. In today’s economic environment, often categorized by higher inflation and periods of market instability, many investors are exploring ways to combine tax-advantaged retirement accounts with alternative assets that can offer diversification, cash flow opportunities and act as a potential hedge against inflation.”
One way to build such savings? Gleich suggested alternative assets and income-producing investments within retirement accounts.
“Through vehicles like self-directed IRAs,” he said. “Investors can diversify beyond stocks and bonds and into alternative assets such as real estate, private lending, private equity or other assets that can possibly generate passive income and help reach the $1 million goal.”
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This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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