An overwhelming majority of U.S. households with $2 million or more in investable assets are confident they won’t run out of savings if they live to 90 years old, says LIMRA. The problem is, most households don’t have that level of savings.
LIMRA recently surveyed Americans ages 40 to 85 with at least $100,000 in household investable assets to explore their perceptions about retirement income and their confidence in their retirement security.
LIMRA found between 80% and 90% of households with $2 million plus strongly agree (51%) or somewhat agree (32%) they are confident they won’t run out of money by age 90, said Matt Drinkwater, LIMRA’s corporate vice president of Annuity and Retirement Income Research.
But that kind of confidence begins to drop off significantly for investors who have between $1 million and $2 million saved. In that group, only 28% strongly agreed and 42% somewhat agreed. Not surprisingly, confidence sinks further for those with only $100,000 to $249,000 in investable assets — only 12% strongly agreed and 29% somewhat agreed that their “savings and investments won’t run out if I live to be 90 years old.”
Relatively few households with enough assets
Among the 47 million households headed by someone age 60 or older, 7% had household investable assets of at least $2 million, Drinkwater said. Only 6% of the 89 million households in the U.S. headed by someone 40 to 85 years old has that amount, Drinkwater said.
He added that percentage drops to 4% when all 128 million U.S. households are included. Investable assets primarily include investment accounts, IRAs and defined contribution plans. The figures are based on LIMRA’s 2019 Survey of Consumer Finances, adjusted to 2022 asset levels.
Income expectations dropping
Among retirees who responded to the recent survey, 70% say that their households receive enough income from various sources to cover the household’s basic living expenses. But for future retirees, only 44% expect to receive enough income from Social Security, traditional defined-benefit pension plans, and/or lifetime-guaranteed annuities to cover their household’s basic living expenses.
Regardless of their household income sources, workers overwhelmingly agree that lifetime-guaranteed income can provide peace of mind. LIMRA research shows this sentiment is on the rise. Among both retired and non-retired Americans surveyed, a larger proportion (86%) in 2022 said having lifetime-guaranteed income gives them peace of mind in retirement, compared with 76% in 2018.
Rising interest in annuities
LIMRA research shows interest in annuities had been level or down for much of the last decade, reaching a low of 33% in 2018. But in 2022, for the first time, a majority of workers (51%) said they would consider converting a portion of assets into a lifetime-guaranteed annuity in retirement. In 2022, annuity sales hit records and commission-free products grow in popularity.
“The ongoing decline in pensions could partly explain why workers feel they will not have enough income, but other factors like uncertainty about Social Security benefits, market volatility, and the rising cost of living, are undoubtedly playing a role,” Drinkwater said. “There has been significant disruption in the economy and the finances of many Americans over the past several years, so it is to be expected that workers nearing retirement will increasingly feel uncertain about their ability to make ends meet throughout their retirements. In a time of extreme instability, the perceived value of investments offering stability, and the peace of mind that comes with it, can’t be underestimated.”
LIMRA research indicates that 49% of immediate annuity buyers in 2020 were age 71 or older; only 5% were under age 55, Drinkwater said. But deferred income annuity buyers skew younger, with 23% under age 55, and only 6% age 71 or older, Drinkwater said.
FAQs
LIMRA found between 80% and 90% of households with $2 million plus strongly agree (51%) or somewhat agree (32%) they are confident they won't run out of money by age 90, said Matt Drinkwater, LIMRA's corporate vice president of Annuity and Retirement Income Research.
Can I retire with 2 million in assets? ›
$2 million should afford you to enjoy a comfortable and happy retirement. If you choose to retire at 50, a retirement savings fund of $2 million would provide you with $50,000 annually. If you want to manage your finances and get ready for retirement, a trusted financial advisor can help.
What percentage of Americans have $2 million in retirement? ›
According to EBRI estimates based on the latest Federal Reserve Survey of Consumer Finances, 3.2% of retirees have over $1 million in their retirement accounts, while just 0.1% have $5 million or more.
How long will $2000000 last in retirement? ›
Assuming that's how much you'd spend in retirement, you could live for about 37 years on $53,600 per year with a nest egg of $2 million (assuming that $2 million is earning 0% and not factoring in Social Security). If that holds true for you, you could retire at 63, and live on $53,600 each year until you turned 100.
How much money can you withdraw a year if you have $2 million in retirement savings? ›
4% Retirement Rule
This calculation should also adjust for inflation annually, which is supposed to help you avoid running out of money in retirement. According to the 4% retirement rule, if you have $2 million in retirement savings, you could withdraw $80,000 annually.
Is 2 million in assets rich? ›
Being rich currently means having a net worth of about $2.2 million. However, this number fluctuates over time, and you can measure wealth according to your financial priorities. As a result, healthy financial habits, like spending less than you make, are critical to becoming wealthy, no matter your definition.
What percentage of retirees have $3 million dollars? ›
Specifically, those with over $1 million in retirement accounts are in the top 3% of retirees. The Employee Benefit Research Institute (EBRI) estimates that 3.2% of retirees have over $1 million, and a mere 0.1% have $5 million or more, based on data from the Federal Reserve Survey of Consumer Finances.
What is considered wealthy in retirement? ›
To be considered wealthy at age 65 or older, you need a household net worth of $3.2 million, according to finance expert Geoffrey Schmidt, CPA, who used data from the 2019 Survey of Consumer Finances (SCF) to determine the household net worth needed at age 65 or older to determine the various percentiles of wealth in ...
How many people have $3 million? ›
There are estimated to be a little over 8 million households in the US with a net worth of $3 million or more.
What is a high net worth in retirement? ›
What is Considered a High Net Worth in Retirement? A high-net-worth individual or HNWI is generally anyone with at least $1 million in cash or assets that can be easily converted into cash, including stocks, bonds, mutual fund shares and other investments.
For example, you can calculate an $80,000 return for your $2 million retirement fund. As a result, your income at 55 will be $6,666 per month. Then, you'll increase this amount by 3% this year to combat inflation. Plus, you'll start collecting Social Security at 65 and estimate a $2,500 monthly benefit.
What is the new rule of thumb for $3 million retirement? ›
He added that, according to this rule, the amount you withdraw should be considered safe enough to sustain your retirement for 30 years. “For example, if you retire with $3 million saved, you would start withdrawing $120,000 in the first year and adjust this amount for inflation thereafter,” he said.
How many people have $2000000 in savings? ›
Per the Federal Reserve about 6% of households have over $2,000,000 in wealth in 2020. Only 9% of Americans make over $100,000/yr. so, it is a relatively small percentage. As for savings, for those over 60, if they have been frugal and saved, they may have over a million dollars.
Can a couple retire on $2 million dollars at age 65? ›
Is $2 Million Enough to Retire at 65? Applying the 4% rule to $2 million can help you tell if this is a suitable amount. The rule means you count on your principal returning 4% and plan to live on that amount. In this scenario, your nest egg of $2 million returns $80,000 in retirement income.
What is the maximum social security benefit? ›
The maximum benefit depends on the age you retire. For example, if you retire at full retirement age in 2024, your maximum benefit would be $3,822. However, if you retire at age 62 in 2024, your maximum benefit would be $2,710. If you retire at age 70 in 2024, your maximum benefit would be $4,873.
How much money do you need to retire with $80,000 a year income? ›
Sticking with the $80,000 example, that means you need an additional $50,000 in income a year. Assuming an inflation rate of 4% and a conservative after-tax rate of return of 5%, you should aim for a savings target of $1.3 million to fund a 30-year retirement that begins at age 67.
How much does a $2 million dollar annuity pay per month? ›
The amount a $2 million annuity pays depends on factors such as whether you want your monthly lifetime income payments to start immediately or, say, 10 years from now. Currently, a $2 million annuity will likely pay between $10,000 to $20,000 a month for the rest of your life.
Is 2 million in super enough? ›
27 years is the length of time between the average retirement age in Australia, and the current life expectancy. So $2M in retirement savings could be enough to retire on if you kept living expenses and your standard of living at a level of comfort considered essential by the ASFA.
