Imagine sitting on a beach, the waves gently lapping at the shore as you sip on a drink with a tiny umbrella. That's the $2 million retirement dream. The idea of kicking back worry-free, because you've saved enough to enjoy your golden years in style. But here's the twist: how many people realize that dream? Can you guess what percentage of retirees manage to bank $2 million before they call it quits?
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Spoiler Alert: It's a Tiny Fraction
The dream of retiring with $2 million is just that for most – a dream. According to the Federal Reserve's Survey of Consumer Finances, only about 3.2% of retirees have over $1 million in their accounts. And if you're aiming for the $2 million club? Well, the number of those who make it is even smaller. We're talking about a sliver of a sliver – somewhere between that 3.2% and the razor-thin 0.1% who've got $5 million or more.
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How Does $2 Million Stack Up Against Average Savings?
The average retirement savings for people 65 and older? Just $232,710 as of 2022, according to Vanguard. That's less than one-tenth of $2 million! Even if you look at different age groups, it's clear that the $2 million milestone is out of reach for the vast majority. Those aged 65 to 74 average around $609,230; for those 75 and older, it drops to $462,410. Both figures are impressive compared to the general population, but they're still far from that magical $2 million mark.
What Sets the $2 Million Achievers Apart?
So, what's the secret for those few who hit $2 million? It's not just luck – though that never hurts. Several key factors play a role:
Early Start: Time is your friend when it comes to retirement savings. Start at 25, and you'd need to save about $5,677 annually to hit $2 million by age 72, assuming a 7% annual return. Delay it, and the numbers get a lot scarier.
Consistency is Key: It's all about regular contributions. Financial pros often recommend saving away 10-15% of your income for retirement. It's not glamorous, but it works.
Smart Investing: This isn't just about saving – it's about making your money work for you. Stocks, index funds, ETFs – these tools have historically provided the best returns. Just letting cash sit in a savings account won't cut it.
Higher Income, Higher Savings: Whether you like it or not, those with higher incomes have an easier time saving big. The top 10% of households have an average of $769,000 saved up for retirement.
Education Matters: College grads tend to have more than triple the retirement savings of those with just a high school diploma. It's a reminder of how education can impact your financial future.
Homeownership Helps: Homeowners typically have way more saved for retirement – 267% more, to be precise. They've got an average of $303,000 saved up, compared to renters.
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Is $2 Million Enough?
Here's the kicker: even if you hit $2 million, is it enough? The answer isn't one-size-fits-all. It depends on where you live, your lifestyle, your health care needs, and whether you plan to keep working part-time. For some, $2 million might be more than enough. For others, it might just scratch the surface.
But one thing's for sure: reaching that $2 million milestone puts you in an elite group of retirees. Whether it's enough? That's up to you and your unique situation. It may be a smart move to discuss your goals with a financial advisor. These experts can help you develop a game plan to reach your retirement or any other financial goals.
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This article Can You Guess What Percent Of People Actually Retire With A $2 Million Nest Egg? Here's A Hint – Aim Really Low originally appeared on Benzinga.com
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