You've been saving like a miser
to get ready for retirement. You've pinched pennies, kept that last car for
what seems like an eternity. And now you've banked a cool $1 million for your
retirement years.
Think
you're set?
Well,
you very well might be. Then again, you still might be short.
"The
good news is there are more millionaires," says Richard G. Dragotta, at
LPL Financial in Paramus, N.J. "Over 9 million people in the U.S. have $1
million or more." But, Dragotta says, $1 million might not mean you're
wealthy: The new $1 million may be $2 million.
"Thirty
years ago, $1 million was a huge amount of money," says Haitham
"Hutch" Ashoo, CEO of Pillar Wealth Management, in Walnut Creek,
Calif. "Today, given today's lifestyles and costs, it isn't so much
money."
Why
not? "It translates into $40,000 to $50,000 (annually) in sustainable
revenue," says Joe Heider, regional managing principal for Rehmann
Financial Group in Westlake, Ohio. "That is not that much money on an
annual basis."
Heider
says that 10 to 12 years ago, when people earned a lot more on their
investments, $1 million could generate $70,000 to $80,000 a year in retirement
income. But with interest rates as low as they are, that's not really feasible.
Still,
that's not to say that no one could live on savings of $1 million. Not everyone
will need that kind of cash in their retirement kitty, financial planners say.
It all depends on your lifestyle — the one you're living now, and the one you
want to live in retirement. It also depends on your investment returns, taxes
and inflation.
"I
think it depends on how much money you're going to spend," says Tim
Courtney, chief investment officer at Exencial Wealth Advisors in Oklahoma
City. "A million is not like $1 million 20 years ago or 30 years ago. If
you're wanting to spend $50,000 a year or less from your investment portfolio,
$1 million will probably get it done for you.
"If
you want more than that, $1 million is not going to provide that for you,"
he says. Otherwise, you run the risk of depleting your savings before you die.
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