You’ve likely seen the game show “Who Wants to be a Millionaire?” Perhaps you’ve even played along at home, chucking to yourself and thinking, “Sure, it would be nice to have, but I’m glad I don’t need a million dollars.”
Not so fast, say a majority of registered investment advisors (RIAs) in a new study from Scottrade Advisor Services.
The recommended investment goals for
Generation X (ages 27-42) should save between $2 million and $3 million, according to 46% of RIAs surveyed. Another 22% said that Gen X-ers should have $3 million in
Thirty-five percent of advisers polled feel that
Seniors (ages 65+) are the only generation for whom a paltry $1 million might be sufficient savings for retirement according to many of the advisers surveyed. Forty-four percent of RIAs said that $500,000 to $1.5 million is
Sheryl Garrett, the founder of The Garret Planning Network, an international network of fee-only advisers, tells MME that younger people often have an “illusion of wealth,” in which $1 million sounds like an endless supply of money.
But once you take a million dollars and factor in that an 18-year-old might not retire for another 49 years — a conservative annual inflation rate of 3% would place that $1 million at something closer to $4.3 million, Garrett says.
“For the younger age groups, my advice is to not plan on Social Security income,” she says. “It’s kind of like planning on getting an inheritance when you look at your parents and they’re barely making ends meet.”
Garrett also cautions that when RIAs are looking at what the average American family would need to live on, they are talking about an income that hovers somewhere in the $50,000 range. This does not take into consideration those who are used to living on $75,000 or $100,000. All of the projections also don’t take into consideration the periodic big expense or significant long-term care costs, MME reports.
So, start
