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.
Is $2 million plus social security enough to retire? ›
Summary. $2 million is far above the average retirement savings in the US. $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.
What percentage of Americans have 2 million dollars? ›
Top 2% wealth: The top 2% of Americans have a net worth of about $2.472 million, aligning closely with the surveyed perception of wealth. Top 5% wealth: The next tier, the top 5%, has a net worth of around $1.03 million. Top 10% wealth: The top 10% of the population has a net worth of approximately $854,900.
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.
Is $1 million enough for a comfortable retirement? ›
How long will $1 million in retirement savings last? In more than 20 U.S. states, a million-dollar nest egg can cover retirees' living expenses for at least 20 years, a new analysis shows.
What percentage of people retire with 2 million dollars? ›
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.
What percentage of retirees have $1 million dollars? ›
Putting that much aside could make it easier to live your preferred lifestyle when you retire, without having to worry about running short of money. However, not a huge percentage of retirees end up having that much money. In fact, statistically, around 10% of retirees have $1 million or more in savings.
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 ...
What is a high net worth retiree? ›
High-net-worth individuals use different retirement strategies to protect their assets. 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.
What net worth is considered rich? ›
According to Schwab's 2023 Modern Wealth Survey, Americans perceive an average net worth of $2.2 million as wealthy. Knight Frank's research indicates that a net worth of $4.4 million is required to be in the top 1% in America, a figure much higher than in countries like Japan, the U.K. and Australia.
In fact, if you were to retire even 15 years from 2021, $53,600 would be about $79,544 in 2036 dollars, assuming a 2.5% inflation rate from now until then. Using that as your annual expenses, you could retire for about 25 years on $2 million.
What age can you retire with $2 million? ›
If you have multiple income streams, a detailed spending plan and keep extra expenses to a minimum, you can retire at 55 on $2 million. However, because each retiree's circ*mstances are unique, it's essential to define your income and expenses, then run the numbers to ensure retiring at 55 is realistic.
What is the maximum Social Security benefit? ›
The maximum Social Security check
Your maximum benefit if you file at full retirement age – between 66 and 67 – is $3,822 per month. Your maximum benefit if you file at age 70 – the age when extra benefits stop accruing – is $4,873 per month.
How much income will $2 million generate in retirement? ›
A $2 million nest egg can provide $80,000 of annual income when the principal gives a return of 4%. This estimate is on the conservative side, making $80,000 a solid benchmark for retirement income with this sum of money.
Can a couple retire at 60 with $2 million? ›
As a general rule, most retirees and pre-retirees underestimate what their expenses will be. A $2 million nest egg is substantial and can provide financial security for many couples, but whether it's enough for you depends on various factors. First, consider when you plan to retire.
At what age can I retire with 2 million dollars? ›
Retiring at 65 seems like a typical target, but it takes careful planning and a sufficient nest egg to pull off. If you accrue $2 million during your career, you can pay yourself $80,000 annually without touching your principal, which translates to a healthy monthly budget.
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.
