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
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.
How much will $2 million generate in retirement? ›
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.
How many people have $2000000 in savings? ›
Per the Federal Reserve about 6% of households have over $2,000,000 in wealth in 2020. Depends on what you count as assets. Bank savings, property people often count but pensions are also an asset.
What percentage of US has net worth over 2 million? ›
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.
Do most people have a million dollars when they retire? ›
Northwestern Mutual reports that the average person in their 60s has $112,500 saved for retirement. So if you're nearing retirement with an IRA or 401(k) balance of $1 million, you're way ahead of the game. But are you set for life with $1 million in retirement savings? Not necessarily.
What percentage of retirees have $3 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 US population has $2 million dollars? ›
Additionally, statistics show that the top 2% of the United States population has a net worth of about $2.4 million. On the other hand, the top 5% wealthiest Americans have a net worth of just over $1 million. Therefore, about 2% of the population possesses enough wealth to meet the current definition of being rich.
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.
What is considered wealthy in retirement? ›
$1 million, $5 million, $10 million
However, if you have $1m, are retired and are living an expensive lifestyle, you might go from wealthy to poor in a relatively short period of time. The Schwab survey found that overall, Americans say they need: $1.9 million to be wealthy in 2021 (down from $2.6 million in 2020)
What percentage of US population has $3 million dollars? ›
According to the MacroMonitor, by 2022-23, the number of U.S. households with $3 million or more in financial assets represents 3.2% of all households, totaling 4.6 million.
The report found that breaking into the world's top-one-percent club is getting more difficult every year. In the U.S. in 2023, individuals needed a net worth of $5.1 million to be considered in the richest echelons of society. By 2024 this figure rose to more than $5.8 million, an increase of approximately 14%.
How many people have $3,000,000 in savings in usa? ›
1,821,745 Households in the United States Have Investment Portfolios Worth $3,000,000 or More.
What net worth is middle class? ›
We can also define middle class in terms of net worth. According to the U.S. Census data, the average net worth for U.S. households in 2022 is about $300,000. The median net worth is about $110,000 in 2024. In other words, wealth is concentrated at the top.
Can you live off interest of 2 million dollars? ›
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 should a 70 year old have to retire? ›
How Much Should a 70-Year-Old Have in Savings? Financial experts generally recommend saving anywhere from $1 million to $2 million for retirement. If you consider an average retirement savings of $426,000 for those in the 65 to 74-year-old range, the numbers obviously don't match up.
What is the maximum Social Security benefit? ›
The maximum Social Security benefit you can receive in 2024 ranges from $2,710 to $4,873 per month, depending on the age you retire. "Maximum benefits can be received by delaying the start of benefits until age 70 since benefits increase by about 8% for each year you delay beyond full retirement age.
Can you retire comfortably with $2 million dollars? ›
If you were to retire at 65 and live for at most 35 years, you would need to keep your annual expenses at or below $57,000 to live on a $2 million nest egg, assuming you don't live past 100. This would put you in a great position to retire comfortably.
What is the return on investments for $2 million? ›
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.
How to retire with $2 million if you make $100000 per year? ›
If you want to retire with $2 million, you'll need to invest about 12% of a salary of $100,000 starting in your 20s. Waiting until you're older will require a larger portion of your pay. If you wait until your 30s, then that number is closer to 17% of your salary.
